If the economy is experiencing an inflationary gap, then which of the following is a proper Federal Reserve response to close this gap?  Check all that apply. Group of answer choices Buy U.S. bonds. Increase the discount rate. Increase taxes. Decrease the reserve ratio. Decrease government purchases. Sell U.S. bonds.

What are the goals of monetary policy? maximum employment and stable prices zero unemployment and zero inflation zero unemployment and stable prices maximum employment and zero inflation The Federal Reserve seeks to achieve these goals by choosing between maximum employment and stable prices in the long run. maintaining both the money supply and short-term interest rates at low levels. keeping the growth rate of money consistent with the growth rate of the natural rate of output. targeting short-term interest rates and the money supply.

Decisions regarding purchases and sales of government securities by the Fed are made by the: Federal Deposit Insurance Commission (FDIC). Discount Committee (DC). Federal Open Market Committee (FOMC). Federal Funds Committee (FFC).

The former chairman of the Federal​ Reserve, Alan​ Greenspan, used the term​ "irrational exuberance" in 1996 to describe the high levels of optimism among stock market investors at the time. Stock market indexes such as the​ S&P Composite Price Index were at an​ all-time high. Some commentators believed that the Fed should intervene to slow the expansion of the economy.   Why would central banks want to clamp down when the economy is​ growing?

Both increases in the price level and increases in real GDP will decrease the demand for money True False

A central bank such as the Fed is different from other banks and financial institutions in that it does not____ A)provide service to individuals or businesses B) generate, stimulate, or hurt the economy  C)provide any concrete banking service  D) have multiple locations throughout the country

Suppose that the money supply increases by 20 percent. If there is no inflation, what does the quantity theory of money tell us must happen to real GDP? It must increase by more than 20 percent. It must increase by less than 20 percent. It must increase by exactly 20 percent. None of the above are correct.   Which of the following statements is true of the federal funds market? No banks are refused loans in the federal funds market. In the federal funds market, banks with a shortage of reserves borrow funds, while banks with an excess of reserves lend them out. The interbank lending system works more efficiently in periods of financial panic than in periods of financial stability. Although the federal funds market aims to provide liquidity to needy banks, it is not very popular as overnight loans are logistically inefficient for large banks.   On a graph with real GDP growth on the x-axis and the unemployment rate on the y-axis, you plot each year's values for the United States as…

Which of the following is NOT one of the three tools used by the Fed to implement US monetary policies? discount rate printing more money open market operations reserve requirement regulations

Which of these is an alternative to monetary policy and aims to reduce inflation? reduce the money supply raise government purchases reduce taxes increase taxes

Explain why the Reserve Supply is perfectly elastic at Discount Window Rate.