Monetary Policy - Mostly with Ample Reserves

What is inflation?

• rise in all goods purchased

• decrease in prices

• when prices stagnate

• rise in general prices

The federal government's overall approach to spending and taxes is called

• Physical Policy
• Fiscal Policy
• Money
• Monetary Policy

Who is in charge of Monetary Policy

• The Government

• The Federal Reserve System

• The states

• The Department of the Treasury

Suppose the Fed wanted to engage in an expansionary monetary policy, which of the following should it do, assuming a situation of AMPLE reserves?

• Buy stocks on the stock market

• Increase the tax on bank profits.

• Decrease the administered interest rates

• Make it harder for banks to loan money to businesses.

Contractionary monetary policy attempts to ___ aggregate demand by ___ interest rates.

• decrease, increasing

• increase, decreasing

• decrease, decreasing

• increase, increasing

• increase, maintaining

In an economy with ample reserves, which of the following central bank actions would be used to combat inflation?

• quantitative easing

• buying bonds

• increasing the interest paid on reserves

• raising reserve requirements

• increasing the discount rate

What do economists call the time between recognizing a problem in the economy and the effects of monetary policy?

• Powell's dilemma

• Monetary policy lags

• The calm period

• The monetary policy worm hole

• The Central Bank conundrum

Which policy would help fight inflation?

• Expansionary

• Contractionary

During a recession, the Fed should use...

• an expansionary policy

• a contractionary policy

When interest rates are low, people are more likely to...

• Take out a loan and spend money, helping the economy grow

• Save their money and not take out any loans, slowing the economy