Which of the following constitute the Federal Reserve's dual mandate? Question 14 options: Maximize consumer surplus and reach full employment. Reach full employment and stabilize prices. Maximize consumer surplus and stabilize prices. Reach full employment and optimize long-run growth. Reach full employment and maximize bank profits. Maximize consumer surplus and optimize long-run growth.

Which of the following constitute the Federal Reserve's dual mandate? Question 14 options: Maximize consumer surplus and reach full employment. Reach full employment and stabilize prices. Maximize consumer surplus and stabilize prices. Reach full employment and optimize long-run growth. Reach full employment and maximize bank profits. Maximize consumer surplus and optimize long-run growth.

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter15: Monetary Policy

Section: Chapter Questions

Problem 8QP

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The Board of Governors of Federal Reserve have 14-year terms of office and the Federal Reserve is a self-financing institution that is owned by private-sector commercial banks that are members of the Federal Reserve System. This supports the independence of the Federal Reserve from political pressure of the federal government, thus allowing the Federal Reserve freedom to effectively control the money supply to maintain price stability. Group of answer choices True False
Which of the following is an example of a contractionary policy? A) Raising reserve ratio B) Raising taxes C) Raising discount rate D) All of the above
Which of the statements best describes the monetary rule, as proposed by the economist Milton Friedman? An acceptable rate of unemployment is targeted and the money supply is adjusted accordingly. Inflation is kept in check by directly manipulating interest rates to decrease bond prices. Inflation is kept in check by increasing the growth of M1 and decreasing the growth of M2 in equal amounts. Inflation is kept in check in the long run by keeping the growth of M1 and M2 on a steady path.
Question 3 Which one of the following statements best summarizes the Federal Reserve’s monetary policy over the years 2000-2006? Question 3 options: The Federal Reserve continually lowered the federal funds rate to promote economic growth The Federal Reserve has tried to keep the federal funds rate constant The Federal Reserve continually increased the federal funds rate to prevent inflation The Federal Reserve initially increased the federal funds rate to avoid inflation but then lowered the federal funds rate to avoid a recession The Federal Reserve initially lowered the federal funds rate to avoid a recession but then increased the federal funds rate to avoid inflation
Which statement best describes the Federal Reserve's current level of transparency to the American public? The actions of the Fed are largely carried out in secrecy with little regard to public transparency. The Fed is somewhat transparent with regard to some aspects of monetary policy, but does not disclose details regarding macroeconomic conditions and goals. The Fed is extremely transparent with regard to monetary policy and discloses goals, targets, and predictions for the macroeconomy. The Fed only reports to the American public during periods of economic slow down.
If the economy is experiencing an inflationary gap, then which of the following is a proper Federal Reserve response to close this gap? Check all that apply. Group of answer choices Buy U.S. bonds. Increase the discount rate. Increase taxes. Decrease the reserve ratio. Decrease government purchases. Sell U.S. bonds.
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Which of the following statements best characterizes the Federal Reserve’s relationship to the US economy? A. The Federal Reserve cannot affect the economy in any predictable manner. B. The Federal Reserve can control the economy with precise accuracy. C. The Federal Reserve can indirectly affect output by influencing aggregate demand. D. The Federal Reserve is required by mandate to execute the demands of Congress and the President.
Changing the reserve requirement is such a powerful instrument of monetary policy that it is the most frequently used of all the available tools. TRUE/False : The discount rate is the interest rate that one bank charges on a loan to another bank TRUE/False : The present value of a bond is the rate of interest times the expected annual income flow TRUE/False :
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