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Click Clickon onthe thebutton buttontotogo gototothe theQuestion problem © 2013 Pearson Monetary Policy 33 CLICKER QUESTIONS © 2013 Pearson Click Clickon onthe thebutton buttontotogo gototothe theQuestion problem Checkpoint 33.1 Checkpoint 33.2 Checkpoint 33.3 Question 1 Question 4 Question 8 Question 2 Question 5 Question 9 Question 3 Question 6 Question 10 Question 7 © 2013 Pearson CHECKPOINT 33.1 Question 1 The operational goals that the Fed uses for its monetary policy objectives are the ________. A. B. C. D. E. federal funds rate and the supply of reserves the demand for reserves and the supply of reserves supply of reserves and the output gap core inflation rate and the output gap federal funds rate and the core inflation rate © 2013 Pearson CHECKPOINT 33.1 Question 2 The Fed’s monetary policy instrument is ________. A. B. C. D. E. the output gap the core inflation rate the federal funds rate the supply of reserves the demand for reserves © 2013 Pearson CHECKPOINT 33.1 Question 3 To lower the federal funds rate, the Fed conducts an open market ____ of securities which ____. A. B. C. D. E. sale; increases the demand for reserves sale; increases the supply of reserves purchase; increases the demand for reserves purchase; decreases the demand for reserves sale; decreases the demand for reserves © 2013 Pearson CHECKPOINT 33.2 Question 4 When the Fed raises the federal funds rate, ______ responds most rapidly. A. consumption expenditure B. the supply of loanable funds C. the long-term real interest rate D. other short-term interest rates E. the inflation rate © 2013 Pearson CHECKPOINT 33.2 Question 5 When the Fed lowers the federal funds rate, the quantity of bank reserves ____, and quantity of money ____. A. B. C. D. E. increases; does not change increases; decreases decreases; does not change decreases; increases increases; increases © 2013 Pearson CHECKPOINT 33.2 Question 6 To fight inflation, the Fed will ____ the federal funds rate to bring about a ____. A. B. C. D. E. raise; decrease in aggregate demand raise; decrease in aggregate supply raise; increase in aggregate supply lower; increase in aggregate supply lower; decrease in aggregate demand © 2013 Pearson CHECKPOINT 33.2 Question 7 When the Fed raises the federal funds rate, the same or next day U.S. exchange rate ____, about a year later U.S. net exports ____, and two years later U.S. inflation _____. A. rises; do not change; increases B. falls; increase; decreases C. rises; decrease; decreases D. rises; increase; decreases E. falls; decrease; increases © 2013 Pearson CHECKPOINT 33.3 Question 8 The Fed doesn’t pursue discretionary monetary policy because it _____. A. usually leads to higher inflation B. is a long-term policy and monetary actions need to be short term C. makes inflation expectations harder to manage D. cannot be implemented using changes in the federal funds rate E. takes time to implement © 2013 Pearson CHECKPOINT 33.3 Question 9 Inflation targeting requires the central bank to ____. A. B. C. D. use a short-term interest rate as its policy instrument adopt a k-percent rule for the inflation rate avoid changing the amount of the money publicize its targeted inflation rate and explain how it will achieve that target E. set a fixed price for gold and other real assets © 2013 Pearson CHECKPOINT 33.3 Question 10 Under a gold standard, the central bank _____. A. uses the federal funds rate to conduct monetary policy B. converts its currency into gold on demand C. intervenes in the market for gold to keep the dollar price of gold fixed at a specified level. D. makes the monetary base consistent of only gold E. is willing to publish its expected inflation rate © 2013 Pearson
