One tension that occurs in central banking in a democracy is O Central bankers only think on a short term basis. O Politicians usually know what is best for the economy in the long run, but central bankers have no incentive to listen to them. O There is nothing that central bankers can do to boost the economy in the short run. O Politicians who are elected for short terms are often more willing to accept (and sometimes encourage) a looser monetary policy in order to boost the economy and increase their chances of being re-elected, despite the negative long-term consequences for the economy.

The Board of Governors of the Federal Reserve is in charge of setting and overseeing monetary policy and is headed by the ___________(PRESIDENT OF THE BANK OF NEW YORK / CHAIRMAN OF THE FEDERAL RESERVE / SPEAKER OF THE HOUSE / PRESIDENT OF FEDERAL OP[EN MARKET COMMITTEE).    . Monetary policy is supposed to be____________(COORDINATED WITH/ INDEPENDENT OF)    Congress and the president. This goal is hindered by the fact that the chairman is_______________(APPOINTED BY THE PRESIDENT / PUBLICLY ELECTED).   Because Congress initially intended to create a decentralized banking system, there are also smaller branches of the Federal Reserve known as district banks. All presidents of the district banks take turns serving as members of the Federal Open Market Committee (FOMC) except for the president of the Federal Reserve Bank of __________(SAN FRANCISCO, NEW YORK, WASHINGTON DC), who is a permanent member.   NOTE- This is one question but divided into the parts please answer with an…

Select ALL of the following that are ways to do easy (expansionary) policy. O Raise the cost of borrowing. O Sell bonds to banks. Increase government purchases (spending). Increase bank excess reserves. Raise taxes. O Lower interest rates.

In regard to monetary policies, nonactivists have various proposals. True or False: Some nonactivists believe in the Taylor rule, which suggests that the annual money-supply growth rate should be based on the growth rates of velocity and Real GDP to ensure that the price level does not fluctuate. O False O True Which of the following statements best explains the difference between the Taylor rule and the two other nonactivist rules (the constant-money growth rate rule and the predetermined-money growth rate rule)? O The Taylor rule does not take into account the stability of prices. O The Taylor rule suggests how much the money supply should grow. O The Taylor rule does not take into account the current state of the economy. O The Taylor rule is not a derivation of the equation of exchange.

Q8

Consider the model of supply and demand for central bank money. Assumethat there there are commercial banks. Suppose that people hold 20% of their moneyin currency and 80% of their money in deposits. The central bank sets the reserve-todeposit ratio at 10%. In the first period, the central bank increases the supply of moneyby $200, buying bonds through Open-Market Operations. Use this information to answerthe following questions:(a) For the second period (after the central bank has injected $200 in theeconomy), calculate: (i) the demand for currency, (ii) the amount of deposit held atthe commercial banks, (iii) the demand for reserves held at the central bank, and(iv) the demand for the high-powered money. How much is the additional moneysupply created at the end of the second period?2(b) How much is the additional money supply created at the end of the thirdperiod?(c) As time continues, additional money supply will be created. Calculatethe total increase in the money supply as a…

Which of the following policies would the Federal Reserve most likely use if the economy was suffering from high inflation? O Decrease the required reserve rate O Buy bonds in the open market O Decrease the interest rate the Fed pays on bank reserves O Raise the discount rate

Quantitative easing can be described as A, B, C OR D ONE ANSWER A the purchase of long-term government and private mortgage backed securities by central banks to make credit available so as to stimulate aggregate demand. B the purchase of long-term government and private mortgage backed securities by central banks to make credit less available so as to stimulate aggregate demand. C the buy back long-term government and private mortgage backed securities by central banks to make credit available so as to decrease aggregate demand. D the buy back long-term government and private mortgage backed securities by central banks to make credit less available so as to decrease aggregate demand.

The Federal Reserve is responsible for managing the U.S. money supply. A.) List and thoroughly explain 6 of the functions of the Federal Reserve System. Be specific.   b.)Please thoroughly and completely explain how money is created and destroyed. c.) Please thoroughly and completely explain how the 3 tools of monetary policy would work to address the problem of recession. Include the impact of those tools on the key economic variables.  Specifically, I want you to explain how each of the 3 tools would work using the chain of events approach.

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