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Which of the following is NOT a lesson to draw from the work of the Federal Reserve under Chairman Volcker when combatting stagflation? (a) fiscal policy is a critical complement to monetary policy when fighting high inflation rates; (b) choking off the supply of bank reserves can strangle money supply growth; (c) the process of strangling money supply growth reduces inflation expectations and eventually brings down long-term interest rates; (d) lower long-term interest rates would help to stimulate demand for the most interest-rate sensitive components of the economy
Which of the following is NOT a lesson to draw from the work of the Federal Reserve under Chairman Volcker when combatting stagflation? (a) fiscal policy is a critical complement to monetary policy when fighting high inflation rates; (b) choking off the supply of bank reserves can strangle money supply growth; (c) the process of strangling money supply growth reduces inflation expectations and eventually brings down long-term interest rates; (d) lower long-term interest rates would help to stimulate demand for the most interest-rate sensitive components of the economy. 61. In response both to Great Financial Crisis and the Covid-19 Crisis, the Federal Reserve: (a) performed reverse repurchase agreements daily; (b) engaged in permanent open market operations that expanded the Fed's asset holdings; (c) sold Treasury securities and sold mortgage-backed securities; (d) increased its federal funds target range to between 2.00% and 2.25%. 62. The possibility that even a relatively or seemingly minor event somewhere in the world could spread and disrupt the entire real economy is known as: (a) operational risk; (b) credit risk (c) a liquidity trap; (d) systemic risk. 63. A key function of microprudential supervision is to uncover: (a) the most effective monetary policy tools; (b) banking practices that jeopardize the safety and soundness of the financial system; (c) digital threats to the real economy: (d) obsolete international agreements hampering the U.S. banking system. 64. Development of new housing tracts in New Mexico is counted in GDP under: (a) personal consumption expenditures for durable goods; (b) personal consumption expenditures on housing services; (c) gross private domestic investment; (d) business fixed investment. (Ctrl) -
Expert Solution
60)
Which of the following is NOT a lesson to draw from the work of the Federal Reserve under Chairman Volcker when combatting stagflation?
The correct answer Option A : fiscal policy is a critical complement to monetary policy when fighting high inflation rates. Fiscal policy was not used by Volcker to fight stagflation since he relied on radical monetary policy to do so. Volcker fought 10% annual inflation rates with contractionary monetary policy and doubled the fed funds rate to 20% in 1980.
61)
In response both to Great Financial Crisis and the Covid 19 Crisis, the Federal Reserve:
The correct answer is Option B: engaged in permanent open market operations that expanded the Fed's asset holdings.
62)
The possibility that even a relatively or seemingly minor event somewhere in the world could spread and disrupt the entire real economy is known as:
The correct answer is Option D systemic risk.
63)
A key function of macro-prudential supervision is to uncover:
The correct answer is Option B: banking practices that jeopardize the safety and soundness of the financial system.
64)
Development of new housing tracts in New Mexico is counted in GDP under
The correct answer is Option C: gross private domestic investment.
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