Exam 13: Central Banking and Monetary Policy: Exploring Tools and Strategies

According to your text, borrowing from the Fed's discount window is a privilege, not a right, of depository institutions.

When the unemployment rate equals the natural rate, then the economy's labor resources are thought to be at:

Typically, the lowest discount rate charged by the Federal Reserve is for:

A straight or outright open-market transaction by the Fed produces a permanent change in the level of reserves held by depository institutions.

Through open market operations the Fed can offset which of the following?

If the Fed sells securities to a nonbank dealer, interest rates will fall.

Some of the Federal Reserve's policy tools have an impact on interest rates - for example, open market operations and loans from the discount window; however, some Fed policy tools do not affect interest rates - for example, reserve and margin requirements.

Recently, the discount rate has reached what is known as the zero lower bound.

Temporary unemployment of jobseekers, who are either new to the workforce or who are in transition from one job to another is referred to as the:

A Federal Reserve open-market operation whereby the Fed chooses not to replace its maturing Treasury with new securities from the Treasury is called a:

If bad weather slows the clearing of checks, there will be an increase in excess reserves.

Describe the trade-offs that appear to exist among the nation's economic goals. How do these trade-offs influence the central bank's ability to achieve the nation's economic goals?

The so-called substitution effect argues that the Federal Reserve's discount rate causes money market rates to move in the opposite direction from the discount rate change.

No loan from the Fed's discount window may exceed 15 days under any circumstances.

When a bank repays a loan obtained from the discount window of the Federal Reserve bank in its district, total legal reserves of the banking system decline, other factors held equal.

A policy directive is issued to the press at the conclusion of each FOMC meeting for the purpose of keeping the public informed about Federal Reserve policy decisions.

The Federal Reserve can maintain the Federal funds rate exactly at its target level every hour of every day.

A central bank such as the Federal Reserve uses selective credit controls to affect the financial system. An example of a selective credit control is:

Frictional employment which arises from the temporary unemployment of jobseekers, is also referred to as the full employment level of unemployment.

An increase in the public's desire to increase its holdings of currency and coin, other factors held constant, will: