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As a keen student of the Great Depression, Federal Reserve Chairman Ben Bernanke became concerned when short term interest rates such as the federal funds rate fell below 0.5 percent in late 2008 as the Fed responded to the financial crisis. Bernanke

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1. ___________ (Inside/Outside) lags are longer for the Fed. 2. Experimental evidence shows us that individuals perform ________ than committees in making monetary policy decisions. 3. Long-term interest rates can be thought of as ________of short-term rates. 4. The Fed directly controls

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1. When the Federal Reserve sells bonds on the open market, it leads to ______ (higher/lower) levels of investment and output in the economy. 2. To decrease the level of output, the Fed should conduct an open market______ (sale/purchase) of bonds. 3.

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1. Interest rates typically fall in a recession because the demand for money depends______ on changes in real income. 2. If interest rates are 9 percent per year, the price of a bond that promises to pay $109 next year will be

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1. To increase the supply of money, the Fed should_______ bonds. 2. Increasing reserve requirements _______ the supply of money. 3. Banks trade reserves with one another in the _______ market. 4. Banks borrow from the Fed at the rate. 5.

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1. We measure the of holding money with ________. 2. Money demand will________ (increase/decrease) as prices fall. 3. The principle of ________suggests that the demand for money should increase as prices increase. 4. The ________demand for money arises because

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Traditionally, to conduct monetary policy and to expand the money supply, the Fed purchased either outright or on temporary basis Treasury securities. When it purchased these securities for the public, it credited the reserve accounts in banks and the amount of these

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When Professor Alan Blinder returned to teaching after serving as vice-chairman of the Federal Reserve from 1994 to 1996, he was convinced that committees were not effective for making decisions about monetary policy. With another researcher, Blinder developed an experiment to determine

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Economists have often noticed that as an economy recovers from a recession, interest rates start to rise. And, in general, interest rates tend to rise as the economy grows quickly. An example occurred during 2005, when interest rates on three-month Treasury bills

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1. The Federal Reserve is the ________of last resort. 2. The San Francisco Federal Reserve Bank is the only one in the West because San Francisco outbid Los Angeles to be its host. ________ (True/False) 3. The ________votes on monetary policy.