2 Prior to the financial crisis, the Fed often communicated its intentions to re

Q: 2 Prior to the financial crisis, the Fed often communicated its intentions to re

7. The right answer is B. Explanation: The federal funds rate refers to the rate at which banks provide overnight loans to other banks for maintaining reserve requirements. The federal funds rate is the primary rate targeted by the fed as its monetary policy tool.

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2 Prior to the financial crisis, the Fed often communicated its intentions to restrict or espand otry polcy by announcing a change in targets for the exchange rate federal funds rate. prime interest rate. consumer price index. c, D, nancial crisis if the Fed wanted to contract the money supply: it would raise the intcrest rate on excess reserves and use reverse repos to purchase any non- banks' excess cash. would decrease the interest rate on excess reserves and use reverse repos to parchaue any would raise the interest rate on excess reserves and use repos to sell non-banks' excess would decrease the interest rate on excess reserves and use repos to sell non-banks' excess B. it non-banks' excess cash. C. it eash, cash. 9· The level of GDP will tend to increase when: A. reserve requirements are increased B. there is an increase in the discount rate. © the Federal Reserve buys government securities in the open market. D, the Federal Reserve sells govenment securities in the open market 10 Which is considered a strength of monetary policy compared to fiscal policy? A. the ability to increase the budget deficit B. the ability to decrease the budget surplus C) its protection from political pressure its cyclical asymmetry 11. If government uses fiscal policy to restrain cost-push inflation, we can expect A) the unemployment rate to rise. B. the unemployment rate to fall. C. the aggregate demand curve to shift rightward. D. tax-rate decelines and increases in government spending 12. An adverse aggregate supply shoek: utomatically shifts the aggregate demand curve rightward. causes the Phillips Curve to shift leftward and downward C can be caused by a hoost in the rate of growth of productivity D. can cause stagflation.

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7. The right answer is B.

Explanation: The federal funds rate refers to the rate at which banks provide overnight loans to other banks for maintaining reserve requirements. The federal funds rate is the primary rate targeted by the fed as its monetary policy tool.

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