Exam 14: Monetary Policy

In 2012,U.S.core inflation was 2.1 percent.This inflation rate

A worldwide recession reduces the amount of U.S.exports,and as a result,aggregate demand decreases.To move U.S.GDP back to potential GDP,the Fed should

The Fed lowers the federal funds rate.A mechanism through which aggregate demand increases is that the lower federal funds rate

When would the Fed want to carry out a monetary policy that decreases aggregate demand?

In the short run,if the Fed wants to fight a recession,should it buy or sell government securities? Why?

If the Fed wants to lower the federal funds rate,it can

The federal funds rate is the interest rate

The President of the United States is also the chairman of the Federal Reserve.

When the federal funds interest rate is 6 percent,the quantity of reserves demanded is $100 billion.If the quantity of reserves is actually $110 billion,then the

The Federal Reserve fights recession via open market operations,the supply of loanable funds curve shifts ________ and the aggregate demand curve shifts ________.

An open market sale of government securities by the Federal Reserve shifts the ________ reserves curve ________.

In 2012 the Fed announced it would purchase $40 billion of mortgage securities per month.These purchases shifted the ________ reserves curve ________.

If the Fed lowers the federal funds rate,the first effect in an AS/AD figure is a ________ shift of the ________ curve.

In an effort to address the troubled economy,..."For the ninth time in just over a year,the Federal Reserve is expected to cut interest rates,quite possibly its last reduction in this downturn." Rates have not been this low "...since 2003,when the economy was growing at a snail's pace." www.csmonitor.com,10/28/2008 The Fed's rate cuts will ________ bank reserves and ________.

Suppose that initially real GDP equals potential GDP.Then an increase in aggregate demand occurs.According to the Taylor rule,the Fed should ________ the federal funds rate by ________ government securities in the open market.

In March 2013 the Fed announced that it might decrease its open market purchases of securities by the end of the year.This announcement suggests that the Fed is concerned that

In the aggregate demand/aggregate supply framework,lowering the federal funds rate has what short-run effects on real GDP?

An inflation rate targeting rule

If the Fed fears inflation it will undertake an open market ________ of securities,the federal funds rate will ________ and the long-term real interest rate will ________.

Open market operations by the Fed lead to