Exam 15: Monetary Policy

Suppose that the Federal Reserve Open Market Committee adheres to the ideas expressed by ________.If the economy moves into a recession,the Fed would recommend that the federal funds target rate decrease as long as the inflation rate did not rise above the publicly announced goal for inflation.

Which of the following will lead to a decrease in the equilibrium interest rate in the economy?

What problems can high inflation rates cause for the economy?

If the Fed raises the interest rate,this will ________ inflation and ________ real GDP in the short run.

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

Inflation targeting has typically been accompanied by lower inflation.

Using the Taylor rule,if the current inflation rate exceeds the target inflation rate and real GDP exceeds potential GDP,then the federal funds target rate ________ the sum of the current inflation rate plus the real equilibrium federal funds rate.

The relationship between GDP and the money supply has gotten stronger since the 1980s.

The Federal Reserve's performance in the mid-to-late 1980s,1990s,and early 2000s has received high marks from economists,even without inflation targeting.

When the Fed increases the money supply,

An increase in real GDP can shift

The Fed has adopted an interest rate target for most of the time since World War II.

In March 2008,the Fed announced that primary dealers would be eligible to receive discount loans.

Table 15-2 -Refer to Table 15-2.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 higher than if the Fed had taken no action?

The Federal Reserve can directly affect its monetary policy ________,which then affect its monetary policy ________.