Question 1

Which types of unemployment still occur even when the economy is considered to be operating at full employment?

Accepted Answer

At full employment,t

Question 2

If the account manager finds that the current level of bank reserves is greater than the desired level indicated in the most recent directive from the FOMC,he will

Accepted Answer

A)  order banks to reduce their reserves. 
B)  order banks to raise their interest rates in an attempt to get them to loan out more of their reserves. 
C)  conduct an open market purchase. 
D)  conduct an open market sale. 
A)  order banks to reduce their reserves. 
B)  order banks to raise their interest rates in an attempt to get them to loan out more of their reserves. 
C)  conduct an open market purchase. 
D)  conduct an open market sale.

Question 3

Which of the following statements is correct?

Accepted Answer

A)  Open market purchases are expansionary and open market sales are contractionary. 
B)  Open market purchases are contractionary and open market sales are expansionary. 
C)  Both open market purchases and open market sales are expansionary. 
D)  Both open market purchases and open market sales are contractionary. 
A)  Open market purchases are expansionary and open market sales are contractionary. 
B)  Open market purchases are contractionary and open market sales are expansionary. 
C)  Both open market purchases and open market sales are expansionary. 
D)  Both open market purchases and open market sales are contractionary.

Question 4

The information lag facing the Fed is

Accepted Answer

A)  the difficulty of becoming informed quickly of changes in public opinion about which policy goal is most important. 
B)  the delay in receiving accurate information about the state of the economy. 
C)  the delay in Congress and the President communicating their policy goals for the Fed to act on. 
D)  the time required for monetary policy changes to affect output, employment, and prices. 
A)  the difficulty of becoming informed quickly of changes in public opinion about which policy goal is most important. 
B)  the delay in receiving accurate information about the state of the economy. 
C)  the delay in Congress and the President communicating their policy goals for the Fed to act on. 
D)  the time required for monetary policy changes to affect output, employment, and prices.

Question 5

The Fed can implement open market operations

Accepted Answer

A)  more rapidly than changes in reserve requirements, but less rapidly than changes in the discount rate. 
B)  more rapidly than changes in the discount rate, but less rapidly than changes in reserve requirements. 
C)  less rapidly than either changes in the discount rate or changes in reserve requirements. 
D)  more rapidly than either changes in the discount rate or changes in reserve requirements. 
A)  more rapidly than changes in reserve requirements, but less rapidly than changes in the discount rate. 
B)  more rapidly than changes in the discount rate, but less rapidly than changes in reserve requirements. 
C)  less rapidly than either changes in the discount rate or changes in reserve requirements. 
D)  more rapidly than either changes in the discount rate or changes in reserve requirements.

Question 6

The discount window is

Accepted Answer

A)  another name for the discount rate. 
B)  the means by which the Fed makes discount loans to banks. 
C)  the spread between the discount rate and the T-bill rate. 
D)  the period each month during which banks are allowed to apply for discount loans. 
A)  another name for the discount rate. 
B)  the means by which the Fed makes discount loans to banks. 
C)  the spread between the discount rate and the T-bill rate. 
D)  the period each month during which banks are allowed to apply for discount loans.

Question 7

What is the difference between defensive and dynamic open market operations?

Accepted Answer

Dynamic open market operations are inten

Question 8

Rates of inflation in the hundreds or thousands of percent per year are known as

Accepted Answer

A)  super inflation. 
B)  megainflation. 
C)  hyperinflation. 
D)  overinflation. 
A)  super inflation. 
B)  megainflation. 
C)  hyperinflation. 
D)  overinflation.

Question 9

What is meant by inflation targeting? Does the Fed engage in inflation targeting?

Accepted Answer

Under inflation targeting a central bank

Question 10

The original Federal Reserve Act

Accepted Answer

A)  specified open market operations as the Fed's main policy tool. 
B)  specified open market operations as one of several Fed policy tools. 
C)  specified that open market operations be employed by the Fed only in circumstances where discount loans were ineffective. 
D)  did not specifically mention open market operations. 
A)  specified open market operations as the Fed's main policy tool. 
B)  specified open market operations as one of several Fed policy tools. 
C)  specified that open market operations be employed by the Fed only in circumstances where discount loans were ineffective. 
D)  did not specifically mention open market operations.

Question 11

How does the interest paid on reserves set a floor for the federal funds rate?

Accepted Answer

If the federal funds rate was lower than

Question 12

A rising dollar makes U.S.goods

Accepted Answer

A)  more expensive abroad and increases the volume of U.S. exports. 
B)  less expensive abroad and increases the volume of U.S. exports. 
C)  less expensive abroad and decreases the volume of U.S. exports. 
D)  more expensive abroad and decreases the volume of U.S. exports. 
A)  more expensive abroad and increases the volume of U.S. exports. 
B)  less expensive abroad and increases the volume of U.S. exports. 
C)  less expensive abroad and decreases the volume of U.S. exports. 
D)  more expensive abroad and decreases the volume of U.S. exports.

Question 13

The Fed's monetary policy tools

Accepted Answer

A)  have proven to be of little value in helping the Fed to achieve its monetary policy goals. 
B)  have allowed the Fed to achieve its monetary policy goals directly. 
C)  have allowed the Fed to achieve its monetary policy goals indirectly. 
D)  are no longer as effective in achieving its monetary policy goals, due to restrictive legislation passed by Congress in the 1990s. 
A)  have proven to be of little value in helping the Fed to achieve its monetary policy goals. 
B)  have allowed the Fed to achieve its monetary policy goals directly. 
C)  have allowed the Fed to achieve its monetary policy goals indirectly. 
D)  are no longer as effective in achieving its monetary policy goals, due to restrictive legislation passed by Congress in the 1990s.

Question 14

What is a matched sale-purchase transaction (also known as a reverse repo)?

Accepted Answer

A matched sale-purchase transa

Question 15

Which of the following statements is NOT true?

Accepted Answer

A)  Each Federal Reserve bank maintains its own discount window. 
B)  Before 1980, the Fed rarely made loans to banks which were not members of the Federal Reserve System. 
C)  Since 1980, all depository institutions have had access to the discount window. 
D)  Each Federal District Bank can charge a different discount rate. 
A)  Each Federal Reserve bank maintains its own discount window. 
B)  Before 1980, the Fed rarely made loans to banks which were not members of the Federal Reserve System. 
C)  Since 1980, all depository institutions have had access to the discount window. 
D)  Each Federal District Bank can charge a different discount rate.

Question 16

The Employment Act of 1946 codified the federal government's commitment to

Accepted Answer

A)  promote high employment consistent with price stability. 
B)  promote high employment irrespective of the effects on price stability. 
C)  guarantee a job to every unemployed person. 
D)  fine companies that engage in excessive layoffs during recessions. 
A)  promote high employment consistent with price stability. 
B)  promote high employment irrespective of the effects on price stability. 
C)  guarantee a job to every unemployed person. 
D)  fine companies that engage in excessive layoffs during recessions.

Question 17

The Fed was created

Accepted Answer

A)  after financial panics in the late 1800s and early 1900s. 
B)  after the stock market crash of 1929. 
C)  to help finance government expenditures during World War II. 
D)  to help channel funds to the residential mortgage market. 
A)  after financial panics in the late 1800s and early 1900s. 
B)  after the stock market crash of 1929. 
C)  to help finance government expenditures during World War II. 
D)  to help channel funds to the residential mortgage market.

Question 18

Which central bank has its exchange rate as a focus of its monetary policy?

Accepted Answer

A)  Bank of Canada 
B)  Bank of England 
C)  European Central Bank 
D)  Federal Reserve 
A)  Bank of Canada 
B)  Bank of England 
C)  European Central Bank 
D)  Federal Reserve

Question 19

The Fed generally conducts open market operations in

Accepted Answer

A)  long-term corporate bond markets. 
B)  the federal funds market. 
C)  the Treasury securities market. 
D)  the commercial paper market. 
A)  long-term corporate bond markets. 
B)  the federal funds market. 
C)  the Treasury securities market. 
D)  the commercial paper market.

Question 20

Discount loans available to health banks which can be used for any purpose are called

Accepted Answer

A)  primary credit. 
B)  secondary credit. 
C)  seasonal credit. 
D)  repo loans. 
A)  primary credit. 
B)  secondary credit. 
C)  seasonal credit. 
D)  repo loans.

Which types of unemployment still occur even when the economy is considered to be operating at full employment?

If the account manager finds that the current level of bank reserves is greater than the desired level indicated in the most recent directive from the FOMC,he will

Which of the following statements is correct?

The information lag facing the Fed is

The Fed can implement open market operations

The discount window is

What is the difference between defensive and dynamic open market operations?

Rates of inflation in the hundreds or thousands of percent per year are known as

What is meant by inflation targeting? Does the Fed engage in inflation targeting?

The original Federal Reserve Act

How does the interest paid on reserves set a floor for the federal funds rate?

A rising dollar makes U.S.goods

The Fed's monetary policy tools

What is a matched sale-purchase transaction (also known as a reverse repo)?

Which of the following statements is NOT true?

The Employment Act of 1946 codified the federal government's commitment to

The Fed was created

Which central bank has its exchange rate as a focus of its monetary policy?

The Fed generally conducts open market operations in

Discount loans available to health banks which can be used for any purpose are called

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Investment Banks, mutual Funds, hedge Funds, and the Shadow Banking System

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

The International Financial System and Monetary Policy

Monetary Theory I: the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters

Exam 15: Monetary Policy

Which types of unemployment still occur even when the economy is considered to be operating at full employment?

If the account manager finds that the current level of bank reserves is greater than the desired level indicated in the most recent directive from the FOMC,he will

Which of the following statements is correct?

The information lag facing the Fed is

The Fed can implement open market operations

The discount window is

What is the difference between defensive and dynamic open market operations?

Rates of inflation in the hundreds or thousands of percent per year are known as

What is meant by inflation targeting? Does the Fed engage in inflation targeting?

The original Federal Reserve Act

How does the interest paid on reserves set a floor for the federal funds rate?

A rising dollar makes U.S.goods

The Fed's monetary policy tools

What is a matched sale-purchase transaction (also known as a reverse repo)?

Which of the following statements is NOT true?

The Employment Act of 1946 codified the federal government's commitment to

The Fed was created

Which central bank has its exchange rate as a focus of its monetary policy?

The Fed generally conducts open market operations in

Discount loans available to health banks which can be used for any purpose are called

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Investment Banks, mutual Funds, hedge Funds, and the Shadow Banking System

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

The International Financial System and Monetary Policy

Monetary Theory I: the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters