Exam 29: Monetary Policy: Conventional and Unconventional

Define the following terms and explain their importance to the study of macroeconomics. a. Central bank b. Federal Open Market Committee c. Supply of money d. Monetary policy

When the Fed purchases government securities from a commercial bank, the bank

If there is 100 percent reserve banking, the money supply is unaffected by the proportion of the dollars that the public chooses to hold as currency versus deposits.

The reason that the Fed does not actively use discount rate policy to control the money supply is because the Fed

The Federal Reserve System can be described as a bank for bankers.

Required reserves are a fixed percentage of their

Which of the following policy actions by the Federal Reserve is likely to increase the money supply?

Which of the following will increase interest rates in the short run?

The Federal Reserve System functions as America's

The money supply contracts when the Fed

Why does the economy's aggregate demand curve have a negative slope?

Which of the following observations is true?

The federal funds rate is the short-term interest rate that banks charge one another for loans.

If the Fed buys a U.S. Treasury bill from a member of the public, the banking system has

Stock prices fell throughout much of 2007 and 2008 and many investors decided to switch their funds into the bond market. What only about 30 percent of surveyed investors knew was that as bond prices rise, interest rates

The Federal Open Market Committee meets

What determines the magnitude of the changes in price level when central bank takes monetary policy measures that leads to a change in the aggregate demand?

When the Fed wants to expand the money supply, it

Why do economists insist on emphasizing the difference between money and income? Why is this difference important in macroeconomics?

Which of the following is an income number?