True or False: The government securities purchased by the Federal Reserve ("the Fed") in normal open-market operations have a longer term than the government bonds the Fed purchases for quantitative easing. True zero. False Quantitative easing is an example of monetary policy, which is generally used when the federal funds rate is

True or False: The government securities purchased by the Federal Reserve ("the Fed") in normal open-market operations have a longer term than the government bonds the Fed purchases for quantitative easing. True zero. False Quantitative easing is an example of monetary policy, which is generally used when the federal funds rate is

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter26: Monetary Policy

Section: Chapter Questions

Problem 11SQP

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Targeting the federal funds rate ( is, is not ) as important a tool today as it was before the 2007-2009 financial crisis. During the financial crisis when the federal funds rate was near zero, the Fed ( did, did not ) wish to go lower than zero and came up with alternatives to influence interest rates and lending: the administered rates. Today, the Fed still sets a target for the federal funds rate but finds it more effective to change the administered rates. By doing that, the Fed can stimulate or restrict lending. The federal funds rate is the Feds policy rate and (is, is not ) useful when providing forward guidance. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Describe a situation where a central bank would want to implement expansionary monetary policy. Describe a situation where a central bank would want to implement contractionary monetary policy. Suggest a policy tool that the central bank (e.g., the Federal Reserve) can use for one of the above situations and explain how that policy would alleviate the situation.
True or False: The securities purchased by a central bank in normal open-market operations are on a bigger scale than those a central bank purchases for quantitative easing. True conventional False unconventional Quantitative easing is an example of monetary policy, which is generally used when central bank lending rates are zero.
As a result of the recent global financial crisis, the Fed began implementing a new policy tool known as which differs from a normal open market purchase by its scale and function. a)open market operation b)credit easing c) extraordinary crisis measure d)quantitative easing
The Chairman or Chairlady or Fed Chair (a politically correct term) of the Federal Reserve Bank has the power to override the votes of the FOMC and can independently carry out the monetary policy that they want as an individual. The FOMC is merely an advisory board to the Fed Chair. The FOMC has no real power, it's the Fed Chair (currently Jerome Powell) who has 100 percent of the power over U.S. monetary policy.
Changes in the discount rate are more important than open-market operations in implementing monetary policy. 1) True 2) False
How does quantitative easing differ from open-market operations? Quantitative easing extends the range of assets the Federal Reserve buys. Quantitative easing is conducted by the U.S. Treasury. Quantitative easing requires the approval of Congress. Quantitative easing actually tries to create deflation rather than just disinflation.
Which of the following is true? When income tax rates fall, it is possible for tax revenues to rise. When income tax rates fall, tax revenues always fall. All economists agree that a monetary rule is preferred to discretionary Fed policy. All economists agree that discretionary Fed policy is preferred to a monetary rule.
Which of the following was not proposed as an explanation of why the effectiveness monetary policy was limited during and after the financial crisis of 2007-2009? A) recessions accompanied by financial crises tend to be severe. B) long levels of high unemployment had led to a reduction in the employment to population ratio that would be difficult to reverse. C) the Fed was reluctant to implement nonconventional policies. D) structural changes had taken because important sectors of the economy were deeply affected by the financial crisis. recessions accompanied by financial crises tend to be severe long levels of high unemployment had led to a reduction in the employment to population ratio that would be difficult to reverse. structural changes had occurred because important sectors of the economy were deeply affected by the financial crisis. the Fed was reluctant to implement nonconventional policies.
Compare and contrast Classical, Keynesian and Monetarists approaches to monetary policy.
The former chairman of the Federal Reserve, Alan Greenspan, used the term "irrational exuberance" in 1996 to describe the high levels of optimism among stock market investors at the time. Stock market indexes such as the S&P Composite Price Index were at an all-time high. Some commentators believed that the Fed should intervene to slow the expansion of the economy. Why would central banks want to clamp down when the economy is growing?
What will an expansionary monetary policy do when the economy is in equilibrium? have no effect on both unemployment and inflation. reduce unemployment, but increase inflation. reduce unemployment, but have little effect on inflation. reduce both unemployment and inflation.