Exam 15: Monetary Policy

In October 2008,Congress passed the Troubled Asset Relief Program (TARP),under which the Treasury provided ________ to banks in exchange for ________.

Contractionary monetary policy on the part of the Fed results in

In the Taylor rule,does the target for the federal funds rate respond differently for a recession caused by a decrease in aggregate demand and for a recession caused by a decrease in short-run aggregate supply? Explain whether there is or is not a difference in how the target for the federal funds rate changes.

Contractionary monetary policy to prevent real GDP from rising above potential real GDP would cause the inflation rate to be ________ and real GDP to be ________.

In October 2008,Congress passed the ________,under which the Treasury provided funds to banks in exchange for stock.

When calculating GDP,the Bureau of Economic Analysis revises its quarterly data

Figure 15-12 -Refer to Figure 15-12.In the dynamic AD-AS model,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 dynamic aggregate demand and aggregate supply model accounts for the price level rising every year.

Inflation targeting refers to conducting ________ policy so as to commit the central bank to achieving a ________.

The body that is responsible for dating the beginning and ending dates for a recession is

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 wants to keep real GDP at its potential level in 2017,it should

The supporters of a monetary growth rule believe that active monetary policy

By the height of the housing bubble in 2005 and early 2006,lenders had greatly loosened the standards for obtaining a mortgage loan,with many mortgages being granted to ________ borrowers with flawed credit histories and ________ borrowers who did not document their incomes.

Suppose the Fed decreases the money supply.In response households and firms will ________ short term assets and this will drive ________ interest rates.

A decrease in interest rates can ________ the demand for stocks as stocks become relatively ________ attractive investments as compared to bonds.

Buying a house during a recession may be a good idea if your job is secure because the Federal Reserve often

Although the Federal Reserve had traditionally made discount loans only to commercial banks,in response to the financial crisis in 2008 the Fed made ________ eligible for discount loans as well.

Suppose that households became mistrustful of the banking system and decide to decrease their checking account balances and increase their holdings of currency.Using the money demand and money supply model and assuming everything else is held constant,the equilibrium interest rate should

With a monetary growth rule as proposed by the monetarists,during a recession the rate of growth of the money supply would

Present two arguments as to why the Fed should adopt inflation targeting as a framework for monetary policy.