A decrease in the federal funds rate is an indication that monetary policy is expansionary.
Answer the following statement true (T) or false (F)
True
The federal funds rate falls when excess reserves within the banking system increase. The increase in excess reserves is an indication that monetary policy is expansionary.
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Immediately following a business cycle "peak" comes a
A) "trough." B) "recession." C) "expansion." D) "recurrence."
A weak U.S. dollar is one that has:
a. c and e. b. d and e. c. depreciated. d. appreciated. e. helped U.S. exporters.
Tammy installed a set of wind chimes in her backyard. She enjoys listening to the musical tones when the breeze hits them. Her neighbor Steven also enjoys the chimes, but her other neighbor Sally hates the constant noise. Tammy's wind chimes
a. create a negative externality for Steven and a positive externality for Sally b. are not related to the issue of property rights since all parties are homeowners c. are an example of an efficient market since the benefits to one party are balanced by costs to another party d. are a public good because all three parties can hear the wind chimes e. create a positive externality for Steven and a negative externality for Sally
Answer the following statements true (T) or false (F)
1. If the Fed sells $10 million in government securities to commercial banks, the size of the effect on the banks' excess reserves is not the same as if the Fed sold the securities to the public instead. 2. When commercial banks borrow from the Federal Reserve Banks, they decrease their excess reserves and their money-creating potential. 3. The Federal funds rate is the rate that banks charge other banks for overnight loans of excess reserves. 4. If the Fed seeks to maintain a fixed targeted interest rate, then it will have to increase the money supply when the demand for money increases as income increases. 5. If the Fed is targeting a lower federal funds rate, then it is pursuing a restrictive monetary policy.