Exam 10: Conduct of Monetary Policy: Tools, Goals, Strategy, and Tactics

When it comes to choosing an operating target, both the ________ rate and ________ aggregates are easily controllable using the Fed's policy tools.

Which of the following is a potential operating target for the Fed?

If inflation and unemployment are of direct concern to Fed officials, why do they make such a big issue about money growth and interest rates? Why don't they just target the unemployment rate and the inflation rate directly? Explain.

Which of the following is a potential operating target for the Fed?

Flexibility is a requirement in selecting an intermediate target.

The Federal Reserve will engage in an outright purchase if it wants to ________ reserves ________ in the banking system.

The actual execution of open market operations is done at

Banks' holding of deposits in accounts with the Fed, plus currency that is physically held in banks are called

Which of the following statements is true regarding the Fed's procedures for operating the discount window?

Discuss how the monetary policy of the European Central Bank is similar to the U.S. How are they different?

Under inflation targeting, a central bank must pursue policies that

Discuss the role of the Fed as a lender of last resort during the 2007-2009 financial crisis.

Although the goals of high employment and economic growth are closely related, policies can be specifically aimed at encouraging economic growth by

The federal funds rate is

Regulations making it obligatory for depository institutions to keep a certain fraction of their deposits in accounts with the Fed are

An open market transaction intended to change the level of bank reserves is a

Why does the Fed use open market operations to a greater extent than reserve requirements in its conduct of monetary policy?

If the Fed wants to "prick" an asset-pricing bubble driven by a credit boom, what is the primary tool for accomplishing this?

An open market sale leads to an expansion of reserves and deposits in the banking system and hence to a decline in the monetary base and the money supply.

Bank reserves can be categorized as