Fed Policy Procedures: Historical Perspective
1) The Fed”s use of the ________ as an operating target in the 1970s resulted in ________ monetary policy.
A) federal funds rate; countercyclical
B) federal funds rate; procyclical
C) M1 money supply; countercyclical
D) M1 money supply; procyclical
2) In the 1970s, the Fed selected an interest rate as an operating target rather than a reserve aggregate primarily because it
A) had no interest in targeting a monetary aggregate, as evidenced by its unwillingness to target a reserve aggregate.
B) was still very concerned with achieving interest rate stability.
C) was committed to targeting free reserves.
D) was committed to the real bills doctrine.
3) The Fed operating procedures employed between 1979 and 1982 resulted in ________ swings in the federal funds rate and ________ swings in the M1 growth rate.
A) increased; increased
B) increased; decreased
C) decreased; decreased
D) decreased; increased