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

Inflation targeting involves

The goal for high employment should be a level of unemployment at which the demand for labor equals the supply of labor. Economists call this level of unemployment the

An open market purchase of securities by the Fed will

The Federal Open Market Committee makes the Fed's decisions on the purchase or sale of government securities, but these purchases or sales are executed by the Federal Reserve Bank of

At its inception, the Federal Reserve was intended to be

Holding everything else constant, if the federal funds rate falls, then the demand for

When a bank repays a discount loan to the Fed, there is a(n)________ in reserves in the banking system and a(n)________ in the monetary base.

If the Fed uses nonborrowed reserves, a reserve aggregate, as a target, fluctuations in the reserves demand curve will cause ________ to fluctuate.

If the Fed uses nonborrowed reserves, a reserve aggregate, as a target, an increase in the demand for reserves will result in a(n)________ in ________.

When the Federal Reserve was created, its most important role was intended to be

Distinguish between the three types of Fed discount loans: primary credit, secondary credit, and seasonal credit.

If the Fed uses the federal funds rate as an interest rate target, fluctuations in the reserves demand curve will cause ________ to fluctuate.

What are the arguments for and against central bank intervention during asset-price bubbles?

The first country to mandate that its central bank adopt inflation targeting was

If the Fed uses the federal funds rate as an interest rate target, an increase in the demand for reserves will result in a(n)________ in ________.

What goals are continually mentioned by central bank officials when discussing the objectives of monetary policy?

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

The discount rate is an operating target.

Open market purchases by the Fed cause the federal funds rate to rise.

When workers voluntarily leave work while they look for better jobs, the resulting unemployment is called frictional unemployment.