Exam 18: Monetary Policy: Stabilizing the Domestic Economy

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There have been many changes made to the method for computing the required reserves for banks over the years.Currently, lagged reserve accounting used enables a bank and the Fed to know the level of reserves required over a period of time well before the period of time begins.Why is this method for computing reserves advantageous to banks as well as the Fed?

(Essay)

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Question 21

What is the difference between primary and secondary credit offered by the Fed and who would use secondary credit?

(Essay)

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Question 22

The tools of monetary policy include:

(Multiple Choice)

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Question 23

Which of the following statements is most correct?

(Multiple Choice)

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Question 24

For the European Central Bank (ECB), the equivalent of the FOMC's target federal funds rate is the:

(Multiple Choice)

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Question 25

If the market federal funds rate were below the target rate, the response from the Fed would likely be to:

(Multiple Choice)

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Question 26

Federal funds loans are:

(Multiple Choice)

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Question 27

Could the Fed enter the federal funds market to make sure the market and target rates are always equal, and if they could, why don't they?

(Essay)

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Question 28

Discuss why the Fed can either select a quantity or a price (interest rate) target but not both.If it helps, you can use the market for reserves for an example.

(Essay)

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Question 29

If the current market federal funds rate equals the target rate and the demand for reserves increases, the likely response in the federal funds market will be:

(Multiple Choice)

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Question 30

One of the reasons primary credit exists is to:

(Multiple Choice)

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Question 31

Discuss the evolution of discount lending from a tool of monetary policy to its current role.

(Essay)

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Question 32

The interest rate the Fed charges for secondary credit is:

(Multiple Choice)

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Question 33

In the period of 1979 to 1982, if the Fed had set an interest rate target that was equal to the actual market interest rates that occurred, the:

(Multiple Choice)

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Question 34

Every one percent increase in the rate of inflation will:

(Multiple Choice)

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Question 35

For most of the Fed's history, the Fed:

(Multiple Choice)

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Question 36

The fact that, for most of its history, the Fed was reluctant to make discount loans actually:

(Multiple Choice)

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Question 37

If the Fed entered the federal funds market as a borrower or a lender to make sure the market rate always equals the target rate, they would be doing all of the following except:

(Multiple Choice)

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Question 38

During the financial crisis of 2007-2009 it became difficult for the Fed to hit their target federal funds rate because:

(Multiple Choice)

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Question 39

One reason the target federal funds rate may not equal the actual federal funds rate is because:

(Multiple Choice)

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Question 40

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Exam 18: Monetary Policy: Stabilizing the Domestic Economy

What is the difference between primary and secondary credit offered by the Fed and who would use secondary credit?

The tools of monetary policy include:

Which of the following statements is most correct?

For the European Central Bank (ECB), the equivalent of the FOMC's target federal funds rate is the:

If the market federal funds rate were below the target rate, the response from the Fed would likely be to:

Federal funds loans are:

Could the Fed enter the federal funds market to make sure the market and target rates are always equal, and if they could, why don't they?

Discuss why the Fed can either select a quantity or a price (interest rate) target but not both.If it helps, you can use the market for reserves for an example.

If the current market federal funds rate equals the target rate and the demand for reserves increases, the likely response in the federal funds market will be:

One of the reasons primary credit exists is to:

Discuss the evolution of discount lending from a tool of monetary policy to its current role.

The interest rate the Fed charges for secondary credit is:

In the period of 1979 to 1982, if the Fed had set an interest rate target that was equal to the actual market interest rates that occurred, the:

Every one percent increase in the rate of inflation will:

For most of the Fed's history, the Fed:

The fact that, for most of its history, the Fed was reluctant to make discount loans actually:

If the Fed entered the federal funds market as a borrower or a lender to make sure the market rate always equals the target rate, they would be doing all of the following except:

During the financial crisis of 2007-2009 it became difficult for the Fed to hit their target federal funds rate because:

One reason the target federal funds rate may not equal the actual federal funds rate is because:

An Introduction to Money and the Financial System

Money and the Payments System

Financial Instruments, Financial Markets, and Financial Institutions

Future Value, Present Value, and Interest Rates

Understanding Risk

Bonds, Bond Prices, and the Determination of Interest Rates

The Risk and Term Structure of Interest Rates

Stocks, Stock Markets, and Market Efficiency

Derivatives: Futures, Options, and Swaps

Foreign Exchange

The Economics of Financial Intermediation

Depository Institutions: Banks and Bank Management

Financial Industry Structure

Regulating the Financial System

Central Banks in the World Today

The Structure of Central Banks: The Federal Reserve and the European Central Bank

The Central Bank Balance Sheet and the Money Supply Process

Exchange-Rate Policy and the Central Bank

Money Growth, Money Demand, and Modern Monetary Policy

Output, Inflation, and Monetary Policy

Understanding Business Cycle Fluctuations

Modern Monetary Policy and the Challenges Facing Central Bankers

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