Exam 18: Tools of Monetary Policy

When bad storms slow the check-clearing process, float tends to ________ causing the Fed to initiate ________ open market ________.

From before the financial crisis began in September of 2007 to when the crisis was over at the end of 2009, amount of Federal Reserve assets rose, leading to

Everything else held constant, in the market for reserves, when the federal funds rate equals the interest rate paid on excess reserves, raising the interest rate paid on excess reserves

In the market for reserves, if the federal funds rate is above the interest rate paid on excess reserves, an open market sale ________ the supply of reserves causing the federal funds rate to ________, everything else held constant.

Which of the following monetary policy tools is more effective when the economy faces the interest rate zero-lower-bound problem?

Open market purchases raise the ________ thereby raising the ________.

The Federal Reserve has had the authority to vary reserve requirements since the

Everything else held constant, in the market for reserves, when the federal funds rate is 1%, increasing the interest rate paid on excess reserves from 1% to 2%

The interest rate on seasonal credit equals

The Federal Reserve will engage in a repurchase agreement when it wants to ________ reserves ________ in the banking system.

Open market purchases ________ reserves and the monetary base thereby ________ the money supply.

At its inception, the Federal Reserve was intended to be

Suppose on any given day there is an excess supply of reserves in the federal funds market. If the Federal Reserve wishes to keep the federal funds rate at its current level, then the appropriate action for the Federal Reserve to take is a ________ open market ________, everything else held constant.

If the Fed wants to temporarily inject reserves into the banking system, it will engage in

Everything else held constant, in the market for reserves, when the demand for federal funds intersects the reserve supply curve along the horizontal section, increasing the discount rate

The Fed's discount lending is of three types: ________ is the most common category; ________ is given to a limited number of banks in vacation and agricultural areas; ________ is given to banks that have experienced severe liquidity problems.

Explain dynamic and defensive open market operations. What is the purpose of each type? Describe two situations when defensive open market operations are used. How are defensive open market operations typically conducted?

Open market operations intended to offset movements in noncontrollable factors (such as float) that affect reserves and the monetary base are called

The discount rate refers to the interest rate on

In the market for reserves, if the federal funds rate is between the discount rate and the interest rate paid on excess reserves, a ________ in the reserve requirement ________ the demand for reserves, raising the federal funds interest rate, everything else held constant.