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Monetary policy Flashcards | StudBud

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Monetary policy

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Questions 10

Answers

1
Open market purchases raise the ___________
money supply
aggregate demand
aggregate supply
GDP
2
Which is most likely to occur in an economy if more money is demanded than is supplied?
None of the above
Interest rates will increase
Interest rates will decrease
Interest rates will remain constant
3
A decrease in the money supply will shift the aggregate __________ curve to the __________.
supply; left
demand; left
supply; right
demand; right
4
The Central Bank can increase the money supply by
Selling gold reserves to the banks
Buying government bonds on the open market
Selling foreign currency holdings
Borrowing reserves from foreign governments
5
The demand-for-money curve illustrates the __ relationship between the QD of money and _____
inverse; the interest rate
direct; the interest rate
inverse; GDP
direct; GDP.
6
Monetary policy refers to
actions taken by banks and other financial institutions
changes in government expenditures and taxation
changes in money supply to achieve particular economic goals
the change in private expenditures
7
As the interest rate falls,the quantity
demanded of money falls.
supplied of money falls.
demanded of money rises.
supplied of money rises.
8
If the economy is in a recessionary gap, the Fed should conduct ________monetary policy
contractionary
fiscal
expansionary
all of the above
9
Under which of the conditions would a contractionary monetary policy be most appropriate?
High unemployment
High inflation
Low interest rates
A budget deficit
10
The discount rate is
the price banks pay the Central Bank
None of the above
the interest rate that banks charge their customers
the interest rate the Fed charges on loans to banks.