OOOOOOOOOOWhich one of the following statements is FALSE?Select one:a. The prime bank rate is the rate banks charge their most credit-worthy commercial customers.b. The Fed can influence the supply of federal funds through open market operations.c. "Tight money" policies tend to increase the money supply growth rate.d. The Fed does not directly set the federal funds rate but instead tightly controls the rate through open market operations.e. The prime bank rate in the United States is consistently higher than the federal funds rate.In recessions, tax revenues tend to decline and transfer payments like unemployment insurance and food stamps tend to increase, sothese programs...Select one:a. are procyclical.b. make Aggregate Expenditures lessc. are automatic stabilizers.d. create budget surpluses during economic downturns.e. increase unemployment.

The monetary policy is the policy taken by a central bank of a country to curb inflation and…

Which one of the following statements is FALSE? Select one: D a. The prime bank rate is the rate banks charge their most credit-worthy commercial customers. D b. The Fed can influence the supply of federal funds through open market operations. D c. "Tight money" policies tend to increase the money supply growth rate. D d. The Fed does not directly set the federal funds rate but instead tightly controls the rate through open market operations. D e. The prime bank rate in the United States is consistently higher than the federal funds rate. In recessions, tax revenues tend to decline and transfer payments like unemployment insurance and food stamps tend to increase, so these programs... Select one: D D D c. are automatic stabilizers. D d. create budget surpluses during economic downturns. D e. increase unemployment. a. are procyclical. b. make Aggregate Expenditures less

Which one of the following statements is FALSE? Select one: D a. The prime bank rate is the rate banks charge their most credit-worthy commercial customers. D b. The Fed can influence the supply of federal funds through open market operations. D c. "Tight money" policies tend to increase the money supply growth rate. D d. The Fed does not directly set the federal funds rate but instead tightly controls the rate through open market operations. D e. The prime bank rate in the United States is consistently higher than the federal funds rate. In recessions, tax revenues tend to decline and transfer payments like unemployment insurance and food stamps tend to increase, so these programs... Select one: D D D c. are automatic stabilizers. D d. create budget surpluses during economic downturns. D e. increase unemployment. a. are procyclical. b. make Aggregate Expenditures less

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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M7
2. Outline the three monetary policy instruments the fed can implement if its objective is to cool off an economy suffering from high inflation.
Which statement explains how the Federal Reserve can control rising inflation?
Federal funds A. provide banks with an immediate infusion of reserves. B. are short-term funds transferred between financial institutions, usually for a period of one day. C. actually have nothing to do with the federal government. D. are all of the above..
When the Federal Reserve increase the discount rate of the Fed Fund in the US market. a. Money supply increases b. Money supply decreases c. Irrelevant to Money Supply
Question 1 When the Fed sells bonds on the open market O it increases the money supply and lowers the federal funds rate it increases the money supply and the federal funds rate O it decreases the money supply and the federal funds rate O it decreases the money supply and increases the federal funds rate
Consider an increase in government spending. Assume that the economy is initially operating at the natural level of output. In the short run, the impact on the IS-LM framework is This change results in In the medium run, the no output gap a negative output gap The resulting medium- a positive output gap his change is OYrn and current period's inflation is less than target inflation OY > Yn, r = rn and current period's inflation is greater than target inflation OY = Yn, r = rn and current period's inflation equals target inflation OY> Yn, r
Multiple choices 1. Banks face liquidity risk because A) they can have difficulty meeting their depositor's demands to withdraw money. B) they are unable to borrow from the Federal Reserve. C) households and businesses may seek to borrow a large amount of funds in a short period of time. D) governments tend to run high budget deficits. 2. The original intention of the Fed's role as lender of last resort was to make loans to banks that were A) not illiquid nor insolvent. B) illiquid, but not insolvent. C) insolvent, but not illiquid. D) both illiquid and insolvent. 3. Why might a nation seek to maintain a pegged exchange rate? A) It makes business planning easier for firms involved in the global economy. B) It removes the need to intervene in the foreign exchange market. C) It ensures that the exchange rate will remain at its equilibrium. D) It makes their currency more attractive on the foreign exchange market. 4. Suppose a country pegs its currency. If investors start to believe the…
27.A household buys U.S. government bonds, and at the same time the Federal Reserve (Fed) also buys government bonds. From the standpoint of monetary theory, the key difference between the two transactions is that A: the Fed is putting money into circulation, whereas the household is not. B: the household makes the purchase on the open market. C: the bonds held by the Fed do not need to be repaid at maturity. D: the Fed is putting bonds into circulation, whereas the household is not. C: the Fed requires permission from Congress to make the purchase.
25. Show in a graph how the Fed essentially chooses a monetary rule that creates a flat effective supply of money,
When the Fed sells government securities, it: Group of answer choices raises the cost of borrowing from the Fed, discouraging banks from making loans to thegeneral public. lowers the cost of borrowing from the Fed, encouraging banks to make loans to thegeneral public. decreases the amount of excess reserves that banks hold, discouraging them from makingloans to the general public. increases the amount of excess reserves that banks hold, encouraging them to make loans tothe general public.
To counteract a recession, the Central Bank should A. raise the reserve requirement and the discount rate B. sell securities on the open market and raise the discount rate C. sell securities on the open market and lower the discount rate D. buy securities on the open market and lower the discount rate