Chapter 14, 15, 16, 18 – Flashcards

All of the following would be true for the banking system if there was no government regulation except

If the annual interest rate printed on the face of a bond is 25 percent, the face value of the bond is $1,000, and the current market price of the bond is $700, what is the current yield on the bond?

If a bank does not have enough reserves to satisfy the reserve requirement, it is likely to do any of the following except

Which of the following represents the lending capacity of an individual (nonmonopoly) bank?

By raising the required reserve ratio, the Fed

The use of money and credit controls to achieve macroeconomic goals is

In order to increase the money supply, the Fed can

Which of the following is responsible for buying and selling government securities to influence reserves in the banking system?

Which of the following concerns is consistent with the Fed's policy initiative outlined in the In the News article titled "Fed Cuts Deposit Reserve Requirements"?

Which of the following is responsible for the Fed's daily activity in financial markets?

The Fed can decrease the federal funds rate by

Which of the following is true about the Monetary Control Act of 1980?

It reduced the distinction between different types of depository institutions.

In order to decrease the money supply, the Fed can

If the Fed buys $25 billion of U.S. bonds in the open market and the reserve requirement is 20 percent, M1 will eventually

If the Fed wants to sell more government bonds than people are willing to buy, then the Fed should

All of the following are tools available to the Fed for controlling the money supply except

A change in the reserve requirement causes a change in all of the following except

The primary method for controlling the money supply in the United States is to limit the

The Federal Open Market Committee includes

Discounting refers to the Fed's practice of

Monetary policy involves the use of money and credit controls to

The purchase and sale of government bonds by the Fed for the purpose of altering bank reserves is known as

Open market operations involve the Fed

One In the News article is titled "Fed Cuts Deposit Reserve Requirements." All of the following are consistent with this headline except

Assume an original balance sheet: On the basis of the information in Table 14.3, the required reserve ratio is

The Federal Reserve System was created by

Which of the following services is performed by the regional Federal Reserve banks?

Anil buys a bond in the amount of $2,000 with a promised interest rate of 17 percent. If the market interest rate increases to 27 percent, Anil can sell his bond for up to

Assuming a reserve requirement of 10 percent, if the Fed sells $20 billion in bonds to the public, the lending capacity of the system will eventually

If the Fed buys $32 billion of U.S. bonds in the open market and the reserve requirement is 10 percent, M1 will eventually

When the Fed wishes to increase the reserves of the member banks, it

If the Fed wants to increase the lending capacity of the system by $60 billion and the reserve requirement is 10 percent, it should

A bond is a

If the required reserve ratio is 5 percent and the Federal Reserve sells $10,000 worth of bonds, the money supply can potentially

Using the equation of exchange and assuming full employment and a constant velocity of money, a decrease in the required reserve ratio would result in a

The choice about how and where to hold idle funds is the

The Fed can change the equilibrium rate of interest by changing

In which of the following situations is expansionary monetary policy most effective?

Ceteris paribus, if the Fed sells bonds through open market operations, the money

Which diagram in Figure 15.1 best represents a situation in which lower interest rates do not stimulate additional investment?

Money held to take advantage of future financial opportunities is the

Which of the following explains why small reductions in interest rates may not lead to an increase in investment spending?

In Figure 15.3, the Fed can change the equilibrium interest rate from 2 percent to 6 percent by doing all of the following except

Currency held by the public, balances in transactions accounts, plus balances in most savings accounts and money market mutual funds are the

If the anticipated inflation rate is 5 percent and the nominal interest rate is 9 percent, the real interest rate will be

Refer to Figure 15.6. All of the following Fed actions are likely to increase the aggregate demand curve from AD1 to AD2except

Raising the discount rate.

Which of the following is consistent with the monetarist view?

Monetary policy is most effective when the money demand curve is __________ and investment demand is _____________.

Which of the following is likely to cause monetary restraint to be effective?

Using the equation of exchange, all of the following are true according to monetarists except

If the nominal interest rate is a constant 15 percent and anticipated inflation falls from 10 percent to 7 percent, the real interest rate would change from

The success of Fed intervention depends on how well

____________ is the price paid for the use of money.

The choice to hold money in the form of cash

The money supply M2 includes M1

To reduce the level of unanticipated inflation, monetarists advocate

The long-term rate of unemployment, determined by structural forces in labor and product markets, defines the

According to Bernanke's policy guide, a full-point decrease in long-term interest rates results in a

In Figure 15.4, a decrease in the money supply from $135 billion to $100 billion will cause all of the following except

Which shift should occur if the Fed raises the discount rate?

In Figure 15.3, the Fed can use all of the following to decrease the equilibrium interest rate from 6 percent to 2 percent except

Which of the following is a monetarist solution for a recession?

Money held for making everyday market purchases represents the

The liquidity trap refers to the portion of the money demand curve that is

Monetary policy is most likely to result in inflation when the aggregate supply curve is

Long-term interest rates may not closely follow short-term interest rates if

According to monetarists, the aggregate supply curve is

Carolina holds $2,000 in her savings account in case of a medical emergency. This represents the

The reason unemployment claims are a good leading indicator of economic activity is that they reflect

The simultaneous occurrence of high inflation and high unemployment is called

Which of the following supports the argument for hands-on policy?

The idea of rational expectations suggests that

The number of times per year, on average, that a dollar is used to purchase final goods and services is the

Which economists believe a decrease in marginal tax rates will ultimately cause the economy to move from point B to point D in Figure 18.3?

Monetarists believe that

Which of the following is true about the U.S. economy?

When the chairman of the Federal Reserve announced a goal of "zero inflation," which of the following economic policies was most likely being changed?

Which of the following is an example of supply-side policy?

A supply-side policy to cure a recession might include

Which of the following would a Keynesian macro model include to describe the effect of a tax cut?

The idea that no one knows for certain the shape of the aggregate supply curve contributes to

Refer to Figure 18.1. Which of the following would most likely cause a shift from AD3 to AD2?

Fiscal policy includes

Monetary policy to cure inflation might include

Which of the following policy options would tend to offset each other?

If the data collected by policy makers overstate inflation, this is an example of

Since 1946 the U.S. economy has been marked by

The fact that the president must ask Congress for the authority to cut taxes is an example of

Which of the following supply-side efforts was embraced by the second Bush administration?

Efforts to fine-tune the economy have been used for several decades, and since then

A growth recession is characterized by

Many economists argue that government price indexes overstate inflation by 1 to 2 percent. From the point of view of those designing economic policy, this is an example of

Which of the following is the appropriate order of policy responses?

Refer to Figure 18.2. A decrease in the discount rate would most likely result in

According to new classical economists, policies should be introduced suddenly to surprise the economy in order to

Which of the following supply-side efforts did the Clinton administration embrace?

Which group believes an increase in the incentives to produce will ultimately move the economy from point A to point C in Figure 18.3?

If the economy is experiencing a recessionary GDP gap from a demand shock, then aggregate

Which of the following policy obstacles could occur because it is difficult to know how market participants will respond to specific policies?

The case for a "hands off" economic policy is based on the widely held belief that

One In the News article is titled "No Recession, Bernanke Says." According to the text, Bernanke cited all of the following responsible for sluggish growth except

Information about the leading economic indicators is collected to address which of the following issues?

Refer to Figure 18.1. Which of the following would most likely cause a shift from AD1 to AD2?