Exam 17: Monetary Policy and Inflation

A decrease in the discount rate will

Higher U.S. interest rates cause the value of the dollar to

If the Fed wished to decrease inflation, it could

Which action could the Fed use to decrease the money supply?

If the current level of GDP exceeds full employment, the level of GDP can be reduced by

Describe the channels through which an open market sale of bonds by the Fed affects output in a closed economy.

The federal funds rate is the interest rate that

The demand for money that arises because holding money over short periods is less risky than holding stocks or bonds is called the

How would the Fed's changing the discount rate affect the money supply?

Based on the model of the money market, when real GDP increases, the equilibrium interest rate should

The quantity of money demanded will increase as interest rates increase.

The real interest rate is the nominal interest rate plus the expected inflation rate.

If the monthly unemployment rate increase mentioned in the Application was a temporary aberration, the best economic decision by the committee would be to

At lower interest rates the

If the Federal Reserve conducts an open market purchase, the

Outside lags occur because

A U.S. company that wishes to sell more to other countries would favor

Recall the Application about the Fed's policy of quantitative easing to answer the following question(s). -Recall the Application. By the end of the last phase of quantitative easing in late 2014, that value of the Fed's assets was

Inside lags are

When the Fed conducts an open market sale, it leads to a higher level of investment and output in the economy.