EBK FOUNDATIONS OF ECONOMICS
8th Edition
ISBN: 8220103632225
Author: PARKIN
Publisher: PEARSON
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Question
Chapter 27, Problem 5MCQ
To determine
To identify:
The option that correctly identifies the tool that is not a part of the Fed's policy tools.
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1. The primary purpose of a central bank is to control a nation’s:___________. 2. The Fed’s largest single liability is the: _ asset not related to monetary ____________ .___________. 3. A Fed asset not related to monetary policy is ___________________________. 4. The Federal Reserve controls ___________________.1. The FOMC or _____________has __________ members. 2. The document by which the FOMC instructs the trading desk is called a ______________. 3. Among U.S. commercial banks, all __________banks are members of the Federal Reserve System while some ____________banks are members. 4. Total reserves equal required reserves plus _____________. 1. There are __________federal reserve banks. 2. Borrowing from the Fed is called “___________________ “. 3. A Fed asset not related to monetary policy is _________________________. 4. The document by which the FOMC instructs the trading desk is called a 1. Which of the following…
When economists speak of the "zero lower bound problem" that the Fed sometimes faces, what are they referring to?
1. It is when short term interest rates are close to zero meaning the Fed can no longer use changes in interest rates to stimulate the economy
2. It is when economic growth in the economy has reached zero percent and the Fed must use aggressive monetary policy
3. It is when the Fed has sold all the securities on its balance sheet and can no longer impact the money supply using open market operations
4. It is when banks choose to hold no excess reserves, making it impossible for the Fed to lower the discount rate
Which one of these policies should the Fed engage in if unemployment is very high and inflation is under control?
Select one:
a. Buy government bonds through an Open Market Operation
b. Print more money and give it directly to tax payers
c. Lower corporate and income taxes
d. Raise the discount rate
e. Lower consumer confidence
Chapter 27 Solutions
EBK FOUNDATIONS OF ECONOMICS
Ch. 27 - Prob. 1SPPACh. 27 - Prob. 2SPPACh. 27 - Prob. 3SPPACh. 27 - Prob. 4SPPACh. 27 - Prob. 5SPPACh. 27 - Prob. 6SPPACh. 27 - Prob. 7SPPACh. 27 - Prob. 8SPPACh. 27 - Prob. 9SPPACh. 27 - Prob. 10SPPA
Ch. 27 - Prob. 11SPPACh. 27 - Prob. 12SPPACh. 27 - Prob. 13SPPACh. 27 - Prob. 1IAPACh. 27 - Prob. 2IAPACh. 27 - Prob. 3IAPACh. 27 - Prob. 4IAPACh. 27 - Prob. 5IAPACh. 27 - Prob. 6IAPACh. 27 - Prob. 7IAPACh. 27 - Prob. 8IAPACh. 27 - Prob. 9IAPACh. 27 - Prob. 10IAPACh. 27 - Prob. 11IAPACh. 27 - Prob. 1MCQCh. 27 - Prob. 2MCQCh. 27 - Prob. 3MCQCh. 27 - Prob. 4MCQCh. 27 - Prob. 5MCQCh. 27 - Prob. 6MCQCh. 27 - Prob. 7MCQCh. 27 - Prob. 8MCQ
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Similar questions
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- 1) when the fed realises that inflation is going up at an unstable rate for the economy , which of the following are they most likely do ? (a) print more money (b) increase the discount rate (c) lover the reserve ratioarrow_forwardPlease select ONE of the following questions as your discussion topic and respond with a paragraph or two that directly answers the question AND makes reference to class materials. For full credit, you must also respond to the posts of at least two of your classmates. 1. The Federal Reserve Board has enormous power over people's lives with its power to set and influence policy that determines monetary policy in the United States. Do you think this is proper for a democracy to provide the FED with so such power? How is the FED held accountable?arrow_forward2) During the financial crises and recession of 2007-09, the Fed lowered the federal funds rate target to 0-0.25%. However, long-term interest rates, like mortgage rates, were still fairly high. One thing the Fed did to lower long-term rates was that the Fed : A) bought long-term bonds B) lowered the long-term interest rates by lowering the reverse repo rate C) lowered the long-term interest rates by lowering the discount rate D) sold long-term bondsarrow_forward
- This question is about interest rates and Fed policy.a) Define an interest rate. Define inflation, and then define real and nominal interest rates.b) In “normal” times (meaning, pre-2008), one of the main tools of the Fed was open market operations. What is the rate that the Fed would affect with this tool? What are expansionary and contractionary market operations?b) What would you want to do to the federal funds rate if the economy was in a recession? In an expansion?c) Suppose that the economy was in a recession, and the rate was close to 0. Would open market operations be effective?arrow_forwardWhen the Fed raises the required reserve ratio, the banks' excess reserves ________ and the money supply ________. Group of answer choices increase; remain constant remains constant; decreases increase; increases decrease; decreasesarrow_forwardWhich of the below statements DOES NOT CORRECTLY describe the immense power or policy choice of the Federal Reserve (the Fed)? Group of answer choices The Fed can inject money into the financial system after sudden shocks, such as the 1987 stock market crash or the terrorist attacks on Sept. 11, 2001. The Federal Reserve controls the money supply and therefore the credit tap for the economy. The Fed can use monetary policy to counteract economic downturns or prevent them from happening. When the Fed opens the credit tap and increases the money supply, interest rates rise and people buy less and borrow less.arrow_forward
- Because of the Recession of 2007-09, the Fed provided a(n)_?_policy to provide liquidity to the ?_markets. A) expansionary..business C) expansionary..financial B) contractionary..bond D) contractionary...foreign exchange The traditional tools the Fed used in the Great Recession were to ?the Reserve Requirement,?_the Discount Rate and? T-Bills. A) lower... raise...sell B) lower... lower...buy C) raise..lower...buy D) raise..raise.sell DA non-traditional tool used by the Fed in the Great Recession was paying A) Interest on Required Reserves B) Interest on Excess Reserves C) Interest on Fed Funds D) interest on the Discount Ratearrow_forwardIf the Fed decides to sell U.S. Treasury bonds on the open market, how will the money supply and interest rates be affected? a.Money supply unchanged + interest rates increase b.Money supply decrease + interest rates decrease c.Money supply increase + interest rates increase d.Money supply decrease + interest rates increase e.Money supply increase + interest rates decreasearrow_forwardThe Fed's monetary policy strategy that focuses on achieving price stability is known as: A. Money supply management B. Inflation targeting C. Tax policy D. Currency exchangearrow_forward
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