ECON 201- Chapter 14 & 15
households and businesses may not wish to borrow even at very low interest rates.
An expansionary monetary policy may be less effective than a restrictive monetary policy because
an administered rate.
An interest rate set by a central bank to help it manage market-determined interest rates defines
8%
Based on the given table, the equilibrium interest rate is
a unit of account
If you are estimating your total expenses for school next semester, you are using money primarily as:
banks can create money through the lending process
In a fractional reserve banking system
M2
"Near-monies" are included in
Federal Reserve System
In the U.S. economy, the money supply is controlled by the
demand for bonds in the bond market will rise and the interest rate will fall
Refer to the diagram of the market for money. GIven Dm and Sm, an interest rate of I3 is not sustainable because the
2, 3, and 6
Refer to the given list of assets. The M1 definition of money includes item(s)
$0.80
Refer to the given table. The value of the dollar in year 2 is
$555. (M2 is composed of everything in M1 (currency in circulation, checkable deposits, and savings deposits) plus small-denomination time deposits and MMMFs held by individuals: M2 = $555 ($75 + $85 + $65 + $95 + $235). The MMMFs in M2 include only the MMMF accounts held by individuals; those held by businesses and other institutions are excluded.)
Refer to the table. Money supply M2 for this economy is
because people and businesses will not want to accept it in transaction
During the periods of rapid inflation, money. may cease to work as a medium of exchange
decrease the money supply with the negative forward guidance, a higher federal funds target range, increases in the IORB and ON RRP, and/or quantitative tightening
If the Federal Reserve authorities were attempting to reduct inflation, the proper policies would be to
the money supply will increase
If the Federal reserve System buys government securities
the interest rate will rise
If the quantity of money demanded exceeds the quantity supplied
varies inversely with the rate of interest.
The asset demand for money
by the government's ability to control the supply of money and therefore to keep its value relatively stable
The money supply is backed
both M1 and M2
Currency in circulation is a part of
use restrictive monetary policy
Recalling the dual mandate bullseye chart, if an economy is in the northwest quadrant, the Fed should definitely
is the reciprocal of the price level.
The purchasing power of the dollar
the administrative lag
Which of the following is not a main weakness of monetary policy
lower interest rates and increase the equilibrium GDP
An increase in the money supply will
in doing so, one sacrifices interest income.
It is costly to hold money because
a downward-sloping line or curve from left to right.
On a diagram where the interest rate and the quantity of money demanded are shown on the vertical and horizontal axes, respectively, the asset demand for money can be represented by
increase the interest rate, reduce investment, and reduce aggregate demand.
Other things equal, a restrictive monetary policy during a period of inflation will
zero lower bond problem
The Fed's inability to stimulate the economy by reducing interest rates is known as the
quantitative easing.
The Fed's response to the zero lower bound problem was
the 7 members of the Board of Governers of the Federal Reserve System along with the president of the New York Federal Reserve Bank and four other Bank presidents on a rotating basis
The Federal Open Market Commitee (FOMC) is made up of
transactions demand for money
The amount of money people want to hold for use as a medium of exchange is the
rate at which the Federal Reserve Banks lend to banks
The discount rate is the interest
banks; other banks
The federal funds rate is the interest rate that _______ charge(s) ______
restrictive monetary policy can cause the money supply to contract, but expansionary monetary policy may not achieve an increase in the money supply
The problem of cyclical asymmetry refers to the idea that
decrease aggregate demand.
The sale of government bonds in the open market by the Fed will
open-market operations, forward guidance, and changing the administered interest rates.
The three main tools of monetary policy are
An increase in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand and real GDP.
Which of the following best describes the cause-effect chain of expansionary monetary policy?
changes in banking laws
Which of the following is not a tool of monetary policy
