Exam 14: Monetary Policy

Which of the following are policy instruments available to the Fed as it tries to achieve its macroeconomic goals? I.government expenditures on goods and services and taxes II.the government budget deficit or surplus III.changes in the federal funds rate

In the aggregate supply-aggregate demand model, raising the federal funds rate initially

The Federal Reserve monetary policy goals of maximum employment mean

Open market purchases by the Fed

-In the above figure, suppose that the economy is at point D. Which of the following occurs as a result of an open market purchase of government securities by the Fed?

Suppose that the market for reserves is in equilibrium and then the Federal Reserve decreases the quantity of reserves by $2 billion. The federal funds rate will ________ and the supply of loanable funds will ________.

The central bank of Cobra sells securities in an open market operation. In the short run, aggregate demand ________, real GDP ________, and the price level ________.

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

When the Fed lowers the federal funds rate

The Taylor rule uses three variables to determine the target for the federal funds rate. Which of the following is NOT one of those variables?

In the short run, an increase in the federal funds rate ________ the real interest rate and ________ investment.

In the short run, the Federal Reserve faces a tradeoff between

When the Federal Reserve lowers the federal funds rate, in the short run

Which of the following are NOT Federal Reserve monetary policy goals?

In 2012, former Fed Chairman Ben Bernanke said that the Fed's policy had raised real GDP by almost 3 percent. Mr. Bernanke believed that the Fed's policy of keeping the federal funds rate ________ had resulted in an increase in ________.

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

-In the above figure, if the economy is initially at point d, the short-run effect of a cut in the federal funds rate is given by movement from point

In an AS/AD figure, lowering the federal funds rate initially shifts the

In the short run, the Fed's actions to fight inflation shift the

Describe how open market operations change the quantity of money.