Exam 14: Monetary Policy

In the market for bank reserves, if the federal funds rate target is higher than the federal funds rate, the Fed will take action to ________ reserves.

The People's Bank of China announced that it was lowering by 1.08 percentage points the one-year lending rate in response to the slowdown in the Chinese economy. This rate is the Chinese equivalent of the federal funds rate in the United States. Www)nytimes.com, 11/26/2008 This policy ________ the supply of loanable funds. As a result, the long-term real interest rate ________, and planned expenditures ________.

Which of the following describes the chain of events the Fed uses to fight recession?

In the economy of Rulewania, the current inflation rate is 6 percent and the Central Bank's target inflation rate is 2 percent. Real GDP exceeds potential GDP by 1 percent, and the long-term growth rate of real GDP is 5 percent. The medium-term growth rate of the velocity of circulation of the monetary base is 2 percent. According to the Taylor rule, what federal funds rate should the Central Bank set?

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

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

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

Which of the following bodies are responsible for the conduct of monetary policy?

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

The Fed's goals include

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

In the short run, a cut in the federal funds rate

At the end of 2013, the Fed was buying about $100 billion of securities per month, a much higher amount than normal. These purchases would ________ the value of the dollar on foreign exchange markets thereby ________ U.S. exports.

Suppose that several European countries enter a recession, thereby decreasing U.S. exports. To move U.S. GDP back to potential GDP, the Fed should

The federal funds rate is the interest rate

Which of the following increases the quantity of money?

If the Fed sells bonds in the open market, net exports will decrease.

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

If the Fed increases the quantity of reserves, a new equilibrium is reached by a

If the Fed carries out an open market operation and sells U.S. government securities, the federal funds rate ________ and the quantity of reserves ________.