Pts question 43 open market operations influence

This preview shows page 21 - 26 out of 26 pages.

1 / 1 ptsQuestion 43Open market operations influence reserve supply. For example, an open marketsale will increase reserve supply.True False
1 / 1 ptsQuestion 44According to our discussion on the FOMC statement from August 2007, the Fedwas worried about deflation.
1 / 1 ptsQuestion 45Following the 2001 recession (aka, the job-loss recovery), the Federal Reservelowered their target for the federal funds rate all the way down to 1%.
1 / 1 ptsQuestion 46Following the job-loss recovery, the FOMC raised the target for the federal fundsrate 17 meetings in a row.
1 / 1 ptsQuestion 47Since December 2007, the federal funds rate has been at the zero bound with theofficial target being a range from zero to 0.25%.True False
1 / 1 ptsQuestion 48
During the lead up to Y2K, reserve demand was decreasing since banks wereafraid to make loans.
1 / 1 ptsQuestion 49During the lead up to Y2K, the Fed, to keep the federal funds rate from rising, hadto conduct open market purchases. This action is referred to as 'accommodating'the shock to reserve demand.
1 / 1 ptsQuestion 50During normal times, before the zero bound, the Fed forecasts reserve demandand supplies the necessary reserves to meet their federal funds target. The betterthe forecast, the closer the actual federal funds rate is to the target federal fundsrate.
1 / 1 ptsQuestion 51
In order to raise the federal funds rate the Fed would conduct open marketpurchases.True False
1 / 1 ptsQuestion 52When discussing money demand, we argued that people tend to hold more moneyas the interest rate rises, all else constant.
1 / 1 ptsQuestion 53If the Fed conducts open market sales then the price of bonds should fall.
1 / 1 ptsQuestion 54According to our money demand / money supply analysis, an increase in GDP = Y,all else constant, will result in a rise in nominal interest rates.
1 / 1 ptsQuestion 55According to the percent change form of the quantity theory of money, if velocityfalls by 10%, then the Fed, in order to achieve their dual mandate, should let thenominal money supply grow by 15%.True False
1 / 1 ptsQuestion 56A portfolio shock such that households want to hold less money, at any giveninterest rate, will result in the velocity of money falling.
1 / 1 ptsQuestion 57Milton Friedman felt that high inflation was always caused by excessive moneygrowth. In fact, he has been quoted as "Inflation is always and everywhere amonetary phenomenon."
Quiz Score: 86out of 100

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture