Question :
21) The Fed’s use of the ________ as an operating : 1373807
21) The Fed’s use of the ________ as an operating target in the 1970s resulted in ________ monetary policy.
A) federal funds rate; countercyclical
B) federal funds rate; procyclical
C) M1 money supply; countercyclical
D) M1 money supply; procyclical
22) In the 1970s, the Fed selected an interest rate as an operating target rather than a reserve aggregate primarily because it
A) had no interest in targeting a monetary aggregate, as evidenced by its unwillingness to target a reserve aggregate.
B) was still very concerned with achieving interest rate stability.
C) was committed to targeting free reserves.
D) was committed to the real bills doctrine.
23) The Fed operating procedures employed between 1979 and 1982 resulted in ________ swings in the federal funds rate and ________ swings in the M1 growth rate.
A) increased; increased
B) increased; decreased
C) decreased; decreased
D) decreased; increased
24) The fluctuations in both money supply growth and the federal funds rate during 1979-1982 suggest that the Fed
A) had shifted to borrowed reserves as an operating target.
B) had shifted to total reserves as an operating target.
C) had shifted to the monetary base as an operating target.
D) never intended to target monetary aggregates.
25) The Fed’s failure to exercise effective control over the money supply during the 1979-1982 period
A) proves that such control is not possible.
B) resulted because forces outside of its control removed the link between open market operations and the money supply.
C) occurred despite evidence of a strong link between open market operations and the money supply.
D) stems from the Treasury-Federal Reserve Accord.
26) Large fluctuations in money supply growth and smaller fluctuations in the federal funds rate between October 1982 and the early 1990s indicate that the Fed had shifted to ________ as an operating target.
A) borrowed reserves
B) nonborrowed reserves
C) excess reserves
D) required reserves
27) The strengthening of the dollar between 1980 and 1985 contributed to a ________ in American competitiveness, putting pressure on the Fed to pursue a more ________ monetary policy.
A) decrease; contractionary
B) increase; expansionary
C) increase; contractionary
D) decrease; expansionary
28) A borrowed reserves target is ________ because increases in income ________ interest rates and discount loans, causing the Fed to ________ the monetary base, everything else held constant.
A) procyclical; increase; increase
B) countercyclical; increase; increase
C) procyclical; reduce; reduce
D) countercyclical; reduce; reduce
29) Fed policy since the early 1990s indicates that it is pursuing a policy of targeting the
A) monetary base.
B) money supply.
C) federal funds interest rate.
D) exchange rate.
30) Since the early 1990s, the Fed has conducted monetary policy by setting a target for the
A) level of borrowed reserves.
B) monetary base.
C) federal funds rate.
D) inflation rate.
31) The Fed can engage in preemptive strikes against a rise in inflation by ________ the federal funds interest rate; it can act preemptively against negative demand shocks by ________ the federal funds interest rate.
A) raising; lowering
B) raising; raising
C) lowering; lowering
D) lowering; raising
16.8 International Considerations
1) International policy coordination refers to
A) central banks in major nations acting without regard to the global consequences of their policies.
B) central banks in major nations pursuing only domestic objectives.
C) central banks adopting policies in pursuit of joint objectives.
D) central banks all adopting identical policies.
2) The Federal Reserve has been ________ preemptive because of the changing view that monetary policy has to be ________ looking.
A) more; forward
B) more; backward
C) less; forward
D) less; backward
