Economics 110BProf. Genevieve PetersSpring 2007 Sample Final Exam6
_______ 26)Which of the following statements about Fed management of the money supply is correct?
_______ 27)For this question, assume that the Fed sets monetary policy according to the Taylor rule.Suppose current U.S. macroeconomic conditions are represented by the following:π>π* andu = un. Given this information, we would expect that the Fed will:
_______ 28)The discount rate represents the interest rate on:
A)overnight loans between banks.B)one-year discount bonds.C)three-month U.S. securities.D)municipal bonds.E)none of the above
_______ 29)If advertising by money market funds began to lure money from checkable deposits, and theFed kept M1 constant, then:
The primary deficit is: