KW_Macro_Ch_14_End_of_Chapter_Problems - chapter 14 >...

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>> Monetary Policy chapter 14 1. Go to the FOMC page of the Federal Reserve Board’s website ( FOMC/) to find the statement issued after the most recent FOMC meeting. ( G o to the bottom of the web page and click on the most recent statement listed in the calendar.) a. What is the target federal funds rate? b. Is the target federal funds rate different from the target federal funds rate from the pre- vious FOMC statement? If yes, by how much does it differ? c. Does the statement comment on macroeconomic conditions in the United States? How does it describe the U.S. economy? 2. How will the following events affect the nominal demand for money as defined by M1? In each case, specify whether there is a shift of the demand curve or a movement along the demand curve and its direction. a. There is a fall in the interest rate from 12% to 10%. b. Thanksgiving arrives and, with it, the beginning of the holiday shopping season. c. McDonald’s and other fast-food restaurants begin to accept credit cards. d. The Fed engages in an open-market purchase of U.S. Treasury bills. PROBLEMS
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3. The accompanying table shows nominal GDP, M1, and M2 in billions of dollars in five-year increments from 1960 to 2000 as published in the 2005 Economic Report of the President. Complete the table by calculating the velocity of money using both M1 and M2. What trends or patterns in the velocity of money do you see? What might account for these trends? 4.
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This note was uploaded on 04/10/2008 for the course ECONOMICS 103 taught by Professor Sheflin during the Spring '08 term at Rutgers.

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KW_Macro_Ch_14_End_of_Chapter_Problems - chapter 14 >...

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