When the Fed embarked on a policy known as quantitative easing, they
A) slowly lowered the federal funds rate target until it was equal to zero.
B) reduced the required reserve ratio by one-quarter point per month for 12 months.
C) bought longer-term securities than are usually bought in open market operations.
D) opened up lending to primary dealers, commercial banks, and investment banks.
Answer: C
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Which of the following activities can give rise to a positive externality?
A) Jogging every morning B) Getting a flu vaccination C) Consuming herbal products D) Buying a pair of gloves
Economists refer to the inputs that firms use to produce goods and services as
a. derived factors. b. derived resources. c. factors of production. d. instruments of revenue.
If the reserve requirement is 20 percent and a new deposit of $10,000 in cash is made by a customer to their checking account, by how much are excess reserves increased?
A. $10,000 B. $8,000 C. $4,000 D. $2,000
Answer the following questions true (T) or false (F)
1. The relationship between GDP and the money supply has gotten stronger since the 1980s. 2. The Fed has adopted an interest rate target for most of the time since World War II. 3. Inflation targeting allows monetary policy to focus on inflation and inflation forecasts except during times of severe recession.