Exam 11: Monetary Policy and the Fed

If you earn and spend $300 per week and maintain an average cash balance of $100 per week, your velocity of money is

Figure 11-5 -Refer to Figure 11-5. If the economy is at point b,

Using the equation of exchange, if the nominal GDP is $8,000 billion and the money supply is $1,600 billion, then

Adjusting monetary growth based on previous changes in nominal GDP

Studies in the 1980s and early 1990s showed that, in general, greater central bank independence

If the Fed's primary goal is price stability which macroeconomic variable should it target?

The congressional act passed in 1978 that established specific numerical goals for the unemployment rate and the inflation rate to be achieved by 1983 was the

Suppose the Fed's primary goal is price stability and it aims to keep the inflation rate at 2%. If the inflation rate rose above 2%, what should it do?

Open-market operations are such a powerful tool of monetary policy that they are seldom used.

Figure 11-5 -Refer to Figure 11-5. Assume that the economy is at point b. A decrease in the money supply would cause

When the Fed sells bonds in the open market, we can expect

All other thing unchanged, when the Fed sells government bonds, it aims to shift the aggregate demand curve to the right.

Toward the end of 2008, the U.S. economy was characterized by all of the following except

The lag in realizing that a macroeconomic problem exists is called

The rational expectations argument relies on

If nominal GDP is $5,000 billion and the velocity of the M2 money supply is 5, what is the amount of the public's holding in the form of M2?