Exam 29: Monetary Policy: Conventional and Unconventional

Table 29-1 Effects of an open-market transaction on the balance sheets of banks and the fed (in millions of dollars) After the transaction in Table 29-1 is completed, what happens to actual reserves, required reserves, and excess reserves? Assume the required reserve ratio is 25 percent.

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, the Federal Reserve System has

Once the federal funds rate hits zero, a central bank seeking to stimulate its economy further must turn to unconventional monetary policies.

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.

If the FOMC orders the sale of T-bills in the open market, then bank reserves are

How does a central bank influence the lending capacity of the banks?

When the Fed wants to expand the money supply through open-market operation, it

The current chair of the Federal Reserve System is

Explain the relationship between interest rates and (1) investments in housing, and (2) business investments.

Figure 29-1 In Figure 29-1, which panel shows the effect of an expansionary monetary policy on the interest rate?

When the Fed buys a Treasury bill from the public, how does it usually pay for the T-bill?

The correct chain of causation illustrating the changes caused by monetary policy is

The money supply can be increased by decreasing the required reserve ratio.

Income is to money as

Open-market operations refer to the purchase and sales of stocks listed on the New York Stock Exchange.

At higher interest rates, banks will want to hold more reserves.

Discount rate policy is most often

Part of the controversy about Fed independence include(s)

If the Fed purchases $100,000 of government bonds, and the reserve requirement is 20 percent, the maximum increase in the money supply is $ 500,000.

Technically, the Federal Reserve district banks are corporations whose stockholders are the