U.S. Treasury securities are issued by the Treasury in order to
- conduct monetary policy
- collect tax revenue
- fund reserve requirements
- finance budget deficits
Suppose that the FOMC decides that inflation is too high. The appropriate policy actions would be to conduct an open market ____________ in order to __________ the federal funds interest rate.
- sale, increase
- sale, decrease
- purchase, increase
- purchase, decrease
When the Federal Reserve lowers the federal funds interest rate, bank reserves ___________ , creating multiple rounds of loan and deposit __________.
- decrease, creation
- decrease, destruction
- increase, creation
- increase, destruction
If the FOMC acts to increase the federal funds interest rate, in the short-run ________________ and inflation ______________.
- aggregate demand shifts to the right, decreases
- aggregate demand shifts to the left, decreases
- aggregate demand shifts to the right, increases
- short-run aggregate supply shifts to the left, decreases
A monetary policy action to decrease the federal funds interest rate would initially change which of the following spending components?
- government purchases
- net exports
?a) 4. Finance budget deficit (B) 2. Sale, decrease.... View the full answer