1. Put the following tools of monetary policy in order, from earliest to latest, of when the Fed used them as their primary instrument.

A. Open market operations
B. Discount loans
C. Interest paid on excess reserves

Group of answer choices

C, B, A

C, A, B

B, A, C

A, B, C

2. If the Fed wants to encourage spending and get the economy out of recession, it could [ Select ] ["decrease", "increase"] the reserve requirement ratio, [ Select ] ["increase", "decrease"] the interest rate paid on excess reserves, or [ Select ] ["sell government bonds to banks", "buy government bonds from banks"] in the open market.

3. Let's say that the government lowers taxes, and the Fed puts a high priority on keeping interest rates at their current level.

This would mean that the IS curve shifts [ Select ] ["leftward", "rightward"] and the Fed would have to [ Select ] ["raise the opportunity cost of holding cash", "lower the money supply", "raise the money supply", "lower the opportunity cost of holding cash"] to keep rates constant.

Answer rating: 100% (QA)

1 A B C The federal started using since 1920s and Interest paid on excess reserves ... View the full answer