The four tools of monetary policy in a limited reserve environment, as presented in Chapter 16 of your text: a) are open market operations, the reserve ratio (R), the discount rate, and tax changes. b) are open market operations, the reserve ratio (R), the discount rate, and changes in government spending. c) haven't changed in over 50 years. d) are open market operations, the reserve ratio (R), the discount rate, and interest on reserve balances (IORB).

An economy has a reserve ratio equals to 12%. The society is holding 10% of the deposit in the form of cash. a) If the high-powered money (H) is RM100 billion, how much is the money supply in this economy? b) Say the Central Bank targets the money supply is RM650 billion. How much the high-powered money (H) in question a) above should change to achieve this target?   *Prioritize question b

Assume economic growth is weak, reserves are abundant, and the inflation rate has been below the Fed's price stability goal for a significant period of time. Which of the following would best describe an appropriate policy action? a. Lower the target range for the federal funds rate and use open market operations to increase the level of reserves in the banking system. b. Raise the target range for the federal funds rate while simultaneously decreasing the interest on reserve balances rate, overnight reverse repo rate, and discount rate. c. Lower the target range for the federal funds rate and simultaneously decrease the interest on reserve balances rate, overnight reverse repo rate, and discount rate. d. Raise the target range for the federal funds rate and simultaneously increase the interest on reserve balances rate, overnight reverse repo rate, and discount rate.

You find a $1,000 bill hidden beneath the floorboards in your house and decide to deposit it in your checking account. On the same day, the Fed decides to buy $1,000 in government securities from your bank. Assuming a 10 percent reserve requirement, which of these actions creates more money in the economy?

The United States Federal Reserve has two mandates when setting monetary policy - keep annual inflation low (around 2-3%) and the unemployment rate low (around 5%).  Typically, efforts to adjust the money supply to cause inflation to decrease causes unemployment to increase and vice versa. Now, imagine a situation where the United States faces high inflation and high unemployment (called stagflation, was issue in late 1970s).  What do you think the Federal Reserve should do in this situation?

Which of the following is the most accurate description of events when monetary authorities increase the size of commercial banks' excess reserves? Select one: a. The money supply is decreased, which increases the interest rate, and causes investment spending, output, and employment to decrease b. The money supply is increased, which decreases the interest rate, and causes investment spending, output, and employment to increase c. A rise in interest rates increases the money supply, causing a decrease in investment spending, output, and employment d. A fall in interest rates decreases the money supply, causing an increase in investment spending, output, and employment

A primary goal of the Federal Government is to regulate the economy through control over the money supply. True or false

Suppose that the economy is producing above potential GDP and the Fed implements the correct change in monetary policy, but not until after the economy has passed the peak of the boom. Then A) the Fed's contractionary policy will result in too large of a decrease in GDP. B) the Fed's contractionary policy will result in too small of a decrease in GDP. C) the Fed's expansionary policy will result in too small of a decrease in GDP. D) the Fed's expansionary policy will result in too large of an increase in GDP.

Changes in the discount rate are more important than open-market operations in implementing monetary policy. 1) True 2) False

The Federal Reserve Bank relies on three tools to engage in monetary policy:   Question 7 options:   a)  the legal reserve requirements, the discount rate, and the federal funds rate   b)  taxes, government spending, and government transfers   c)  taxes, legal reserve requirements, and the discount rate   d)  government spending, the discount rate, and the federal funds rate