An easy/expansionary monetary policy is used to address what economic problem?
trade deficits
recession
business cycles
inflation
A tight/contractionary monetary policy is used to address what economic problem?
recession
inflation
business cycles
trade surplus
Who controls monetary policy?
Executive branch
Federal Reserve
Judicial branch
Congress
The interest rate the Fed charges banks when they borrow from the Fed is called
Federal funds rate
Discount rate
Reserve requirement
Open market operations
The percentage that banks must set aside when customers deposit money in the bank is called
Interest on reserves
Reserve requirement
Open market operations
Discount rate
The buying and selling of government securities/bonds is called
Discount rate
Interest on reserves
Open market operations
Reserve requirement
Which of the following monetary policy tool combinations would be appropriate during a recession?
Buy bonds and raise the reserve requirement
Buy bonds and lower the reserve requirement
Lower the discount rate and sell bonds
Sell bonds and raise the discount rate
Which of the following monetary policy tool combinations would be appropriate during periods of inflation?
Buy bonds and lower the discount rate
Buy bonds and raise the discount rate
Sell bonds and raise the reserve requirement
Lower the discount rate and lower the reserve requirement
Increasing the money supply will cause interest rates to increase.
True
False
If the Fed buys bonds, lowers the reserve requirement, or lowers the discount rate then aggregate demand and real GDP will change in which of the following ways?
Aggregate demand will decrease but real GDP will increase.
Aggregate demand will increase and so will real GDP.
Aggregate demand will increase but real GDP will decrease.
Aggregate demand will decrease and so will real GDP.