Exam 14: Monetary Policy and the Federal Reserve System

According to the Taylor rule,if inflation in the last year was 6% and output was 2% below its full-employment level,the nominal Fed funds rate should be

Describe how the real interest rate changes in a Keynesian model if a shock shifts the IS curve down and to the right and the Fed changes its policy to keep output unchanged.

Since the 1930s,the Fed's most important tool for controlling the money supply has been

Assume that the currency-deposit ratio is 0.5.The Federal Reserve carries out open-market operations,purchasing $1 million worth of bonds from banks.This action increased the money supply by $2 million.What is the reserve-deposit ratio?

In response to an unanticipated tightening of monetary policy,the Fed funds rate ________ at first,then ________ after 6 to 12 months.

Monetarists argued that the Fed wasn't serious about adhering to a money-growth target because

In response to an unanticipated easing of monetary policy,the Fed funds rate ________ at first,then ________ after 6 to 12 months.

Changes in reserve requirements directly and immediately affect

In response to an unanticipated tightening of monetary policy,the price level ________ at first,then ________ after a year.

In the Keynesian model,suppose the Fed sets a target for the money supply.If the IS curve shifts to the left,and the Fed wants to keep output unchanged,what should the Fed do?

When the Fed sells short-term bonds and buys long-term bonds,it is engaging in

In the Keynesian model,suppose the Fed sets a target for the real interest rate.If the IS curve shifts down and to the left,and the Fed wants to keep output unchanged in the short run and the price level unchanged in the long run,it will

In response to an unanticipated easing of monetary policy,output ________ at first,then ________ after about 4 months.

Policymakers may be uncertain about the structure of the economy because

The money supply is $6 million,currency held by the nonbank public is $2 million,and the reserve-deposit ratio is 0.1.The monetary base is equal to

The currency-deposit ratio is determined by

If the money multiplier is 10,the sale of $1 billion of securities by the Fed on the open market causes a

Assume that the currency-deposit ratio is 0.2 and the reserve-deposit ratio is 0.1.The Federal Reserve carries out open-market operations,purchasing $1 million worth of bonds from banks.This action will increase the money supply by

In a fractional reserve banking system with no currency where res is the ratio of reserves to deposits,the money multiplier is

The largest asset of the Fed from those on this list is