Exam 18: Tools of Monetary Policy

Everything else held constant, in the market for reserves, when the federal funds rate is 3%, increasing the interest rate paid on excess reserves from 1% to 2%

An increase in ________ reduces the money supply since it causes the ________ to fall.

Suppose on any given day the prevailing equilibrium federal funds rate is above the Federal Reserve's federal funds target rate. If the Federal Reserve wishes for the federal funds rate to be at their target level, then the appropriate action for the Federal Reserve to take is a ________ open market ________, everything else held constant.

Everything else held constant, in the market for reserves, decreases in the interest rate paid on excess reserves affect the federal funds rate

The quantity of reserves demanded equals

The actual execution of open market operations is done at

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 increases the demand for reserves, ________ the federal funds interest rate, everything else held constant.

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

When the European System of Central Banks uses main refinancing operations, it is similar to the Federal Reserve using

In the market for reserves, if the federal funds rate is between the discount rate and the interest rate paid on excess reserves, an increase in the reserve requirement ________ the ________ for reserves and causes the federal funds interest rate to rise, everything else held constant.

The Fed is considering eliminating

In the market for reserves, when the federal funds rate is above the interest rate paid on excess reserves, the demand curve for reserves is

If the Fed expects currency holdings to fall, it conducts open market ________ to offset the expected ________ in reserves.

Suppose, at a given federal funds rate, there is an excess demand for reserves in the federal funds market. If the Fed wants the federal funds rate to stay at that level, then it should undertake an open market ________ of bonds, everything else held constant. If the Fed does nothing, however, the federal funds rate will ________.

Everything else held constant, the vertical section of the supply curve of reserves is shortened when the

Explain the Fed's three tools of monetary policy and how each is used to change the money supply. Does each tool affect the monetary base or the money multiplier?

Discount policy affects the money supply by affecting the volume of ________ and the ________.

A decrease in ________ increases the money supply since it causes the ________ to rise.

Funds held in ________ are subject to reserve requirements.

If the Fed expects currency holdings to rise, it conducts open market ________ to offset the expected ________ in reserves.