Exam 15: Tools for Monetary Policy

The equivalent to the Federal Reserve's discount rate in the European System of Central Banks is the

Suppose on any given day there is an excess supply of reserves in the federal funds market.If the Federal Reserve wishes to keep the federal funds rate at its current level,then the appropriate action for the Federal Reserve to take is a ________ open market ________,everything else held constant.

Suppose on any given day there is an excess demand of reserves in the federal funds market.If the Federal Reserve wishes to keep the federal funds rate at its current level,then the appropriate action for the Federal Reserve to take is a ________ open market ________,everything else held constant.

The actual execution of open market operations is done at

The Federal Reserve has had the authority to vary reserve requirements since the

Discount policy affects the money supply by affecting the volume of ________ and the ________.

Open market purchases raise the ________ thereby raising the ________.

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

Suppose on any given day the prevailing equilibrium federal funds rate is above 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 most common type of discount lending that the Fed extends to banks is called

A financial panic was averted in October 1987 following "Black Monday" when the Fed announced that

The interest rate on seasonal credit equals

If the banking system has a large amount of reserves,many banks will have excess reserves to lend and the federal funds rate will probably ________; if the level of reserves is low,few banks will have excess reserves to lend and the federal funds rate will probably ________.

In the market for reserves,if the federal funds rate is above the interest rate paid on excess reserves,an open market sale ________ the ________ of reserves,causing the federal funds rate to increase,everything else held constant.

When good weather speeds the check-clearing process,float tends to ________ causing the Fed to initiate defensive open market ________.

The policy tool of changing reserve requirements is

Which of the following is NOT an argument for the Federal Reserve paying interest on excess reserve holdings?

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

The discount rate is

Explain dynamic and defensive open market operations.What is the purpose of each type? Describe two situations when defensive open market operations are used.How are defensive open market operations typically conducted?