Exam 17: Monetary Policy

In 2008,the Treasury and Federal Reserve took several actions in response to the deepening financial crisis.One action was the Treasury's move to have the federal government take control of

To reassure investors who were unwilling to buy mortgages in the secondary market,the U.S.Congress used two government sponsored enterprises,________,to sell bonds to investors and use the funds to purchase mortgages from banks.

An increase in real GDP can shift

Using the Taylor rule,if the current inflation rate exceeds the target inflation rate and real GDP exceeds potential GDP,then the federal funds target rate ________ the sum of the current inflation rate plus the real equilibrium federal funds rate.

If the probability of losing your job remains ________,a recession would be a good time to purchase a home because the Fed usually ________ interest rates during this time.

By the 2000s,investment banks had become significant participants in the secondary market for mortgages.

Which of the following correctly describes what the Fed used as monetary targets in the past?

Inflation targeting has been adopted by the central banks of several countries including the European Central Bank.

The core personal consumption expenditures price index excludes

In 2008,the Treasury and Federal Reserve took action to save large financial firms such as Bear Stearns and AIG from failing.Which of the following is one reason why these measures were taken?

Figure 17-1 -Refer to Figure 17-1.In the figure,the money demand curve would move from Money demand₁ to Money demand₂ if

Following the financial crisis of 2007-2009,banks had a glut of excess reserves.Because of this extraordinary amount of excess reserves being held by banks,the Fed's draining some of them through open market sales of Treasury securities would

Using the money demand and money supply model,an open market sale of Treasury securities by the Federal Reserve would cause the equilibrium interest rate to

An increase in the money supply will

The consumer price index (CPI),the personal consumption expenditures price index (PCE),and the core PCE have over the last 15 years

The money demand curve has a

When the Fed sells a security to a financial firm and the Fed agrees to buy back the security the next day,the transaction is known as

Which of the following situations is one in which the Fed will potentially pursue expansionary monetary policy?

Figure 17-12 -Refer to Figure 17-12.In the dynamic AD-AS model,the economy is at point A in year 1 and is expected to go to point B in year 2,and the Federal Reserve pursues policy.This will result in

In June 2017,the Federal Open Market Committee raised the target for the federal funds rate to a range of 1.00 to 1.25 percent.To keep the federal funds rate in this target band,the Fed set the interest rate it pays on bank reserves to