Question

Quantitative easing (QE) differs from the normal use of open market operations in that it

- Targets short term interest rates

- Targets long term interest rates

- Involves the buying of securities

- Involves the selling of securities

Alan Greenspan, who preceded Janet Yellen and Ben Bernanke as Fed chairperson, was a proponent of

- Discretionary intervention

- A rules-based approach to monetary policy

- Inflation targeting

- Fiscal policy

In the United States and in virtually every other country, the printing of money is

- Strictly a government monopoly

- Open to the free market so that different monies can compete for acceptance with one another

- Limited by the supplies of gold and silver the central bank holds in reserve.

- A privilege that is allowed only to banks that are members of the Federal Reserve System

The Federal Reserve is

- One single bank

- A system of 12 banks located all around the country

- A system of 12 banks all located in Washington D.C.

- A system of banks that includes all private banks

Inflation targeting is a policy in which the Fed

-          Announces an inflation target and then runs monetary policy to hit that target

-          Tries to reduce inflation by setting a low federal funds rate target

-          Tries to reduce inflation by setting a high federal funds rate target

-          Uses open market operations as a method of discretionary intervention

The government and a private business are alike in terms of ________ but different in terms of ________.

- the economic pressure they feel to be efficient; the economic impact of their spending

- the economic impact of their spending; the economic pressure they feel to be efficient

- the economic pressure they feel to be efficient; the nature of their relationships with their customerTop of Form

- the nature of their relationships with their customers; the economic pressure they feel to be efficientBottom of Form

As of 2015, the federal budget deficit was about ________ of GDP, and ________ of the deficit came from interest payments on federal debt.

-2.5 percent; almost all

- 50 percent; almost all

- 2.5 percent; about half

- 50 percent; almost none

A result of budget deficits is that governments have to borrow more, sometimes resulting in

-          Increasing the rate of inflation

-          Decreasing interest rates

-          Increased Foreign borrowing

-          Increasing interest rates

Answer 1

1. A.)) Targets short term interest rates.

Open Market Operations restricted itself to shorter-term government securities, the Fed’s Quatitative Easing asset purchases included longer-term government securities as well as mortgage-backed securities (MBS). Thus rather than focusing solely on affecting short-term interest rates.

2. B.)) Inflation targetting.

Alan Greenspa as Fed chairperson, was a proponent on inflation targetting,where inflation is considered as monetary phenomenon.

3. C.)) Limited by the supplies of gold and silver the central bank holds in reserve.

A central bank, or monetary authority, is a monopolized and often nationalized institution given privileged control over the production and distribution of money and credit. In modern economies, the central bank is responsible for the formulation of monetary policy and the regulation of member banks.

4. B.)) A system of 12 banks located all around the country

The twelve regional Federal Reserve Banks were established as the operating arms of the nation's central banking system is Federal Resereve.