Question 1

The Open Market Trading Desk is

Accepted Answer

A)  another name for the Federal Open Market Committee. 
B)  an organization of private traders in government securities. 
C)  the area on the floor of the New York Stock Exchange set aside for bond trading. 
D)  a group of private securities traders that the Fed has selected to participate in open market operations. 
A)  another name for the Federal Open Market Committee. 
B)  an organization of private traders in government securities. 
C)  the area on the floor of the New York Stock Exchange set aside for bond trading. 
D)  a group of private securities traders that the Fed has selected to participate in open market operations.

Question 2

A consequence of the impact lag is that the Fed

Accepted Answer

A)  may not know the impact of a change in policy. 
B)  might not be able to correct a mistaken policy soon enough. 
C)  may not have current information about the state of the economy. 
D)  may see the impact of a change in policy on inflation, but not economic growth. 
A)  may not know the impact of a change in policy. 
B)  might not be able to correct a mistaken policy soon enough. 
C)  may not have current information about the state of the economy. 
D)  may see the impact of a change in policy on inflation, but not economic growth.

Question 3

All of the following statements about secondary credit are true EXCEPT

Accepted Answer

A)  they are temporary, short-term loans to satisfy seasonal requirements. 
B)  the secondary credit interest rate is set above the primary credit rate. 
C)  it is intended for banks not eligible for primary credit. 
D)  borrowers of secondary credit are less financially healthy. 
A)  they are temporary, short-term loans to satisfy seasonal requirements. 
B)  the secondary credit interest rate is set above the primary credit rate. 
C)  it is intended for banks not eligible for primary credit. 
D)  borrowers of secondary credit are less financially healthy.

Question 4

How did the federal funds rate compare to that suggested by Taylor's rule following the 2001 recession and during the Financial Crisis of 2007-2009? How would proponents of Taylor's rule evaluate monetary policy in each period.

Accepted Answer

Following the recession of 2001,the fede

Question 5

Which of the following statements is correct?

Accepted Answer

A)  The volume of open market operations is determined jointly by the actions of the public, banks, and the Fed. 
B)  The volume of open market operations is determined jointly by the actions of banks and the Fed. 
C)  The volume of open market operations is determined jointly by the actions of the public and the Fed. 
D)  The volume of open market operations is determined solely by the Fed. 
A)  The volume of open market operations is determined jointly by the actions of the public, banks, and the Fed. 
B)  The volume of open market operations is determined jointly by the actions of banks and the Fed. 
C)  The volume of open market operations is determined jointly by the actions of the public and the Fed. 
D)  The volume of open market operations is determined solely by the Fed.

Question 6

Which of the following countries experienced hyperinflation during the 1920s?

Accepted Answer

A)  The United States 
B)  Canada 
C)  Germany 
D)  England 
A)  The United States 
B)  Canada 
C)  Germany 
D)  England

Question 7

Using a monetary aggregate for an intermediate target

Accepted Answer

A)  will cause the inflation rate to accelerate. 
B)  will cause interest rates to fluctuate. 
C)  requires the use of an interest rate as an operating target. 
D)  is required by the Federal Reserve Act. 
A)  will cause the inflation rate to accelerate. 
B)  will cause interest rates to fluctuate. 
C)  requires the use of an interest rate as an operating target. 
D)  is required by the Federal Reserve Act.

Question 8

Temporary,short-term discount loans to banks in areas in which agriculture and tourism are important are known as

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.

Question 9

The Fed uses operating targets as well as intermediate targets because

Accepted Answer

A)  the Federal Reserve Act of 1913 requires it to do so. 
B)  the Fed controls intermediate targets only indirectly. 
C)  the public is much more unfamiliar with the variables used as operating targets, so for policy to be effective intermediate targets must also be announced. 
D)  if one set of targets proves ineffective in attaining policy goals, the other set is available. 
A)  the Federal Reserve Act of 1913 requires it to do so. 
B)  the Fed controls intermediate targets only indirectly. 
C)  the public is much more unfamiliar with the variables used as operating targets, so for policy to be effective intermediate targets must also be announced. 
D)  if one set of targets proves ineffective in attaining policy goals, the other set is available.

Question 10

The FOMC states its overall objectives for interest rates in

Accepted Answer

A)  the Governors' Order. 
B)  the Policy Directive. 
C)  the Federal Reserve Bulletin. 
D)  the Chairman's Order. 
A)  the Governors' Order. 
B)  the Policy Directive. 
C)  the Federal Reserve Bulletin. 
D)  the Chairman's Order.

Question 11

Which of the following statements is correct?

Accepted Answer

A)  The discount rate is generally above the federal funds rate. 
B)  The discount rate is generally below the federal funds rate. 
C)  The discount rate is generally equal to the federal funds rate. 
D)  There is no general pattern to the relation between the discount rate and the federal funds rate. 
A)  The discount rate is generally above the federal funds rate. 
B)  The discount rate is generally below the federal funds rate. 
C)  The discount rate is generally equal to the federal funds rate. 
D)  There is no general pattern to the relation between the discount rate and the federal funds rate.

Question 12

Reserve requirements are changed

Accepted Answer

A)  more frequently than the discount rate is changed, but less frequently than open market operations are conducted. 
B)  more frequently than the discount rate is changed and more frequently than open market operations are conducted. 
C)  more frequently than open market operations are conducted, but less frequently than the discount rate is changed. 
D)  less frequently than open market operations are conducted and less frequently than the discount rate is changed. 
A)  more frequently than the discount rate is changed, but less frequently than open market operations are conducted. 
B)  more frequently than the discount rate is changed and more frequently than open market operations are conducted. 
C)  more frequently than open market operations are conducted, but less frequently than the discount rate is changed. 
D)  less frequently than open market operations are conducted and less frequently than the discount rate is changed.

Question 13

Which of the following is an intermediate target?

Accepted Answer

A)  M2 
B)  reserves 
C)  unemployment rate 
D)  inflation rate 
A)  M2 
B)  reserves 
C)  unemployment rate 
D)  inflation rate

Question 14

On which type of unemployment can monetary policy have the most effect? Why?

Accepted Answer

Monetary policy has the most e

Question 15

Why did the Fed expand discount lending in the aftermath of the terrorist attacks in the fall of 2001?

Accepted Answer

A)  It feared that inflation was going to increase. 
B)  To ensure the smooth operation of banks in the affected areas. 
C)  It feared the effects on the U.S. economy of rising oil prices. 
D)  It was attempting to increase the chances that President Bush would be reelected. 
A)  It feared that inflation was going to increase. 
B)  To ensure the smooth operation of banks in the affected areas. 
C)  It feared the effects on the U.S. economy of rising oil prices. 
D)  It was attempting to increase the chances that President Bush would be reelected.

Question 16

Suppose banks incur heavy losses and become more cautious,increasing their demand for reserve.Make use of a graph of the loanable funds market to show how the Fed can use open market operations to maintain the same federal funds rate.

Accepted Answer

The Fed will conduct open mark

Question 17

Which of the following statements concerning seasonal credit is true?

Accepted Answer

A)  It tends to have a lower interest rate than federal funds. 
B)  It has become increasingly more important in recent years. 
C)  Only firms receiving secondary credit are eligible to receive seasonal credit. 
D)  Improvements in credit markets have reduced the need for a seasonal credit facility. 
A)  It tends to have a lower interest rate than federal funds. 
B)  It has become increasingly more important in recent years. 
C)  Only firms receiving secondary credit are eligible to receive seasonal credit. 
D)  Improvements in credit markets have reduced the need for a seasonal credit facility.

Question 18

If the Fed desired to reduce the federal funds rate,

Accepted Answer

A)  it would conduct an open market sale, reducing reserve supply. 
B)  it would conduct an open market purchase, increasing reserve supply. 
C)  it would conduct an open market sale, increasing reserve demand. 
D)  it would conduct an open market purchase, reducing reserve demand. 
A)  it would conduct an open market sale, reducing reserve supply. 
B)  it would conduct an open market purchase, increasing reserve supply. 
C)  it would conduct an open market sale, increasing reserve demand. 
D)  it would conduct an open market purchase, reducing reserve demand.

Question 19

Using an interest rate for an intermediate target

Accepted Answer

A)  will cause the quantity of money to fluctuate. 
B)  will often lead to a recession. 
C)  requires the use of a monetary aggregate as an operating target. 
D)  is required by the Federal Reserve Act. 
A)  will cause the quantity of money to fluctuate. 
B)  will often lead to a recession. 
C)  requires the use of a monetary aggregate as an operating target. 
D)  is required by the Federal Reserve Act.

Question 20

In 2006,the Bank of Japan adopted a policy framework focusing on

Accepted Answer

A)  expected inflation one to two years in the future. 
B)  current inflation. 
C)  maintaining a fixed exchange rate. 
D)  the growth in the money supply. 
A)  expected inflation one to two years in the future. 
B)  current inflation. 
C)  maintaining a fixed exchange rate. 
D)  the growth in the money supply.

The Open Market Trading Desk is

A consequence of the impact lag is that the Fed

All of the following statements about secondary credit are true EXCEPT

How did the federal funds rate compare to that suggested by Taylor's rule following the 2001 recession and during the Financial Crisis of 2007-2009? How would proponents of Taylor's rule evaluate monetary policy in each period.

Which of the following statements is correct?

Which of the following countries experienced hyperinflation during the 1920s?

Using a monetary aggregate for an intermediate target

Temporary,short-term discount loans to banks in areas in which agriculture and tourism are important are known as

The Fed uses operating targets as well as intermediate targets because

The FOMC states its overall objectives for interest rates in

Which of the following statements is correct?

Reserve requirements are changed

Which of the following is an intermediate target?

On which type of unemployment can monetary policy have the most effect? Why?

Why did the Fed expand discount lending in the aftermath of the terrorist attacks in the fall of 2001?

Suppose banks incur heavy losses and become more cautious,increasing their demand for reserve.Make use of a graph of the loanable funds market to show how the Fed can use open market operations to maintain the same federal funds rate.

Which of the following statements concerning seasonal credit is true?

If the Fed desired to reduce the federal funds rate,

Using an interest rate for an intermediate target

In 2006,the Bank of Japan adopted a policy framework focusing on

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

The Open Market Trading Desk is

A consequence of the impact lag is that the Fed

All of the following statements about secondary credit are true EXCEPT

How did the federal funds rate compare to that suggested by Taylor's rule following the 2001 recession and during the Financial Crisis of 2007-2009? How would proponents of Taylor's rule evaluate monetary policy in each period.

Which of the following statements is correct?

Which of the following countries experienced hyperinflation during the 1920s?

Using a monetary aggregate for an intermediate target

Temporary,short-term discount loans to banks in areas in which agriculture and tourism are important are known as

The Fed uses operating targets as well as intermediate targets because

The FOMC states its overall objectives for interest rates in

Which of the following statements is correct?

Reserve requirements are changed

Which of the following is an intermediate target?

On which type of unemployment can monetary policy have the most effect? Why?

Why did the Fed expand discount lending in the aftermath of the terrorist attacks in the fall of 2001?

Suppose banks incur heavy losses and become more cautious,increasing their demand for reserve.Make use of a graph of the loanable funds market to show how the Fed can use open market operations to maintain the same federal funds rate.

Which of the following statements concerning seasonal credit is true?

If the Fed desired to reduce the federal funds rate,

Using an interest rate for an intermediate target

In 2006,the Bank of Japan adopted a policy framework focusing on

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