Econ 353 Chapter 15 Review

Everything else held constant, in the market for reserves, when the demand for federal funds intersects the reserve supply curve along horizontal section, increasing the discount rate

• increases the federal funds rate.

• lowers the federal funds rate.

• has no effect on the federal funds rate.

• has an indeterminate effect on the federal funds rate.

In the market for reserves, if the federal funds rate is above the interest rate paid on excess reserves, an open market sale ________ the supply of reserves causing the federal funds rate to ________, everything else held constant.

• increases; increase

• decreases; increase

• decreases; decrease

• increases; increase

Everything else held constant, in the market for reserves, when the federal funds rate is 3%, lowering the interest rate paid on excess reserves from 2% to 1%

• lowers the federal funds rate.

• raises the federal funds rate.

• has no effect on the federal funds rate.

• has an indeterminate effect on the federal funds rate.

In the market for reserves, if the federal funds rate is between the discount rate and the interest rate paid on excess reserves, a _______ in the reserve requirement ________ the demand for reserves, lowering the federal funds interest rate, everything else held constant.

• decline; decreases

• rise; increases

• decline; increases

• rise; decreases

In the market for reserves, if the federal funds rate is between the discount rate and the interest rate paid on excess reserves, an increase in the reserve requirement _______ the ________ for reserves and causes the federal funds interest rate to rise, everything else held constant.

• decrease; supply

• increases; supply

• increases; demand

• decreases; demand

In the market for reserves, a lower discount rate

• increases the supply of reserves.

• lengthens the vertical selection of the supply curve of reserves.

• decreases the supply of reserves.

• shortens the vertical section of the supply curve of reserves.

The primary indicator of the Fed's stance on monetary policy is

• the growth rate of M2.

• the growth rate of the monetary base.

• the federal funds rate.

• the discount rate.

In the market for reserves, if the federal funds rate is between the discount rate and the interest rate paid on excess reserves, a decline in the reserve requirement ______ the _______ curve of reserves and causes the federal funds interest rate to fall, everything else held constant.

• increases; demand

• increases; supply

• decreases; supply

• decreases; demand

In the market for reserves, when federal funds rate is above the interest rate paid on excess reserves, the demand curve for reserves is

• negatively sloped.

• horizontal.

• vertical.

• positively sloped.

In the market for reserves, if the federal funds rate is above the interest rate paid on excess reserves, an open market purchase _______ the supply of reserves and causes the federal funds interest rate to _______, everything else held constant.

• decreases; fall

• decreases; rise

• increases; fall

• increases; rise