Macroeconomics - Monetary Policy Lecture
The actions taken by a country's central bank to expand the money supply and lower interest rates is called:
expansionary monetary policy.
The market for borrowing and lending reserves between banks is the:
federal funds market.
The actions taken by a country's central bank to contract the money supply and raise interest rates is called:
-contractionary monetary policy. -tight money.
The money multiplier equals:
1/reserve requirement.
Which of the following refers to a liquidity trap?
A situation where increasing the money supply does not lower interest rates due to a flattening of the money demand curve.
----- demand describes the overall or total demand for all final goods and services produced in an economy.
Blank 1: Aggregate
----- reserves, the amount the bank can lend out to earn interest, equal ----- reserves minus ----- reserves. (Enter one word in each blank.)
Blank 1: Excess Blank 2: total Blank 3: required
----- monetary policy is sometimes referred to as "easy money."
Blank 1: Expansionary
The discount rate is set by the . (Enter one word in the blank.)
Blank 1: Fed or feds
----- reserves are equal to deposits times the reserve requirement.
Blank 1: Required
The federal funds market is the market for borrowing and lending reserves between ----- . (Enter one word for the blank.)
Blank 1: banks
The federal funds market is the market for borrowing and lending reserves between -----.
Blank 1: banks
The actions taken by a country's central bank to contract the money supply and raise interest rates is called a(n) ---- monetary policy.
Blank 1: contractionary
The actions taken by a country's central bank to contract the money supply and raise interest rates is called a(n) ----- monetary policy.
Blank 1: contractionary
When aggregate demand rises, to decrease aggregate demand, we can use a(n) ----- monetary policy.
Blank 1: contractionary or tight
When banks borrow from the Fed, the interest rate they pay is set by the Fed, and it's called the ----- rate.
Blank 1: discount
Actions taken by a country's central bank to expand the money supply and lower interest rates with the objective of increasing real GDP and reducing unemployment is ----- monetary policy.
Blank 1: expansionary
The actions taken by a country's central bank to expand the money supply and lower interest rates is called ----- monetary policy.
Blank 1: expansionary
When aggregate demand falls too much to increase aggregate demand, we can use ----- monetary policy.
Blank 1: expansionary
When aggregate demand falls too much, to increase aggregate demand, we can use a(n) ----- monetary policy.
Blank 1: expansionary
When aggregate demand falls, to increase aggregate demand, we can use ----- monetary policy.
Blank 1: expansionary or easy
The time between when a policy is enacted and when it has its full effect on the economy is called the ----- lag.
Blank 1: implementation or recognition
When aggregate demand rises, to avoid ----- and return to the long-run equilibrium, we must decrease aggregate demand.
Blank 1: inflation
The ----- rate is the payment made to agents that lend or save money, expressed as an annual percentage of the monetary amount lent or saved.
Blank 1: interest or intrest
A situation where increasing the money supply does not lower interest rates due to a flattening of the money demand curve refers to a(n) ----- trap.
Blank 1: liquidity
Governments use ----- ----- to keep prices stable and encourage economic growth.
Blank 1: monetary Blank 2: policy or policies
Governments use ----- policy to keep prices stable and encourage economic growth.
Blank 1: monetary or fiscal
The ----- multiplier is the amount by which a $1 change in reserves will change the money supply.
Blank 1: money
The money ----- is the amount by which a $1 change in reserves will change the money supply.
Blank 1: multiplier
When aggregate demand falls, to avoid a(n) ----- and return to the long-run equilibrium, we must increase aggregate demand.
Blank 1: recession or contraction
The federal funds market is the market for borrowing and lending ----- between banks.
Blank 1: reserves
Which of the following is a monetary policy tool used by the Federal Reserve?
Paying interest on excess reserves
Suppose the Federal Reserve is planning to conduct expansionary monetary policy during a recession. Which of the following is a tool they may consider using?
Reducing the interest rate paid on excess reserves
How is a change in the money supply calculated when there is a change in excess reserves?
The change in the money supply equals a negative money multiplier (−1/rr) multiplied by the change in excess reserves.
Which of the following refers to the implementation lag?
The time between when a policy is enacted and when it has its full effect on the economy.
A situation where increasing the money supply does not lower interest rates due to a flattening of the money demand curve refers to:
a liquidity trap.
The interest rate at which banks can borrow money directly from the Federal Reserve is called the:
discount rate.
When aggregate demand falls, to increase aggregate demand, we can use ----- monetary policy.
expansionary
The time between when a policy is enacted and when it has its full effect on the economy is called the __ lag. The time between when an event affects an economy and the time when we recognize that effect in the data collected is called the __ lag.
implementation; recognition
The money multiplier is the amount by which a $1 change:
in reserves will change the money supply.
The interest rate:
is the price of money.
The fraction of checkable deposits that banks must keep on hand as reserves either as currency or on deposit with the Federal Reserve is called the:
reserve requirement.
If an economy experiences a change in excess reserves, the change in money supply will also depend on
the money multiplier.
The money multiplier equals:
the overall change in the money supply/the initial change in reserves.
