Exam 27: Monetary Policy and Interest Rates

The money demand curve has:

If people start to expect higher inflation in the future, current spending will _____ because people will:

(Figure: Business Cycle 0) The figure shows effective monetary policy over the business cycle. What does point 2 represent?

Econia decreases its money supply. What is likely to happen to the value of Econia's currency in foreign exchange markets and to the level of Econia's net exports?

In 1979 and 1980, the U.S. economy was faced with stagflation. Policymakers decided to focus on reducing _____, which caused _____ temporarily to rise even further.

The economist who is the best-known monetarist is:

How is quantitative easing different from ordinary monetary policy? Summarize three differences.

The Federal Reserve's mandate to achieve stable prices means that the Fed's policies try to achieve:

(Figure: Business Cycle 0) The figure shows effective monetary policy over the business cycle. What does point 1 represent?

An increase in the money supply tends to _____ the foreign exchange value of the dollar, which will cause net exports to:

In their analysis, monetarists rely heavily on:

Which of the following is NOT a reason that monetary policy impacts aggregate demand?

An increase in interest rates can be caused by a _____ money policy or _____ in expected inflation.

When the Federal Reserve engages in contractionary monetary policy, which of the following will NOT be a result?

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

The _____ rate is the interest rate that banks pay to borrow from the Federal Reserve, and the _____ rate is the interest rate that banks pay to borrow another bank's excess reserves.

What could monetary policymakers do to avoid liquidity traps in the future?

(Figure: Decrease in Money Supply) The figure shows a decrease in the money supply through open market sales. Which of these is INCORRECT concerning this figure?

The goal of monetary policymakers with regard to the business cycle is to:

New Keynesians do NOT believe that: