Exam 15: Tools for Monetary Policy

In the market for reserves,if the federal funds rate is between the discount rate and the interest rate paid on excess reserves,a decline in the reserve requirement ________ the ________ curve of reserves and causes the federal funds interest rate to fall,everything else held constant.

Everything else held constant,in the market for reserves,when the federal funds rate is 1%,increasing the interest rate paid on excess reserves from 1% to 2%

There are two types of open market operations: ________ open market operations are intended to change the level of reserves and the monetary base,and ________ open market operations are intended to offset movements in other factors that affect the monetary base.

The interest rate for primary credit is usually set ________ basis points ________ the federal funds rate.In March 2008,this gap was changed to ________ basis points.

In the market for reserves,if the federal funds rate is between the discount rate and the interest rate paid on excess reserves,a ________ in the reserve requirement ________ the demand for reserves,lowering the federal funds interest rate,everything else held constant.

The interest rate on secondary credit is set ________ basis points ________ the primary credit rate.

Everything else held constant,in the market for reserves,when the federal funds rate is 3%,raising the discount rate from 5% to 6%

The quantity of reserves supplied equals

Suppose,at a given federal funds rate,there is an excess supply of reserves in the federal funds market.If the Fed wants the federal funds rate to stay at that level,then it should undertake an open market ________ of bonds,everything else held constant.If the Fed does nothing,however,the federal funds rate will ________.

The Federal Reserve ________ pay interest on reserves held on deposit.The European System of Central Banks ________ pay interest on reserves held on deposit.

In the market for reserves,a lower discount rate

Explain the Fed's three tools of monetary policy and how each is used to change the money supply.Does each tool affect the monetary base or the money multiplier?

Everything else held constant,in the market for reserves,when the federal funds rate equals the discount rate,lowering the discount rate

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

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

The Federal Reserve will engage in a repurchase agreement when it wants to ________ reserves ________ in the banking system.