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

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 ________.

An open market purchase of securities by the Fed will

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

An open market ________ leads to a(n)________ of reserves and deposits in the banking system and hence to a(n)________ of the monetary base and the money supply.

Which of the following is not an operating target?

If the Federal Reserve wants to lower the monetary base and the money supply, it will

Which type of open market operation is intended to change the level of reserves?

Explain why the use of an interest rate targeting strategy may result in procyclical monetary growth.

Describe the goals of the Federal Reserve. What happens when these goals come into conflict? How would one decide if lower inflation is more important than lower unemployment? Explain.

Bank reserves can be categorized as

The actual execution of open market operations is done at

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 ________.

The demand curve for reserves shifts to the left and the federal funds rate falls when the Fed

If the Fed increases reserve requirements, the demand for reserves ________ and the equilibrium federal funds rate ________.

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

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

Explain how the Fed's use of its three tools of monetary policy affect supply and demand in the market for reserves and the equilibrium federal funds interest rate.

The Fed's operating procedures and paying interest on reserves contains the federal funds rate between the interest rate paid on reserves and the discount rate.

The discount rate is

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