Macro Ch 15 Part 1

In​ 2015, some banks in Europe had to make interest payments to borrowers rather than receive interest payments from borrowers. Which of the following statements describes this​ situation?

If the probability of losing your job remains​ _________, a recession would be a good time to purchase a home because the Fed usually​ _________ interest rates during this time...

Monetary policy refers to the actions the...

The Federal​ Reserve's four goals of monetary policy are...

When the Federal Reserve was established in​ 1913, its main policy goal was...

The top policy goal for Paul Volker when he became chair of the Federal​ Reserve's Board of Governors in 1979 was ...

When the Fed increased the volume of discount loans after the terrorist attacks of September​ 11, 2001, it was trying to achieve...

The goals of monetary policy tend to be interrelated. For​ example, when the Fed pursues the goal of​ __________, it also can achieve the goal of​ ________________ simultaneously....

Monetary policy refers to the actions the Federal Reserve takes to manage...

Which of the following are goals of monetary​ policy?

Rising prices erode the value of money as a​ ________ and as a​ ________.

Federal Reserve Board Chairmen Paul​ Volcker, Alan​ Greenspan, and Ben Bernanke all have focused on which of the following as their main goal of monetary​ policy?

The Fed seeks to promote stability of financial markets because...

One of the monetary policy goals of the Federal Reserve is price stability.

Since World War​ II, the Federal Reserve has not been involved in carrying out monetary policy....

Inflation rates during the years 1979minus−1981 were the highest the United States has ever experienced during peacetime....

The main goal of monetary policy for recent Fed Chairmen has been to maintain high employment in labor markets....

Monetary policy is conducted by the U.S. Treasury Department....

Maintaining a strong dollar in international currency markets is not one of the four monetary policy goals of the Fed listed in the textbook....

The Federal​ Reserve's two main monetary policy targets are...

The Federal Reserve can affect directly its monetary policy​ ________, which then affect its monetary policy​ ________.

The money demand curve has a ...

An increase in the interest rate...

An increase in the interest rate causes...

An increase in the price level causes...

Which of the following would cause the money demand curve to shift to the​ left?

Using the money demand and money supply​ model, an open market PURCHASE of Treasury securities by the Federal Reserve would cause the equilibrium interest rate to...

Using the money demand and money supply​ model, an open market SALE of Treasury securities by the Federal Reserve would cause the equilibrium interest rate to...

Suppose that households became mistrustful of the banking system and decide to decrease their checking account balances and increase their holdings of currency. Using the money demand and money supply model and assuming everything else is held​ constant, the equilibrium interest rate should...

Using the money demand and money supply​ model, an increase in money demand would cause the equilibrium interest rate to...

Which of the following will lead to a decrease in the equilibrium interest rate in the​ economy?

An increase in real GDP can shift...

When the Federal Reserve increases the money​ supply, at the previous equilibrium interest rate households and firms will now have...

When the Federal Reserve decreases the money​ supply, at the previous equilibrium interest rate households and firms will now want to...

An increase in the demand for Treasury bills will...

Which of the following is​ true?

For purposes of monetary​ policy, the Federal Reserve has targeted the interest rate known as the...

The monetary policy target the Federal Reserve focuses primarily on today is ...

The interest rate that banks charge other banks for overnight loans is the...

Changes in the federal funds rate usually result in...

The Fed can increase the federal funds rate by...

The​ Fed's two main monetary policy targets are...

If the Fed raises the interest​ rate, this will​ ________ inflation and​ ________ real GDP in the short run.

A monetary policy target is a variable that

The money demand​ curve, against possible levels of interest​ rates, has a ...

The money demand curve has a negative slope because...

An increase in real GDP...

Increases in the price level...

The money supply curve is vertical if...

Suppose the Fed increases the money supply. Which of the following is​ true?

When the price of a financial asset​ ________ its interest rate will​ ________.

Suppose the Fed decreases the money supply. In response households and firms will​ ________ short term assets and this will drive​ ________ interest rates.

If the Fed buys Treasury​ bills, this will shift the...

An increase in the money supply will...

A decrease in real GDP can...

The money market model is concerned with​ ________ and the loanable funds market model is concerned with​ ________.

Which of the following correctly describes what the Fed used as monetary targets in the​ past?

The federal funds rate is...

The rate of interest banks charge other banks for overnight loans of reserves is the...

The federal funds rate...

Buying a house during a recession may be a good idea if your job is secure because the Federal Reserve often...

The Fed can directly lower the inflation rate..

The Fed can simultaneously reduce the inflation rate and stimulate growth through lowering interest rates...

A monetary policy target is a variable that the Fed can affect​ directly, which then affects one or more of the​ Fed's policy goals...

Ceteris paribus​, an increase in the money supply will lower shortminus−term interest rates....

Rising nominal GDP will increase the demand for money and shortminus−term interest rates...

Buying a house during a recession may be a good idea if your job seems secure because the Federal Reserve often lowers interest rates during a recession...

The ability of the Federal Reserve to use monetary policy to affect economic variables such as real GDP ultimately depends upon its ability to affect...

An increase in interest rates...

A decrease in interest rates can​ _________ the demand for stocks as stocks become relatively​ _______ attractive investments as compared to bonds...

An increase in the interest rate should​ ____________ the demand for dollars and the value of the​ dollar, and net exports should​ __________...

The situation in which​ short-term interest rates are pushed to​ zero, leaving the central bank unable to lower them further is known as...

With the federal funds rate near zero and the economy still​ struggling, the Fed began buying​ 10-year Treasury notes and certain​ mortgage-backed securities to keep interest rates low. This policy is known as...

In November​ 2008, the Fed began its first round of quantitative easing. In​ total, the Fed conducted​ ________ rounds of quantitative easing before ending the program in October 2014.

From an initial longminus−run macroeconomic​ equilibrium, if the Federal Reserve anticipated that next year aggregate demand would grow significantly slower than longminus−run aggregate​ supply, then the Federal Reserve would most likely...

Expansionary monetary policy refers to the​ ________ to increase real GDP.

Expansionary monetary policy to prevent real GDP from falling below potential real GDP would cause the inflation rate to be relatively​ ________ and real GDP to be relatively​ ________.

Which of the following describes what the Fed would do to pursue an expansionary monetary​ policy?

Contractionary monetary policy on the part of the Fed results in...

When the Fed uses contractionary​ policy,

Which of the following would be most likely to induce the Federal Reserve to conduct expansionary monetary​ policy? A significant decrease in...

The economy suffered a mild recession in 2001. Despite the​ recession, home sales and durable goods sales remained high. Which of the following is a plausible​ explanation?

Which of the following is true about the Federal Reserve and its ability to prevent​ recessions? The Federal Reserve...

Your roommate is having trouble grasping how monetary policy works. Which of the following explanations could you use to correctly describe the mechanism in which the Fed can affect the economy through monetary​ policy? Increasing the money supply...

If the Federal Reserve raises or lowers interest rates too​ late, it could result in a​ ________ policy that destabilizes the economy.

Monetary policy could be procyclical if the Federal Reserve...

When calculating​ GDP, the Bureau of Economic Analysis revises its quarterly data...

Lowering the interest rate will...

If money demand is extremely sensitive to changes in the interest​ rate, the money demand curve becomes almost horizontal. If the Fed expands the money supply under these​ circumstances, then the interest rate will ...

An increase in the domestic interest rate relative to other interest rates should..

Falling interest rates can...

When the Fed embarked on a policy known as quantitative​ easing, they...

Implementing a negative interest rate​ policy, as was advocated by the president of the Federal Reserve Bank of​ Minneapolis, would be an example of​ ________ monetary policy designed to​ ________ aggregate demand.

Implementing a negative interest rate​ policy, as was advocated by the president of the Federal Reserve Bank of​ Minneapolis, would be designed to​ ________ the price level and​ ________ real GDP.

When Fed Chair Janet Yellen announced that a rate increase would be warranted by the end of the​ year, she was was referring to the...

If the Fed lowers its target for the federal funds​ rate, this indicates that...

If the Fed pursues expansionary monetary​ policy,...

Which of the following situations is one in which the Fed will potentially pursue expansionary monetary​ policy?

Which of the following characterizes the​ Fed's ability to prevent​ recessions?

If the Fed raises its target for the federal fund​ rate, this indicates that...

Contractionary monetary policy causes...

If the​ Fed's policy is​ contractionary, it will..

In which of the following situations would the Fed conduct contractionary monetary​ policy?

When the Fed increases the money​ supply,...

Suppose that the economy is producing below potential GDP and the Fed implements the correct change in monetary​ policy, but not until after the economy has passed the trough of the recession. Then...

Suppose that the economy is producing above potential GDP and the Fed implements the correct change in monetary​ policy, but not until after the economy has passed the peak of the boom. Then...

The Fed...

The Fed...

The body that is responsible for dating the beginning and ending dates for a recession is...

When calculating​ GDP, the Bureau of Economic Analysis releases its​ "advanced estimate" of a​ quarter's GDP approximately...

Changes in interest rates affect all four components of aggregate demand.

Expansionary monetary policy refers to the​ Fed's increasing the money supply and increasing interest rates to increase real GDP.

When the Federal Reserve increases the money​ supply, people spend more because interest rates fall.

Contractionary monetary policy refers to the​ Fed's decreasing the money supply and decreasing interest rates to decrease real GDP.

Your income will increase if the Federal Reserve buys a Treasury bill from you and pays you with a check from the Fed.

When the Federal Reserve increases the money​ supply, people spend more because they now have more money.