Exam 27: Monetary Policy and Interest Rates

(Figure: Interest Rate Targeting) The figure shows interest rate targeting. Initially, the fed funds interest rate equilibrium (E) is the targeted interest rate (iT). If money demand increases, the Federal Reserve _____ to maintain the interest rate target.

After a housing bubble bursts and causes home prices to fall, homeowners:

Summarize the view of the New Keynesians regarding the use of monetary versus fiscal policy to stabilize an economy.

Which of the following is an example of monetary policy?

The Federal Reserve has more impact on interest rates:

A decrease in the money supply tends to _____ the foreign exchange value of the dollar, which causes net exports to:

An increase in the money supply is referred to as _____ money policy.

(Figure: Changing Money Supply) What do graphs 'A' and 'B' represent for an economy?

Which of the following monetary policies was used in Japan in 2013 to address the deflation of the previous twenty years?

Monetarists believe that _____ policy is more effective than _____ policy.

In the short run, a decrease in the money supply will have which of the following impacts on the market for money?

If the Federal Reserve wishes to maintain an unchanging target interest rate and the demand for money is rising, then the Fed will:

The interest rate that a bank pays to borrow another bank's excess reserves is called the:

An example of the asset price effect occurs when the increase in the money supply leads to:

Demand for which of the following is NOT increased by low interest rates?

When conducting monetary policy, the U.S. Federal Reserve now uses the tools of monetary policy to target the level of which of the following variables?

When the Federal Reserve increases the money supply, aggregate ____ will _____, causing short-run output to:

The monetarists assume that velocity is _____ and that changes in the money supply lead to _____ changes in nominal GDP.

New Keynesians believe that the Federal Reserve should target ____ rather than:

The money supply curve has: