Exam 15: Monetary Policy

Figure 15-1 -Refer to Figure 15-1.In the figure above,the money demand curve would move from Money demand1 to Money demand2 if

The Federal Reserve cut the federal funds rate seven times between September 2007 and March 2008.What event led the Fed to make these reductions in the federal funds rate?

Mortgage lenders often resell mortgages in secondary markets.How might this make lenders act differently than if they intended to hold the mortgages themselves?

Refer to the Article Summary.When Fed Chair Janet Yellen announced that a rate increase would be warranted by the end of the year,she was was referring to the

One of the monetary policy goals of the Federal Reserve is price stability.

With the federal funds rate near zero and the economy still struggling,In response to already low interest rates doing little to stimulate the economy,the Fed began buying 10-year Treasury notes and certain mortgage-backed securities to keep interest rates low.This policy is known as

When Congress established the Federal Reserve in 1913,what was its main responsibility? When did Congress broaden the Fed's responsibilities?

The Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association were established by Congress in order to regulate banks that buy and sell mortgage-backed securities.

Changes in the federal funds rate usually result in

Rising nominal GDP will increase the demand for money and short-term interest rates.

If the Federal Reserve targets the money supply,and the money demand curve shifts to the left,then the Fed

Figure 15-11 -Refer to Figure 15-11.In the dynamic model of AD-AS in the figure above,if the economy is at point A in year 1 and is expected to go to point B in year 2,the Federal Reserve would most likely

The Fed seeks to promote stability of financial markets because

Figure 15-8 -Refer to Figure 15-8.In the figure above,if the economy is at point A,the appropriate monetary policy by the Federal Reserve would be to

Figure 15-7 -Refer to Figure 15-7.Suppose the Fed lowers its target for the federal funds rate.Using the static AD-AS model in the figure above,this situation would be depicted as a movement from

Monetary policy refers to the actions the Federal Reserve takes to manage

The Federal Reserve cannot target both the money supply and the interest rate because it does not control

When the Federal Reserve increases the money supply,at the previous equilibrium interest rate households and firms will now have

Table 15-3 -Refer to Table 15-3.Consider the hypothetical information in the table above for potential real GDP,real GDP,and the price level in 2016 and in 2017 if the Federal Reserve does not use monetary policy.If the Fed uses monetary policy successfully to keep real GDP at its potential level in 2017,which of the following will be lower than if the Fed had taken no action?

The Fed can use expansionary monetary policy to lower interest rates to stimulate aggregate demand.