What caused so many European corporate bonds to have negative interest rates?
Inflation rates were consistently increasing.
The European Central Bank cut interest rates to negative levels.
The European economy was growing at higher than normal rates.
Central banks were slowing asset purchases.
Why was the Federal Reserve System split into 12 districts?
The Federal Reserve System was split into 12 districts so that the 12 states with the largest populations would each have a district bank.
The Federal Reserve System was split into 12 districts because communications among regions was so poor that having a single central bank was not feasible.
The Federal Reserve System was split into 12 districts because there was opposition in Congress to establishing a single, unified central bank.
The Federal Reserve System was split into districts based on state borders.
The Fed doesn't seek to reduce the unemployment rate to zero because the tools of monetary policy are
only effective in reducing the level of frictional unemployment.
ineffective in reducing the level of cyclical unemployment.
Ineffective in reducing the level of structural unemployment.
All of the above.
Compare the length of terms of office for central bank heads and members of central bank governing boards between the U.S. Federal Reserve and foreign central banks?
The Fed has the shortest-term length for the head and the longest-term length for the board members.
The lengths of the terms do not vary between the Federal Reserve, the European Central Bank (ECB), the Bank of England, and the Bank of Japan.
The Fed has the longest-term length for the head and the shortest-term length for the board members.
The lengths of both terms are longer in the US than anywhere else.
Slow U.S. economic growth rate impacts the size of the Fed's balance sheet as:
banks maintain high levels of excess reserves.
the Fed reduces the discount rate to 0%.
businesses reduce spending, keeping more money in their demand accounts.
individuals move money from checking to savings accounts.
If banks were holding excess reserves for reasons of safety, why might the Fed's staff have been overestimating potential monetary and credit expansion?
Because the excess reserves would be loaned, the Fed overestimated the money multiplier.
Because the excess reserves would be exchanged for foreign currency, the Fed underestimated the money multiplier.
The Fed's staff could not have been overestimating potential monetary and credit expansion.
Because the excess reserves would not be loaned, the Fed overestimated the money multiplier.
Why did the Fed use it during the financial crisis of 2007-2009?
To reduce the interest rates on short-term Treasury securities.
To reduce the interest rates on mortgages and other long-term rates.
To increase the interest rates on short-term Treasury securities.
To increase the interest rates on mortgages and other long-term rates.
Quantitative easing is the central bank policy that attempts to
increase economic growth by decreasing the money supply.
stimulate the economy by buying short-term securities.
stimulate the economy by buying long-term securities.
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