Econ quiz 13
In counteracting demand shocks, the Fed can achieve
Both full employment and price stability
If the unemployment rate is 10% and the inflation rate is 2%, the Fed will most likely
Buy bonds
Suppose short run aggregate supply shifts to the left because of a decrease in the supply steel. The federal Reserve fights the resulting recession with expansionary monetary policy. This will...
Cause inflation
Fed chairman Ben Bernanke was not happy about bailing out institutions that had gotten themselves in trouble by taking on too much risk why did the FED do it?
The Fed feared that failures of very large institutions threatened the stability of the entire financial system
An increase in the interest rate cause the aggregate _____________ curve to shift _______
demand; leftward
Monetarists believe that in the short run a change in the money supply can affect ____________, while in the long run, a change in the money supply will affect _______________
output and the price level; the price only
Monetary targeting is setting a steady growth rate in
the money supply
Transparency in the federal reserve policy
is a relatively recent phenomenon that tends to mitigate uncertainty in financial markets and leads to more effective monetary policy
If the economy is facing inflationary pressures, the Fed will
raise interest rates
Which action is the Fed most likely to take to curb inflation
sell bonds in the open market