Question : 11) The Fed-Treasury Accord of March 1951 provided the Fed : 1373806

11) The Fed-Treasury Accord of March 1951 provided the Fed greater freedom to

A) let interest rates increase.

B) let unemployment increase.

C) let inflation accelerate.

D) let exchange rates increase.

12) During the 1950s, the Fed targeted

A) M1.

B) M2.

C) the monetary base.

D) money market conditions.

13) During the 1950s, Fed monetary policy targeted

A) the monetary base.

B) the exchange rate.

C) discount loans.

D) interest rates.

14) Targeting interest rates can be procyclical because

A) an increase in income increases interest rates, causing the Fed to buy bonds, increasing the monetary base and money supply, leading to further increases in income.

B) an increase in interest rates increases income, causing the Fed to buy bonds, increasing the monetary base and money supply, leading to further increases in income.

C) an increase in the monetary base increases the money supply, causing the Fed to buy bonds, increasing the monetary base and money supply, leading to further increases in income.

D) an increase in income increases the monetary base and money supply, causing the Fed to buy bonds to increase interest rates and income.

15) High inflation can spiral out of control when

A) expected inflation increases nominal interest rates, causing the Fed to buy bonds, increasing the money supply and further increasing inflation.

B) expected inflation decreases nominal interest rates, causing the Fed to buy bonds, increasing the money supply and further increasing inflation.

C) expected inflation increases nominal interest rates, causing the Fed to sell bonds, increasing the money supply and further increasing inflation.

D) expected inflation decreases nominal interest rates, causing the Fed to sell bonds, increasing the money supply and further increasing inflation.

16) In practice, the Fed’s policy of targeting money market conditions in the 1960s proved to be

A) countercyclical, helping to stabilize the economy.

B) procyclical, destabilizing the economy.

C) procyclical, helping to stabilize the economy.

D) countercyclical, destabilizing the economy.

17) In practice, the Fed’s policy of targeting ________ in the 1960s proved to be ________, destabilizing the economy.

A) money market conditions; countercyclical

B) money market conditions; procyclical

C) monetary aggregates; countercyclical

D) monetary aggregates; procyclical

18) Although the Fed professed employment of a monetary aggregate targeting strategy during the 1970s, its behavior suggests that it emphasized

A) free-reserve targeting.

B) interest-rate targeting.

C) a real-bills doctrine.

D) price-index targeting.

19) Although the Fed professed employment of ________ targeting during the 1970s, its behavior suggests that it emphasized ________ targeting.

A) free-reserve; interest-rate

B) interest-rate; monetary aggregate

C) monetary aggregate; interest-rate

D) free reserve; monetary aggregate

20) The Fed’s use of the federal funds rate as an operating target in the 1970s resulted in

A) countercyclical monetary policy.

B) too slow growth in M1 throughout the decade.

C) procyclical monetary policy.

D) too rapid growth in M1 throughout the decade.