Exam 15: Tools for Monetary Policy

Everything else held constant,when the federal funds rate is ________ the interest rate paid on reserves,the quantity of reserves demanded rises when the federal funds rate ________.

The Fed uses three policy tools to manipulate the money supply: ________,which affect reserves and the monetary base; changes in ________,which affect the monetary base; and changes in ________,which affect the money multiplier.

State whether the following statement is true or false AND explain why: "An increase in the interest rate paid on excess reserves will always cause an increase in the federal reserve funds rate."

The Federal Reserve usually keeps the discount rate

Since 1980,________ are subject to reserve requirements.

The Fed is considering eliminating

An increase in ________ reduces the money supply since it causes the ________ to fall.

Open market sales shrink ________ thereby lowering ________.

The facility that was created in December of 2007 that banks can use to borrow from the Fed that has less of a stigma for banks compared to borrowing from the discount window is the ________.

Everything else held constant,in the market for reserves,increases in the discount rate affect the federal funds rate

If float is predicted to decrease because of good weather,the manager of the trading desk at the New York Fed bank will likely conduct ________ open market operations to ________ reserves.

The Federal Reserve will engage in a matched sale-purchase transaction when it wants to ________ reserves ________ in the banking system.

The Fed uses three policy tools to manipulate the money supply: open market operations,which affect the ________; changes in borrowed reserves,which affect the ________; and changes in reserve requirements,which affect the ________.

If the Fed expects currency holdings to rise,it conducts open market ________ to offset the expected ________ in reserves.

Open market operations intended to offset movements in noncontrollable factors (such as float)that affect reserves and the monetary base are called

When the federal funds rate equals the discount rate

If Treasury deposits at the Fed are predicted to fall,the manager of the trading desk at the New York Fed bank will likely conduct ________ open market operations to ________ reserves.

In the market for reserves,if the federal funds rate is above the interest rate paid on excess reserves,an open market purchase ________ the ________ of reserves which causes the federal funds rate to fall,everything else held constant.

Suppose on any given day the prevailing equilibrium federal funds rate is below the Federal Reserve's federal funds target rate.If the Federal Reserve wishes for the federal funds rate to be at their target level,then the appropriate action for the Federal Reserve to take is a ________ open market ________,everything else held constant.

The opportunity cost of holding excess reserves is the federal funds rate ________.