Exam 29: Monetary Policy: Conventional and Unconventional

Members of the Board of Governors of the Fed are

Central bank independence refers to the central bank's ability to make decisions without political interference.

Discount rate policy is most often

____ is the rate that applies when banks borrow and lend reserves to one another.

The main reason the United States established a central bank was

If the price level rises, what will happen to the demand for reserves?

The central bank in the United States is known as the Federal Reserve System.

If the Federal Reserve wants to increase the supply of money, it creates dollars and uses them to purchase government bonds from the public in the nation's bond markets.

The Fed's tools of monetary policy are

The principal difference between income and money is that income is a ____ and money is a ____.

Table 29-1 Effects of an open-market transaction on the balance sheets of banks and the fed (in millions of dollars) ​ -In Table 29-1, if the required reserve ratio is 10 percent, what will happen to the money supply? Use the oversimplified money multiplier in your calculations.

Figure 29-1 ​ -When interest rates decrease, banks will normally

The Federal Reserve System functions as America's

If the Fed increases the discount rate, what happens to the money supply?

In Latin America, countries like Brazil and Mexico have found it necessary to grant their central banks more independence in order to

Little inflation will occur if the aggregate supply curve is flat.

Reserves demanded varies

Which of the following is the most frequently used tool of monetary policy?

When the bond prices rise, interest rates fall.

The Fed has which of the following as its strongest control over the money supply?