Ample Reserves and Monetary Policy

In the Ample Reserves section of the graph the only effective monetary policy would be

• changing reserve requirements

• open market operations

• raising or lowering income tax rates

• changing administered rates

If Supply is in the section shown the Fed should use _____ to change monetary policy.

• the discount rate

• the federal funds rate

• ample reserves

• open market operations

The shift in the graph could only be caused by

• a Fed purchase of securities (bonds)

• raising administered rates

• lowering the discount rate

• lowering the Federal Funds Rate

Which monetary policy tool does the Fed use today to influence interest rates in the Ample Reserves System?

• Buying Bonds

• Federal Funds Rate

• Reserve Requirement

• Open Market Operations

• Interest on Reserves

The nation is experiencing inflation. using the graph as a reference the only impactful tool the Fed could use to cool the economy would be

• raise the federal funds rate

• raise the reserve requirement

• raise adminstered rates

• sell bonds

Why is there a downward sloping demand curve for reserves?

• A direct relationship exists between price and quantity demanded

• The demand for bonds is an inverse relationship with the federal funds rate

• Inverse relationship between the federal funds rate and the quantity of reserves demanded

• The supply of money is limited by Congress

• Inverse relationship between your grade and studying

The nation is in a recession, using the graph as a reference the only impactful tool the Fed could use to stimulate the economy would be

• lower the federal funds rate

• lower the reserve requirement

• lower adminstered rates

• buy bonds

Country H's current domestic output is lower than its potential domestic output. Assume that the central bank now decreases its interest rates. What will be the short-run effects of the central bank's action on cyclical unemployment and real income?

• Cyclical unemployment will increase, and real income will increase

• Cyclical unemployment will increase, and real income will decrease

• Cyclical Unemployment will remain the same and real income will increase

• Cyclical Unemployment will remain the same, and real income will decrease

• Cyclical Unemployment will decrease and real income will increase

Ample Reserve tools of the Fed are effective in the segment labeled ______ on the graph.

• upper end at the discount rate

• demand becomes downward sloping

• lower end at the IOR

• they are never effective

The shaded portion of the curve is known as the

• ample reserves section

• limited reserves section

• discount rate cap

• reserve requirement limit