Kenneth R. Szulczyk
Open Market Trading Desk
dynamic transaction
defensive transaction
outright purchase and sale
Federal Reserve repurchase agreement
Reverse REPO
discount policy
discount rate
discount window
adjustment credit
seasonal credit
extended credit
high employment
economic growth
financial market and institution stability
interest rate stability
foreign-exchange market stability
information lag
administrative lag
impact lag
intermediate target
operating target
procyclical monetary policy
cyclical asymmetryChapter Questions
- What happens to bank reserves, interest rates, bond prices, and the money supply if the Fed
bought U.S. Treasury securities? - What happens to bank reserves, interest rates, bond prices, and the money supply if the Fed
sold U.S. Treasury securities? - Explain why the Fed concentrates on the growth rate of the money supply or short-term
interest rates, but not both at the same time. - Distinguish between REPOS and reverse REPOS, and identify their purpose.
- Distinguish between dynamic and defensive transactions.
- Explain why open-market operations are such an important monetary tool.
- What happens to the short-term interest rates, bank reserves, and the money supply if the
Fed changes the discount rate? - Identify the three credit-loans that the Fed can grant to banks.
- Explain how the Fed prevents banks from abusing their privilege in receiving Fed loans.
- Identify the problems in using discount policy as a monetary tool.
- Why do the financial analysts and the public scrutinize the federal funds market?
- Explain why reserve requirements are such a powerful monetary tool.