Term
| This is the most important goal of monetary policy and bankers define this as low and stable inflation |
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Definition
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Term
| This ties down the price level to achieve price stability |
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Definition
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Term
| Five goals are mentioned by central bank officials when they discuss the objectives of monetary policy: |
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Definition
1. High employment
2. Economic growth
3. Stability of financial markets
4. Interest-rate stability
5. Stability in foreign exchange markets |
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Term
| High employment is a worthy goal for two main reasons: |
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Definition
1. The alternative situation- high unemployment- causes much human misery
2. When unemployment is high, the economy has both idle workers and idle resources, resulting in a loss of output |
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Term
| Searches by workers and firms to find suitable matchups |
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Definition
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Term
| A mismatch between hob requirements and the skills or availability of local workers |
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Definition
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Term
| This is when the demand and supply for employment are consistent |
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Definition
| The natural rate of unemployment |
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Term
| The goal of price stability comes first and then the other goals are able to be achieved is called? |
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Definition
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Term
| An economy operating to achieve two co-equal objectives: price stability and maximum employment |
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Definition
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Term
| At this point, we have to realize that ________ __________ will only be beneficial for banks in the long run |
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Definition
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Term
| T/F: Each of the 12 Federal Reserve districts has one main Federal Reserve bank, which may have branches in other cities in the district |
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Definition
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Term
| What are the three largest Federal Reserve banks in terms of assets: |
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Definition
| New York, Chicago, San Fransisco |
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Term
| How many Federal reserve districts are there? |
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Definition
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Term
| The 12 district banks are also involved in monetary policy in four ways: |
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Definition
1. They implement the discount rate that is determined by the Board of Governors
2. They decide which banks can get discount loans
3. Each Fed bank selects one commercial banker to serve on the Federal Advisory Council
4. Five Fed bank presidents each have a vote on the FOMC, which directs open market operations |
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Term
| These are commercial banks chartered by the Office of the Comptroller- these banks are required to be members of the Fed |
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Definition
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Term
| Who is the body that controls the Fed, and where are they located, and how many members do they have? |
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Definition
Board of Governors
Washington, D.C.
Seven |
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Term
| Who sets the reserve requirements? |
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Definition
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Term
| What does FOMC stand for? |
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Definition
| Federal Open Market Committee |
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Term
| How many times does the FOMC meet a year? |
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Definition
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Term
| Who essentially runs the Fed?- He is the spokesperson for them and negotiates with Congress and the Pres |
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Definition
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Term
| There are two different types of independence of central banks: |
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Definition
Instrument independence
Goal independence |
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Term
| The ability of the central bank to set monetary policy instruments |
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Definition
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Term
| The ability of the central bank to set the goals of monetary policy |
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Definition
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Term
| What foreign bank is one of the oldest? |
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Definition
| The Bank of England- 1694 |
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Term
| The objective of a bureaucracy (The Fed) is to maximize its own welfare |
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Definition
| The theory of bureaucratic behavior |
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Term
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Definition
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Term
| Does the Fed avoid the political business cycle? |
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Definition
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Term
| Why was the Federal Reserve created? |
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Definition
| Created in 1913 to lessen the frequency of bank panics |
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