The Fed alters the discount price as part of its policy to reach all of the following objectives exceptA. Price stabilityB. High employmentC. Economic growth


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Monetary policy is characterized as:A. The actions congress takes to manage tax policy and interest ratesB. The actions congress takes to control the money supply and interest ratesC. The actions the federal reserve bring away to regulate the money supply and also interest rates
Which that the adhering to is a monetary policy target provided by the Fed?A. Budget deficitB. Interest rateC. Growth rate that GDP
The Fed supplies policy targets the interest price and/or money supply becauseA. The inflation rate is regulated by Congress and the White HouseB. The target because that the GDP growth rate is collection by CongressC. It can impact the interest rate and the money it is provided directly and also these subsequently can impact unemployment, GDP growth, and also the price level
The commonwealth funds rate isA. The forced reserve ratio that the federal reserve requires financial institutions to maintainB. The interest rate that financial institutions charge because that loans come its vital commercial borrowersC. The interest price that financial institutions charge each other for overnight loans
Additionally, the commonwealth funds rate isA. Very important because that the Fed"s financial policy since individual borrowers pay this interest rate for mortgage loansB. Very important because that the Fed"s financial policy because the Fed offers the federal funds rate as a financial policy target due to the fact that it can regulate the price through open market operationsC. An extremely important for the Fed"s financial policy because it is Administratively collection by the Fed
When the federal reserve sells bonds as a component of a contractionary monetary policy, there is:A. A to decrease in the money supply and a diminish in interest rateB. A diminish in the money supply and an increase in attention rateC. An increase in the money supply and also a to decrease in attention rate
The commonwealth Reserve cannot impact the price level directly; therefore, the Fed generally uses the following as its plan target:A. Attention ratesB. Federal government expendituresC. Inflation
What room the Fed"s key monetary plan targets?A. The money supply and also interest ratesB. Taxes and also government spendingC. Price stability and also economic growth
What is considered the most relevant interest rate once conducting monetary policy?A. Momentary nominal attention rateB. Irreversible nominal attention rateC. Annual nominal attention rate
When interest rates on treasury bills and also other jae won assets room low, the opportunity cost of hold money is _______, for this reason the amount of money demanded will be _______.A. Low; lowB. Low; highC. High; low
If actual GDP increases,A. The money demand curve shifts to the leftB. The money demand curves simply to the rightC. There is motion down follow me a stationary money need curve
If the price level decreases,A. The money demand curve shifts to the leftB. Over there is a movement down follow me a stationary money demand curveC. The money demand curve move to the right.
An increase in interest rates affects aggregate demand byA. Changing the aggregate demand curve to the right, enhancing real GDP and lowering the price levelB. Shifting the aggregate demand curve to the left, reducing genuine GDP and also lowering the price levelC. Shifting the aggregate supply curve come the left, decreasing real GDP and also increasing the price level
As the interest price increasesA. Consumption, investment, and also net exports increase, and aggregate demand increasesB. Consumption increases but investment and net exports decrease; accumulation demand stays unchangedC. Consumption, investment, and also net exports decrease; accumulation demand decreases
If the Fed believes the economic climate is around to loss into recession, that shouldA. Use an expansionary monetary policy to reduced the interest price and change AD come the rightB. Usage an expansionary fiscal plan to boost the interest rate and transition AD to the rightC. Use a contractionary financial policy to reduced the interest price and shift AD come the right
If the Fed to trust the inflation rate is around to increase, it shouldA. Usage a Contractionary fiscal policy to increase the interest price and change AD to leftB. Use an expansionary monetary policy to reduced the interest price and shift AD come the rightC. Usage a contractionary monetary policy to increase the interest rate and transition AD come the left
The government would desire the economy to contract when real GDP isA. Above potential GDP and the price level is fallingB. Below potential GDP in the price level is fallingC. Above potential GDP and the price level is rising
Which that the adhering to is influenced by changes in interest rates and, as a result, impacts accumulation demand?A. Service investment projectsD. The worth of the dollarC. Usage of durable goodsD. All of the above
The Fed"s strategy of enhancing the money supply and lowering interest rates in bespeak to increase real GDP is calledA. Contractionary fiscal policyB. Expansionary financial policyC. Expansionary fiscal policy
Why would certainly the Fed deliberately use contractionary monetary policy to reduce real GDP?A. The Fed intends to minimize unemployment, which occurs if genuine GDP is greater than potential GDPB. The Fed intends to minimize real GDP so that actual GDP will flourish again however at a much faster paceC. The Fed intends to minimize inflation, which occurs if actual GDP is higher than potential GDP
For an ext than 20 years, the Fed has actually used the commonwealth funds rate as its monetary policy target. It has not targeted money supply at the same time because theA. Fed does not have actually the authority to regulate both targetsB. Fed can not target both in ~ the exact same time: it needs to choose between targeting an interest rate and targeting the money supplyC. Fed deserve to target both in ~ the same time, however it has chosen to target the interest price as that is an ext reliable as a target
What is inflation targeting?A. Committing the main bank to accomplish an unannounced level of inflationB. A policy that do the efforts to reduce inflation come zeroC. A target that links the Feds target because that the commonwealth funds rate to inflation
All of the complying with are arguments against an clear inflation targeting rule for financial policy except:A. An clear target assumes the the Fed deserve to accurately projection future inflation ratesB. An clear target reduces the versatility of financial policy to resolve other financial issuesC. An clear target is much easier to understand by households and also firms i beg your pardon makes monetary policy much more transparent
When the Fed uses monetary policy targets, castle cannot usage both a money it is provided target and also an interest price target at the very same time becauseA. The is simpler for the Fed to save track of, and also influence, the interest rateB. Interest rates are figured out by money supply and also money demand that the Fed does not regulate money demandC. The Fed is only allowed to pick one target at a time to publish the Congress
If the economic situation moves into recession, monetarists argue that the Fed shouldA. Keep the money supply cultivation at a consistent rateB. Keep the money it is provided fixedC. Increased the commonwealth funds rate
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