Fed Policy Procedures: Historical Perspective
1) During the 1950s, the Fed targeted
A) M1.
B) M2.
C) the monetary base.
D) money market conditions.
2) During the 1950s, Fed monetary policy targeted
A) the monetary base.
B) the exchange rate.
C) discount loans.
D) interest rates.
3) Targeting interest rates can be procyclical because
A) an increase in income increases interest rates, causing the Fed to buy bonds, increasing the monetary base and money supply, leading to further increases in income.
B) an increase in interest rates increases income, causing the Fed to buy bonds, increasing the monetary base and money supply, leading to further increases in income.
C) an increase in the monetary base increases the money supply, causing the Fed to buy bonds, increasing the monetary base and money supply, leading to further increases in income.
D) an increase in income increases the monetary base and money supply, causing the Fed to buy bonds to increase interest rates and income.