ch 15 – Flashcards

Congress broadened the? Fed's responsibility since

The Fed is said to have? a" dual? mandate" because

Investment banks can be subject to liquidity problems because

Why is price stability one of the? Fed's monetary policy ?goals?

This is true because

In what ways would a goal of stabilizing asset prices be different from the four goals listed in this? chapter?

Stabilizing asset prices should not be added to the list of the? Fed's policy goals because they are more specific and deal mainly with individuals and firms. Each of these carry risk associated with them and the Fed should not be in the business of trying to make profit for individuals.

Which of the following is not one of the monetary policy goals of the Federal Reserve? ("the Fed")?

Which of the following is not a viable monetary policy target for the? Fed?

when the federal reserve increase the discount rate as a part of a contracionary monetary policy, there is:

In the? quote, when the official says? "the money stays in? banks," he is referring to __________ in the reserves in banks.

But the real problem was that banks were not ______ the reserves.

The reason for this may have been a lack of

The purchases Fed Chairman Bernanke is referring to are

A? "premature tightening" of the? "pace of? purchases" would slow down the economic recovery because this action would be

Which of the following statements is true about the? Fed's monetary policy? targets?

The federal funds rate

(What policy will increase the price level and increase actual real? GDP?

Quantitative easing involved the? Fed's

?"Operation Twist" refers to

The Taylor rule for federal funds rate targeting does which of the? following?

According to the Taylor? Rule, if the Fed reduces its target for the inflation? rate, the result will be

which of the following was the feds objective in using quantitative easing and operation twist

What do economists mean by the demand for? money?

What is the advantage of holding? money?

What is the disadvantage of holding? money?

One of the goals of the Federal Reserve is price stability. For the Fed to achieve this? goal,

The primary reason for this change in the sources of mortgage finance was? _____; the consequence of this change was also? _____ in mortgage rate

If the Fed would no longer have a specific target for the money? supply, it would be targeting the

The Fed gave up targeting the money supply because

which of these variables are the main monetary policy targets of the fed

In the graph of the money market shown on the? right, what could cause the money supply curve to shift from MS1 to MS2??

In the graph of the money market shown on the? right, what could cause the money demand curve to shift from MD1 to MD2??

When interest rates on Treasury bills and other financial assets are? low, the opportunity cost of holding money is? _________, so the quantity of money demanded will be? _________.

All of the following are arguments against an explicit inflation targeting rule for monetary policy except?:

If the Fed is too slow to react to a recession and applies an expansionary monetary policy only after the economy begins to? recover, then

A countercyclical policy is one that

the fed changes the discount rate as a part of its policy to reach all of the following objectives except

The? Fed's strategy of increasing the money supply and lowering interest rates in order to increase real GDP is called

Why would the Fed intentionally use contractionary monetary policy to reduce real? GDP?

Consider the figure to the right. Can the Fed achieve a? $900 billion money supply? (MS) AND a? 5% interest rate? (point C)?

If the Federal Open Market Committee? (FOMC) decides to increase the money? supply, it orders the trading desk at the Federal Reserve Bank of New York to

If the FOMC orders the trading desk to sell Treasury? securities,

Which of these variables are the main monetary policy targets of the? Fed?

the fed buys and sells bonds a part of its policy to reach all of the following objective except:

When the Fed conducts an open market? purchase, the Fed____ and the money supply ______

When the Fed conducts an open market? purchase, the interest rate should

Which of the following is not an issue with using active monetary policy to reduce business? cycles?

When he said? "to remove the? punchbowl," he meant to engage in_______

In terms of the? economy, "just as the party gets? going" refers to a situation in which real GDP _____ potential? GDP, which will result in ______ the inflation rate

The interest rate that banks charge each other for overnight loans is called the

As interest rates? decline, stocks become a? ________ attractive investment relative to? bonds, which causes the demand for stocks and their prices to? _________

The government would want the economy to contract when real GDP is

What is the relationship between the federal funds rate falling and the money supply increasing?

How does lowering the target for the federal funds rate "pour money" into the banking system?

When the federal reserve sells bonds as a part of a contractionary monetary policy , there is?

The federal fund rate is

Additionally the federal funds rate is

This statement is true because the Chairman of the fed