Exam 15: Monetary Policy

A) increases the monetary base.
B) decreases the monetary base.
C) increases the federal funds rate.
D) is another name for a discount loan.

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A) a group was needed to set reserve requirements for member banks.
B) of a lack of coordination among district banks in carrying out open market operations.
C) Congress was attempting to expand its influence within the Federal Reserve System.
D) a group was needed to coordinate the setting of discount rates by the district banks.

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A) Congress.
B) the President.
C) the Fed.
D) the U.S. Treasury.

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A) lack flexibility because only very small purchases or sales may be carried out in any given month.
B) lack flexibility because open market purchases cannot easily be offset by subsequent open market sales.
C) are more flexible than other policy tools.
D) may be carried out only on the third Friday of each month.

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Although the European Central ...

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A) directly with private securities dealers on the floor of the New York Stock Exchange
B) directly with private securities dealers on the floor of the Federal Reserve Bank of New York
C) over-the-counter electronically with private securities dealers
D) by sending its buy and sell orders to the U.S. Treasury for execution

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Fed funds rate targe...

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A) interest rates fall, which discourages saving even further.
B) interest rates fall, which discourages investment even further.
C) resources are lost.
D) investment rises.

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A) fair wages
B) high employment
C) economic growth
D) price stability

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Under the primary dealer credit facility...

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A) the goals for economic growth and price stability may conflict in the short run.
B) it lost effective control over the monetary base.
C) it has been given responsibility for meeting policy goals, but true control over monetary policy remains with Congress.
D) it has been given responsibility for meeting policy goals, but true control over monetary policy remains with the President.

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A) are aimed at achieving changes in monetary policy.
B) are used much more frequently than defensive open market transactions.
C) are used to offset disturbances to the monetary base.
D) make it easy to deduce the Fed's intentions for monetary policy.

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A) usually reduces inflation.
B) discourages foreign imports.
C) often leads to a high birth rate.
D) often leads to high rates of investment.

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A) interim goals set on the way to fully achieving policy goals.
B) targets for policy goals that are of secondary importance.
C) targets the Fed hopes to achieve by June of each year.
D) financial variables, such as interest rates or monetary aggregates, the Fed believes will help it to achieve policy goals.

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A) are usually not considered to be of much importance and are largely ignored by the Fed.
B) have the paradoxical effect of increasing the rate of economic growth.
C) make it difficult for households and firms to plan for the future.
D) have largely been eliminated by the Fed during the past two decades.

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A) open market sales.
B) lower interest rates.
C) increased monetary base.
D) increased money supply.

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A) The Securities and Exchange Commission
B) The Treasury's Office of Government Finance
C) The Treasury's Office of Federal Reserve Relations
D) The Federal Deposit Insurance Corporation

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A) They were carried out by the Federal Open Market Committee.
B) They were carried out under the direction of the Secretary of the Treasury.
C) They were carried out by the district Federal Reserve banks.
D) They were carried out by the Banking Committee of the House of Representatives.

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