ECON 110 Read & Interact Schiller & Gephardt Chapter 14 solutions complete answers

ECON 110 Read & Interact Schiller & Gephardt Chapter 14 solutions complete answers

 

If the Fed thinks the AS curve is less vertical than it really is, then expansionary policy might cause too much inflation. Instead, the Fed would advocate for

 

Active monetary policy intervention that focuses on continual adjustments to the money supply in response to ups and downs in the economy is known as

 

Generally, aggregate demand is responsive to monetary policy. It will increase with ________ policy and decrease with _______ policy.

 

_______ is the key link between changes in the money supply and shifts of aggregate demand.

 

The purpose of open market operations is to control the nation's money supply and influence   rates. (Enter one word.)

 

Under   monetary policy, the Federal Reserve will sell bonds, increase reserve requirements, and/or raise the discount rate.

 

What is the key link between changes in the money supply and shifts of aggregate demand?

 

Order the steps of the Federal Reserve restraining the economy.

 

During times of rising inflation, the Fed will undertake which of the following monetary policies?

 

If the Federal Reserve decreases the money supply, increases interest rates, and decreases aggregate demand, the Fed is using:

 

Which of the following actions are undertaken by the Federal Reserve in a restrictive monetary policy?

 

When aggregate demand is overheating relative to the economy's full-employment level of real output, the Fed will institute what type of monetary policy?

 

True or false: The purchase of bonds from the public decreases the lending ability of the banking system.

 

A(n)   (increase/decrease) in the money supply will lower the interest rate, increasing borrowing, spending, aggregate demand, and equilibrium GDP.

 

When Federal Reserve banks purchase securities from the public, the lending capacity of banks:

 

During a recession, with substantial unemployment, the Fed should institute what type of monetary policy?

 

The purchase of bonds from the public increases the ______ ability of the banking system.

 

Reserve requirements, open market operations, and the discount rate are tools of _______ policy used by the Fed to alter the money supply.

 

When the Federal Reserve banks sell government bonds, commercial banks' reserves are   (increased/decreased).

 

When a public company sells government bonds to the Federal Reserve, the public company receives a payment check drawn by:

 

If the Federal Reserve offers higher prices for bonds, people will   the bonds to the Fed.

 

When Federal Reserve banks buy bonds in the open market, banks' reserves:

 

Certificates acknowledging a debt and the amount of interest to be paid each year until repayment (i.e., an IOU) that are issued by governments are known as

 

(High/Low) bond prices prompt banks, securities firms, and individual holders of government bonds to sell them to the Federal Reserve banks.

 

Open market operations consist of the buying and selling of ______ to and from the general public.

 

The principal mechanism for directly altering the reserves of the banking system is:

 

Interbank borrowing is referred to as:

 

The role of the Federal Reserve banks known as "discounting" occurs when

 

When the reserve requirement is changed, which of the following will also change?

 

What is the formula for the money multiplier?

 

The Fed can directly manipulate the reserve ratio in order to influence the ability of banks to do what?

 

The Federal Reserve Bank sets _____, which are the fractions of deposit account balances that banks must maintain as currency reserves.

 

The Fed can directly manipulate the ________ in order to influence the ability of banks to lend.

 

Who establishes reserve requirements (the fraction of checking account balances that banks must maintain as currency reserves)?

 

The chair of the Board of Governors serves a  -year term and may be reappointed.

 

The key decision-makers of the U.S. money and banking system are the ________ of the Federal Reserve System.

 

How long is the term of the chair of the Board of Governors?

 

Because banks hold _____ cash in their vaults and sometimes customers have an increased demand for cash, the banks turn to Federal Reserve banks to meet currency demands.

 

In the United States, the monetary authorities are members of the Board of Governors of the:

 

Which of the following serve as central banks or banker's banks?

 

Because banks hold little cash in their vaults and sometimes customers have an increased demand for cash, the banks turn to _______ to meet currency demands.

 

The use of money and credit controls to influence macroeconomic outcomes is

 

The Fed’s major goal is to control

 

The Federal Reserve Banks are a central bank because they:

 

There are _______ Federal Reserve banks in the United States.

 

Who is responsible for issuing currency, setting reserve requirements and holding reserves, lending money, and providing for check collection?

 

Monetary policy is the use of _______ to affect macroeconomic activity.

 

Nearly all bank reserves are held in accounts at the regional             banks. (Enter one word in each blank.)

 

Who has the ultimate responsibility for the supply of money?

 

Because banks hold _____ cash in their vaults and sometimes customers have an increased demand for cash, they turn to Federal Reserve banks to meet currency demands.

 

The Federal Reserve Banks also serve as

 

The key decision makers of the U.S. money and banking system is the ________ of the Federal Reserve System.

 

How many Federal Reserve banks are there in the United States?

 

Which of the following is not a benefit of the long-term appointments of Board members?

 

The Federal Reserve banks

 

The chairperson of the Board of Governors serves a       year term and may be reappointed.

 

Federal Reserve banks hold _______ deposited by banks. These accounts not only provide greater security and convenience for banks but also enable the Fed to monitor these levels.

 

Because banks hold little cash in their vaults and sometimes customers have an increased demand for cash, they turn to _______ to meet currency demands.

 

The current chair of the Federal Reserve is:

 

In the United States, the monetary authorities are members of the Board of Governors of what?

 

The control of the supply of money is the primary responsibility of:

 

Which of the following are benefits of the long-term appointments of Board members?

 

How long is the term of the chairperson of the Board of Governors?

 

The Federal Reserve Bank sets _____ which are the fractions of deposit account balances that banks must maintain as currency reserves.

 

The minimum amount of deposits that a bank is required by law to hold and not lend out is called its

 

Who is the chair of the Federal Reserve Board as of February 2018?

 

The Fed can manipulate the ________ in order to influence the ability of banks to lend.

 

The Fed uses its power to alter

 

Who establishes reserve requirements or the fraction of checking account balances that banks must maintain as currency reserves?

 

Suppose there are $5 billion in excess reserves in the banking system and the reserve requirement is 10%. The available lending capacity of the banking system is _____. 

 

The minimum amount of deposits that a bank is required by law to hold and not lend out is called its required       (Enter one word).

 

Total reserves minus required reserves equals       reserves.

 

The Fed can manipulate the reserve ratio in order to influence the ability of banks to do what?

 

Excess reserves equal       reserves minus       reserves.

 

The equation for the money multiplier is 1 divided by the required       ratio.

 

An increase in the reserve requirement causes a(n) _______ in excess reserves and a(n) _______ in the money multiplier.

 

Suppose there are $7 billion in excess reserves in the banking system and the reserve requirement is 20%. The available lending capacity of the banking system is _____. 

 

If a bank’s reserves are $5,000 and its required reserves are $4,000, how much does it have in excess reserves?

 

Excess reserves and the money multiplier are altered by changes in the:

 

Excess reserves is calculated as

 

Lending money by banks is made possible through

 

The money multiplier is equal to

 

A decrease in the reserve requirement causes a(n) _______ in excess reserves and a(n) _______ in the money multiplier.

 

The interest rate that Federal Reserve Banks charge on loans they grant to private banks is called the

 

Because banks continually seek to keep excess reserves at a minimum, they run the risk of falling below

 

When the reserve requirement is changed, this will result in a change in which of the following:

 

Lowering the reserve ratio enhances the ability of banks to

 

Interbank borrowing is referred to as the federal       market.

 

There are three possible sources of last-minute reserves. Which of the following is not a source?

 

The interest rate that Federal Reserve Banks charge on loans they grant to private banks is called the       rate.

 

The funds being lent and borrowed overnight are called “federal funds” because they are reserves that are required by the Federal Reserve to meet what?

 

Because banks continually seek to keep excess reserves at _______, they run the risk of falling below reserve requirements.

 

Banks can sell government bonds to meet

 

Interbank borrowing is referred to as the

 

The Federal Reserve banks’ practice of making loans to private banks is known as      .

 

What are three possible sources of last-minute reserves?

 

The Fed has the power to set the       interest rate at which commercial banks borrow from Federal Reserve Banks.

 

The federal funds rate is the rate of       (Enter one word) that banks charge one another on overnight loans.

 

An increase in the       rate discourages private banks from obtaining additional reserves from the Federal Reserve Banks.

 

If banks are short on their ________, they can sell government bonds.

 

The Fed may ______ the discount rate when it wants to restrict the money supply.

 

The role of the Federal Reserve banks known as “discounting” is when

 

The Fed has the power to set the:

 

The principle mechanism for directly altering the reserves of the banking system is:

 

Which of the following discourages private banks from obtaining additional reserves through borrowing from the Federal Reserve Banks? 

 

Government       are certificates acknowledging a debt and the amount of interest to be paid each year until repayment (i.e., an IOU) that are issued by governments.

 

To restrict the money supply, the Fed may raise what?

 

Which of the following consists of the buying and selling of government bonds to and from the general public?

 

True or false: Open market operations are the principal mechanism for directly altering the reserves of the banking system and, therefore, the money supply.

 

When Federal Reserve Banks purchase government       from commercial banks, they increase the reserves in the banking system, which then increases the lending ability of the commercial banks.

 

Lowering the discount rate encourages commercial banks to:

 

A certificate acknowledging a debt and the amount of interest to be paid each year until repayment (i.e., an IOU) that are issued by governments is known as

 

If the Federal Reserve offers higher prices for bonds this will cause people to       the bonds to the Fed.

 

Open-market operations consist of the buying and selling of ______ to and from the general public.

 

When the Federal Reserve Banks purchase bonds in the open market from the public, which of the following are elements of the transaction? Assume the bond seller banks at Alpha Bank.

 

The supply of money is directly increased by the Federal Reserve Banks’ purchase of what?

 

When Federal Reserve Banks purchase bonds from commercial banks, what happens to the lending ability of the commercial banks?

 

When Federal Reserve Banks buy bonds in the open market, what happens to banks’ reserves?

 

When the Federal Reserve banks sell government bonds, commercial banks’ reserves are 

 

      (High/Low)bond prices prompt banks, securities firms, and individual holders of government bonds to sell them to the Federal Reserve banks.

 

When a public company sells government bonds to the Federal Reserve, the public receives a payment check drawn by:

 

When the Federal Reserve purchases bonds from the public, bank reserves _______ and the money supply _______.

 

True or false: The volume of trading in the government bond market exceeds $1 trillion per day.

 

When Federal Reserve Banks purchase securities from the public, what happens to the lending capacity of the banks?

 

Reserve requirements, open market operations, and the discount rate are tools of       policy used by the Fed to alter the money supply.

 

List the three levers of monetary policy.

 

If the economy faces recession and unemployment, the Fed will initiate ______.

 

The volume of trading in the government bond market exceeds $1 trillion

 

The total quantity of output demanded at alternative price levels in a given time period, ceteris paribus, is:

 

Which of the following are tools of monetary control that the Fed system can use to alter the money supply?

 

An       in the money supply will lower the interest rate, increasing borrowing, spending, aggregate demand, and equilibrium GDP.

 

There are three levers of monetary policy. Which of the following are not monetary policy levers?

 

Which of the following changes occur when the Federal Reserve implements a monetary stimulus?

 

If the economy faces recession and unemployment, the Fed will initiate what type of policy?

 

Buying government bonds in the open market, lowering the reserve requirement, and lowering the discount rate are all actions the Fed may take to       (increase/decrease) the money supply and increase aggregate demand.

 

The total quantity of output demanded at alternative price levels in a given time period, ceteris paribus, is       demand.

 

The goal of monetary restraint is to:

 

During times of rising inflation the Fed will undertake which of the following monetary policies?

 

An increase in the money supply will do which of the following?

 

Increasing the money supply, reducing interest rates, and increasing aggregated demand are all steps in the Fed’s goal to _____ the economy.

 

Which of the following are actions that the Fed may take to increase the money supply and therefore increase aggregate demand in order to fight unemployment?

 

Monetary       seeks to decrease aggregate demand by decreasing the money supply and increasing interest rates. (Enter one word in the blank.)

 

Selling bonds, raising the reserve requirement, or raising the discount rate involve what type of monetary policy?

 

Which of the following monetary policies addresses the problem of inflation?

 

Order the sequence of steps (first-to-last) following the Federal Reserve’s implementation of monetary stimulus.

 

Which of the following are actions that the Federal Reserve may take to increase the money supply and increase aggregate demand?

 

Which of the following are actions that the Fed may take to decrease the money supply and therefore decrease aggregate demand in order to fight inflation?

 

With       monetary policy, the Federal Reserve Board will direct the Federal Reserve Banks to sell government securities, increase the reserve ratio, or increase the discount rate.

 

The purpose of open-market operations is to control the nation’s money supply and influence       rates. (Enter one word)

 

What is the key link between changes in the money supply and shifts of the aggregate demand?

 

Generally, a decrease in the money supply leads to

 

To combat inflationary pressures and to decrease aggregate demand, the Fed will push up interest rates by doing which of the following:

 

_______ is the total quantity of output producers are willing and able to supply at alternative prices levels in a given time period, ceteris paribus.

 

Which of the following actions are undertaken by the Federal Reserve Bank in a restrictive monetary policy?

 

True or false: The effects of an aggregate demand shift on prices and output depend on the shape of the aggregate supply curve.

 

What type of operations serve to control the nation’s money supply and influence interest rates?

 

Match the following

 

_______ is the key link between changes in the money supply and shifts of the aggregate demand.

 

To reduce instability that comes from positive and negative shocks, the Fed can take an active monetary policy role through

 

Generally, the aggregate demand is responsive to monetary policy. It will increase with ________ policy and decrease with _______ policy.

 

If the Fed thinks the AS curve is less vertical than it really is, expansionary policy might cause too much inflation. Instead, the Fed would advocate for

 

Aggregate supply is represented as a schedule or curve showing the relationship between the       level and the amount output produced in the economy.

 

The effects of an aggregate demand shift on _______ and _______ depend on the shape of the aggregate supply curve.

 

If the aggregate supply curve is vertical, an increase in the money supply generally leads to

 

Active monetary policy intervention which focuses on continual adjustments to the money supply in response to ups and downs in the economy is known as

 

A monetary policy intervention that emphasizes the vertical shape of the aggregate supply curve and policy that increases money supply at a constant rate is best is known as

 

If the aggregate supply curve is upward sloping, an increase in the money supply generally leads to

 

If the aggregate supply curve is horizontal, an increase in the money supply leads to

 

Which of the following are functions that the Federal Reserve Banks perform?

 

The central authority of the U.S. money and banking system is the _______ of the Federal Reserve System.

 

Reserve requirements, open market operations and the discount rate are tools of _______ policy used by the Fed to alter the money supply.

 

The federal reserve has the ultimate responsibility for regulating the supply of 

 

The number of deposit (loan) dollars that the banking system can create from $1 of excess of reserves is known as the 

 

What are three possible sources of last minute reserves?

 

The funs being lent and borrowed overnight are called “federal funds” because they are reserves that are required by the Federal Reserve to meet what?

 

_______ is/are Federal Reserve purchases or sales of government bonds for the purpose of altering bank reserves.

 

When the federal reserve _______ the public, bank reserves increase and the money supply increases.

 

Aggregate _______ can be represented as a schedule or curve showing the relationship between the price level and the amount of real output that is produced in a given time period.

 

To combat inflationary pressures and decrease aggregate demand, the Fed will push up interest rates by doing which of the following: 

 

During times of rising inflation the Fed will undertake ____ monetary policy or “tight money policy.”

 

Open market operations entail the purchase and sale of government: 

 

Order the steps of the Federal Reserve stimulating the economy 

 

If banks are short on their _____ they can sell government bonds

 

______ bond prices and ______ interest yield prompt banks, securities firms, and individual holders of government bonds to sell them to the Federal Reserve Banks.

 

An increase in money supply will do which of the following: 

 

To restrict money supply, the fed may raise what?

 

Which of the following are benefits of long-term appointment of board members?

 

Which of the following is not a benefit of the long term appointment of Board members?

 

Which of the following are true if the terms of Board of Governor members?

 

Which of the following are functions of the restrictive monetary policy

 

Private banks are discouraged from obtaining additional reserves through borrowing from the federal reserve banks when which of the following occurs: 

 

Required reserves are calculated as

 

If the Federal Reserve decreases the money supply, increases interest rates, and decreases aggregate demand, this is known as

 

The required reserve ratio multiplied by deposits is the bank’s

 

The use of money and credit controls to influence macroeconomic outcomes is ______ policy.

 

The Fed has the ultimate responsibility for the supply of _________ (Enter one word).

 

True or false: The Federal Reserve can make available a particular quantity of money and can change that amount through its policy tools.

 

To implement monetary restraint, the Fed will (directly or indirectly):