Which of the following statements is true?
A. The Federal Reserve sets the federal funds rate.
B. The Federal Reserve will set a higher target for the federal funds rate if pursuing an expansionary monetary policy.
C. The Federal Reserve sets the target for the federal funds rate, and then uses the reserve requirement to push banks toward that target.
D. The Federal Reserve does not set the federal funds rate, but it influences it through the use of its open-market operations.
Answer: D
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Which economist created the theory of creative destruction?
A. William Nordhaus B. Joseph Schumpeter C. Adam Smith D. Milton Friedman
__________ is the current Chairman of the Board of Governors of the Federal Reserve.
Fill in the blank(s) with the appropriate word(s).
Consider a many-worker economy with two goods. With access to international trade, a country can consume the greatest amount of both goods by producing at the point where the
A. production possibilities curve intersects the horizontal axis. B. slope of consumption possibilities curve is greater than the slope of the production possibility curve. C. consumption possibilities curve intersects the production possibility curve. D. slope of production possibilities curve is equal to slope of consumption possibilities curve.
Which of the following was not a reason that the Federal Reserve took on additional risks associated with unconventional policy during the recession of 2007–2009?
A. The large budget deficit constrained fiscal policy. B. The inflated price of Treasury bills made them too expensive to purchase in open market operations. C. Only the Federal Reserve acting as the central bank can serve as the lender of last resort. D. The Fed was able to act more quickly than Congress.