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18 terms
econ test 3
decrease by $100
when the fed sells $100 worth of bonds to the first national bank, reserves in the banking system
decrease, decrease
suppose the economy is producing at the natural rate of output. a decrease in consumer and business confidence will cause _______ in the real GDP in the short run and _____ in the aggregate price level in the short run, everything else held constant
dynamic, sale
suppose on any given day the prevailing equilibrium federal funds rate is below the federal reserve's federal funds target rate. if the federal reserve wishes for the federal funds rate to be at their target level, then the appropriate action for the federal reserve to take is a ______ open market _______ everything else held constant.
decrease, decreases
when a bank buys a government bond from the federal reserve, reserves in the banking system _______ and the monetary base________ everything else held constant
increase, demand
everything else held constant, a decrease in net taxes _________ aggregate _________.
credit-driven
suppose interest rates are kept very low for a long time such that there is a spike int he amount of lending. everything else held constant, this could cause a _______ bubble
reserves and monetary base, the money supply
open market sales shrink ______ thereby lowering ______
discount rate
which of the following is not an operating instrument?
marginal lending rate
the equivalent to the federal reserve's discount rate in the european system of central banks is the _________
no change, decrease
suppose the economy is producing at the natural rate of output. an open market sale of bonds by the fed will cause _____ in the real GDP in the long run and ______ in the aggregate price level in the long run, everything else held constant.
banks, depositors, central bank
the three players in the money supply process include
no change, an increase
suppose the economy is producing at the natural rate of output. an open market purchase of bonds by the fed will cause ________ in real GDP in the long run and ________ in aggregate price level in the long run, everything else held constant/
100
in a simple deposit expansion model, if the fed purchases $100 worth of bonds from a bank that previously had no excess reserves, the bank can now increase its loans by
above, falls
everything else held constant, when the federal funds rate is _______ the interest rate paid on reserves, the quantity of reserves demanded rises when the federal funds rate _______
will not work
if the relationship between the monetary aggregate and the goal variable is weak, then monetary aggregate targeting
demand, horizontal
when the federal funds rate equals the discount rate, the ____ curve for reserves is ______
increase, decline, increase, increase
by analyzing aggregate demand through its component parts, we can conclude that, everything else held constant, a decline in price level causes an _____ in the real money supply, a ____ in interest rates, an in ____ in investment spending, and an ______ in aggregate output demand
open market operations, borrowed reserves, reserve requirements
the fed uses three policy tools to manipulate the money supply, ______ which affect reserves in the monetary base _______ which affect the monetary base, and changes in the ________ which affect the money multiplier