Deck 51: Monetary Policy

Question 1

Whats defention of terms:
-deflation

Answer 1

overall falling prices

Question 2

Whats defention of terms:
-Federal Deposit Insurance Corporation

Answer 2

institution that insures bank accounts up to a certain amount of money

Question 3

Whats defention of terms:
-federal funds rate (FFR)

Answer 3

the interest rate that bankers charge each other for overnight loans

Question 4

Whats defention of terms:
-Federal Open Market Committee

Question 5

Whats defention of terms:
-Inflation

Question 6

Whats defention of terms:
-lender of last resort

Question 7

Whats defention of terms:
-monetary policy

Question 8

Whats defention of terms:
-panic

Question 9

Whats defention of terms:
-reserves

Question 10

Whats defention of terms:
-monetarism

Question 11

Whats defention of terms:
-nominal spending

Question 12

Describe a brief history of the evolution of the Central Bank and the Federal Reserve.
-How has the role of the Central Bank and the Federal Reserve changed over time?

Question 13

Describe a brief history of the evolution of the Central Bank and the Federal Reserve.
-List and describe key policies implemented to increase stability in the banking sector.

Question 14

Discuss the evolution and impact of regulation and deregulation of the financial system.
-What are the conservative arguments for deregulating the banks?

Question 15

Discuss the evolution and impact of regulation and deregulation of the financial system.
-What are the progressive arguments for not deregulating the banks?

Question 16

Describe the structure of the Federal Reserve.
-Draw a "map" of the basic structure of the Federal Reserve system.

Question 17

Describe the structure of the Federal Reserve.
-What is the role of the Federal Open Market Committee and why is it so important?

Question 18

List the tools used by the Federal Reserve, and discuss how and why they are used in periods of recession and inflation.
-What are the three main tools used by the Federal Reserve to affect inflation or un?employment?

Question 19

List the tools used by the Federal Reserve, and discuss how and why they are used in periods of recession and inflation.
-Discuss the effectiveness of each tool.

Question 20

Compare and contrast the main views of monetary policy.
-What should the Federal Reserve do according to conservatives economists?

Question 21

Compare and contrast the main views of monetary policy.
-What should the Federal Reserve do according to progressive economists?

Question 22

Discuss the actual history of recent monetary policy under President George W. Bush.
-Describe some monetary policy decisions under the Bush administration.

Question 23

Discuss the actual history of recent monetary policy under President George W. Bush.
-What are the conservative arguments supporting Bush's monetary policies? Progressive criticisms?

Question 24

Compare and contrast the debates about money and monetary policy in the U.S. economy
-How does the focus on production for money profits introduce instability into the economy? Explain.

Question 25

Compare and contrast the debates about money and monetary policy in the U.S. economy
-What are problems using monetary policy to lower unemployment?

Question 26

Compare and contrast the debates about money and monetary policy in the U.S. economy
-What are the major propositions of monetarists? How do these relate to the conclusion of how monetary policy should be conducted?

Question 27

Compare and contrast the debates about money and monetary policy in the U.S. economy
-What are the criticisms of monetarism? How do these impact conclusions about the conduct of monetary policy?

Question 28

Monetary policy may be defined as

A) a policy designed to increase or decrease the flow of money and credit.
B) a policy designed to increase or decrease the ability of consumers to spend money.
C) a policy designed to increase the convertability of paper money into gold.
D) a policy designed to develop money that is more resistant to counterfeiters.

Question 29

Monetary policy is conducted by

A) the Banking Committee of Congress
B) the President's Council of Economic Advisers.
C) the Federal Open Market Committee.
D) Chamber of Commerce

Question 30

The function of the Federal Deposit Insurance Corporation is to

A) conduct monetary policy.
B) issue new currency and coin.
C) insure loans made by members of Congress
D) insure bank deposits.

Question 31

The Federal Reserve makes loans to individual banks at an interest rate

A) called the federal funds rate.
B) called the discount rate
C) called the prime rate
D) called the rate of last resort.

Question 32

During a recession, the Federal Reserve may try to lower interest rates by

A) increasing the required reserve ratio.
B) selling government bonds to banks or individuals.
C) buying government bonds from banks or individuals.
D) sending directives to bank officials.

Question 33

During inflationary periods, the Federal Reserve can be expected to

A) try to lower interest rates.
B) try to raise interest rates.
C) try lend more reserves to banks.
D) try to lower the required reserve ratio.

Question 34

In a barter system

A) commodities are exchanged for commodities.
B) commodities are exchanged for money, then money is exchanged for other commodities.
C) money is exchanged for commodities, then these commodiites are exchanged for more money.
D) money is exchanged for money

Question 35

The view that the only function of money is to serve as a medium of exchange means

A) commodities are exchanged for commodities.
B) commodities are exchanged for money, then money is exchanged for other commodities.
C) money is exchanged for commodities, then these commodiites are exchanged for more money.
D) money is exchanged for money

Question 36

According to progressives, the role of money in capitalism differs from that in precapitalism economies in that

A) commodities are exchanged for commodities.
B) commodities are exchanged for money, then money is exchanged for other commodities.
C) money is exchanged for commodities, then these commodiites are exchanged for more money.
D) money is exchanged for money

Question 37

The existence of credit in a capitalist economy

A) forces consumers to spend less than their income.
B) forces businesses to use current revenues to buy capital goods.
C) increases the stability of the economy.
D) allows consumers to spend beyond their income

Question 38

What is Monetarism?

A) the belief that the economic system works well except when the government makes makes in monetary policy.
B) the belief that monetary policy can stabilize the economy in the short run.
C) the belief that the Federal Reserve should continually adjust the money supply to accommodate fluctuations in demand over the business cycle.
D) the belief that an increase in the money supply will lead to an increase in GDP.

Question 39

Critics of Monetarism argue that the factor that is more important than the supply of money is

A) the expansion and contraction of credit.
B) the rise and fall of demand deposits.
C) the quantity of currency in circulation.
D) the frequency of outside shocks that cause booms and busts.