Financial Markets and Institutions (2-downloads)

p. 224

deposit facility, p. 231

discount rate, p. 216

discount window, p. 226

dual mandate, p. 236

dynamic open market operations, 

p. 224

excess reserves, p. 215

federal funds rate, p. 217

hierarchical mandate, p. 236

inflation targeting, p. 237

intermediate target, p. 246

lender of last resort, p. 227

longer-term refinancing operations, 

p. 231

macroprudential regulation, p. 245

main refinancing operations, p. 231

marginal lending facility, p. 231

marginal lending rate, p. 231

matched sale-purchase transaction

(reverse repo), p. 226

monetary base, p. 215

natural rate of unemployment, p. 234

nominal anchor, p. 232

open market operations, p. 216

operating instrument, p. 246

overnight cash rate, p. 230

policy instrument, p. 246

price stability, p. 232

primary dealers, p. 225

repurchase agreement (repo), p. 226

required reserve ratio, p. 216

required reserves, p. 215

reserve requirements, p. 218

reserves, p. 215

reverse transactions, p. 231

standing lending facility, p. 226

swap lines, p. 229

target financing rate, p. 230

time-inconsistency problem, p. 232

Q U E S T I O N S

1. “Unemployment is a bad thing, and the government

should make every effort to eliminate it.” Do you

agree or disagree? Explain your answer.

2. Which goals of the Fed frequently conflict?

3. “If the demand for reserves did not fluctuate, the Fed

could pursue both a nonborrowed reserves target and

an interest-rate target at the same time.” Is this state-

ment true, false, or uncertain? Explain your answer.

4. Classify each of the following as either an operating

target or an intermediate target, and explain why.