Exam 11: The Monetary System

What is meant by the term "inflation targeting"? What is the Fed's objective regarding inflation?

In Swaziland,the nominal GDP growth rate is 7 percent and the inflation rate is 5 percent.The real GDP growth rate in Swaziland is approximately ________.

Government revenue from printing money is referred to as ________.

When an asset is used as a universal yardstick for expressing the worth of different goods and services,it serves the function of a ________.

The model that states that individuals develop their inflation expectations after considering all available information is referred to as the ________.

Before he went to college,Jon bought a car from his brother Tony.They agreed that Jon would pay Tony $10,000 when Jon graduated from college.While Jon was at college,inflation was lower than expected.Thinking only about the car transaction,this unexpectedly low inflation was ________.

________ money refers to something that is used as money but is otherwise worthless and typically has the backing of the government or a central bank.

A retired worker receives a pension that is not indexed to inflation.Which of the following will happen if the rate of inflation rises?

Assuming all else equal,a contraction in the quantity of bank account balances will cause ________.

Which of the following statements is true of money?

In the Federal Funds Market model,the demand for federal funds is a ________ line,while the supply of federal funds is a(n)________ line.

Suppose the interest rate that banks in Techland charge one another for overnight loans is 5 percent,the long-term nominal interest rate is 4.5 percent,and the long-term expected inflation rate is 3 percent. a)What is the long-term expected real interest rate? b)How will the long-term expected real interest rate be affected if the central bank of Techland starts purchasing government bonds from banks?

In the United States,the key policy lever of the Federal Reserve is ________.

Suppose that inflation were 2 percent and unemployment were 4 percent.Which of the elements of the Fed's dual mandate would it be failing?

Which of the following methods for influencing the federal funds rate has not been used by the Federal Reserve in the past 20 years?

The two key objectives of the Fed are ________.

State two social benefits of inflation.

Suppose that the Federal Reserve decreases the federal funds rate by 1 percent.What would we expect to happen to the long-term expected real interest rate?

In the United States,if a customer of Bank of America writes a check and the recipient of the check deposits it in HSBC North America Holdings,then the check is cleared by ________.

Which of the following statements is true?