During the 1950s and 1960s the fed considered free

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65) During the 1950s and 1960s, the Fed considered free reserves to be a particularly good indicator of money market conditions because it thought that free reserves A) represented the amount of slack in the banking system. B) represented the amount of reserves that could be expected to be used to make loans and create deposits. C) would never be lent by banks. D) represented both (A) and (B) of the above. E) represented both (A) and (C) of the above. Answer: D 66) Under the free reserves monetary policy of the 1950s and 1960s, the Fed interpreted an increase in free reserves as a(n) _____ of money market conditions requiring open market _____ to withdraw reserves from the banking system. 67) Under the free reserves monetary policy of the 1950s and 1960s, the Fed interpreted a decrease in free reserves as a(n) _____ of money market conditions requiring open market _____ to inject reserves into the banking system. 68) A procyclical monetary policy causes the money supply to ______ during recessions and to ______ when the economy is growing. 101 69) A policy of targeting free reserves is likely to prove to be A) procyclical. B) stabilizing. C) too difficult to implement practically. D) none of the above. Answer: A 70) In practice, the Fed’s policy of targeting _____ in the 1960s proved to be _____, destabilizing the economy. 71) Although the Fed professed employment of a monetary aggregate targeting strategy during the 1970s, its behavior suggests that it emphasized 72) The Fed’s use of the federal funds rate as an operating target in the 1970s resulted in 73) The Fed’s operating procedures employed between 1979 and 1982 resulted in _____ swings in the federal funds rate and _____ swings in the M1 growth rate. A) increased; increased B) increased; decreased C) decreased; decreased D) decreased; increased Answer: A
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