Macroeconomics

Make sure you show all your work for the problems requiring calculations.Otherwise, you will not receive credit for the question.

1.Explain the roles of the Fed, Congress, and the President in Monetary Policy.

2.According to the Federal Reserve Act and subsequent amendments, what are the three goals/objectives of monetary policy?

3.Define Federal funds rate.

4.What does the core PCE deflator measure changes in?

5.If the Fed is fighting a recession,

a.Will they buy or sell securities from banks?

b.What will they do with the federal funds rate?

c.What will happen to Aggregate Demand?

d.What will happen to real GDP?

e.What will happen to price level?

6.If the Fed is battling an inflationary gap and sells government securities to banks,

a.What will they do to the federal funds rate?

b.What happens to the supply of loanable funds curve?

c.What will happen to the AD curve?

d.What happens to price level?

e.What happens to real GDP?

7.If the federal funds rate increases, what will happen to

a.Other interest rates?

b.Consumption?

c.Investment?

d.Net exports?

e.AD curve?