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paul volcker served as chairman of teh federal reserve board for two presidents. who were they?
jimmy carter and ronald reagan
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who was the president of the US when the fed reserve switched to targeting monetary aggregates?
jimmy carter
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what formal policy change was announced by paul volcker on oct 6 1979?
the fed would switch from targeting the fed funds rate to targeting monetary aggregates
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what is the best explanation for paul volckers decsion to target monetary aggregates in 1979?
he wanted to avoid teh blame for the rise in interest rates that accompanied his anti inflation policies
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what was milton friedmans recommendation to the fed open market committee during the 1970s?
the fomc should abandon interest rate targets and adobt a monetary growth target
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who gets the oscar for best supporting actor during paul volckers term as chairman?
milton friedman
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which economist ws the strongest advocate of targeting monetary aggregates during the 1970s?
milton friedman
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what is teh misery index?
inflation rate + unemployment rate
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how did the US participate in the international monetary system from 1944-1971?
the US treasury allowed foreign central banks to redeem dollars for gold at $35 per ounce
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when was the bretton woods agreement adopted?
1944
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what action regarding the US dollar was taken by president richard nixon in 1971?
president nixon terminated gold convertibility and allowerd the dollar to float in the foreign exchange markets
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the price of west texas intermediate curde went form $2.50/barrel to $40/barrel during which post war decade?
between 1970-79
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inflation exceeded 10% for the first time during which post war decade?
between 1970-79
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the one year treasury bill yield exceeded 10% for the first time during which post war decade?
1970-79
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according to economist and historian allan meltzer, whyu did the FOMC fail to control moeny growth and inflation from 1970-79?
the FOMC was concerned that an anti inflation program would create unacceptably high interest rates and unemployment
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what was milton friedmans ideal monetary policy?
friedman advocated replacing the open market desk at the FRBNY with a computer that would be programmed to have the moeny supply grow at 3% per year
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which economist advocated the elimination of the fed reserve system?
milton friedman
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what was milton friedmans challenge to the orthodox view of the phillips curve in the 1960s?
friedman argued that in teh long run, higher rates of inflation would have no effect on unemployment
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what was the previling view of the phillips curve in the 1960s?
higher rates of inflation would permanently reduce the level of unemployment
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a commercial bank is prohibited from accepting brokered deposits. how is this bank clasified according to the standards set in the 1991 FDIC improvement act?
adequately capitalized
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a commercial bank is prohibited from paying dividends. how is it classified according to the 1991 FDIC improvement act?
undercapitalized
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a commercial bank has been prohibited form accepting raising the yield paid to depositors and icnreaseing the salaries of bank officers. how is this bank classified according to 1991 fdic improvemetn act?
significantly undercapitalized
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a commercal bank has been placed in receivership. how is bank classified according to 1991 fdic improvement act?
critically undercapitalized
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in the 1982 fdic annual report, which regulatory policy or procedure caused william isaac to be most converned aobut he erosion of market discipline?
a strong preference for purchase and assumptions when resolving bank failures
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when did fed regulators formally admit to too big to fail policy?
following the continental illinois crisis in may 1984
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why does the 1984 failure of continental illinois represent an unprecedented change in policy?
fed regulators declared all deposits were to be protected, regardless of teh $100,000 insurance limit, before tha bank actually failed
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fed regulators were able to protect all depositors(even those about the $250000 limit) when resolving a bank failure. what method is used to achieve this?
purchase and assumption
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the fed deposit insurance corporation chooses to compensate insured depositors and liquidate a failed bank. what is the name for this procedure?
dposit payout
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what was the most significant aspect of the change in risk based captial standards introduced with basel II and subsequently elimated by dodd frnak?
classifiacton of risk was delegated to external (non governmental for profit) rating agencies
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some borrowers complined that basel I created a credit crunch. what was the basis for this complaint?
basil I encouraged undercapitalized banks to substitite treasury notes or bonds for commercial loans
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why was the penn square bank front page news on the wall street journal when it failed?
five major vanks, including chase and continental, had purchased loans of dubious quality from penn square
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what is the single largest line item in teh montly statment of the public debt?
the oasi trust fund
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how is the OASI trust fund classified on the MSPD?
intra governmental holdings of nonmarketable securities
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what action must be taken by the treasury when social security expenditures exceed revenues?
the treasury must issude new debt or transfer funds fromt eh general revenue until the OASI trust fund is exhausted
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the social security system is currently experiencing an operating deficit. since the other parts of the fed budget are also in deficit, how will the social security deficit affect the national debt and the debt held by the public?
the debt held by the public will increase but the national debt will be unchanged
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how is the system open market account classified on the MSPD?
marketable securities held by the public
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what is the difference between the national debt and debt held by the public?
the national debt is equal to the debt held by the public plus intra governmental holdings
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how can we calculate the debt held by teh public (as defined by the treasury) from teh national debt and intra governmental holdings?
we subtract intra governmental holdings from the national debt
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the peoples republic of china has a portfolio of approximately 725 billion dollars of treasury bills, notes, and bonds. how is this portfolio classified on the monthly statment of public debt?
marketable securities held by the public
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how does the congressional budget office (CBO) describe the various trust funds of the federal government, including the social security trust fund?
they are future spending authority for teh various programs
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what does the OASI trust fund represent in fiance terms?
the accumulated value of social security surpluses spent elsewhere, plus interest
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how is the amount of the OASI trust fund calculated?
it is the ucmulative sum of the net revenue from social security in prior years, plus interest
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the OASI trust fund is an asset to which governemnt agency?
social security administration
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the OASI trust fund is a liability to which government agency?
the US treasury
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what is the net asset value of the social security trust fund of teh US governmetn as a whole?
zero
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how do open market operations affect the OASI trust fund?
open market operations have no direct effect the OASI trust fund
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who was the president of the US when the social security system strted to produce unprecented surpluses?
ronald reagan
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according to the 2009 soc. sec. trustees report, soc. sec. represented an unfunded liability of $5.3 trillion dollars over the 75 year horizon. what does this number mean?
it is equal to the PV of projected soc. sec. revenues minus the PV of projected soc. sec. expenditures
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is it possible for teh national debt to increase while the debt held by the public doesnt change?
yes, for example if soc. sec has a surplus the operating budget has a deficit
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is it possible for teh national debt to decline while hte debt held by the public does not change?
yes, for exmple if soc. sec. has a deficit and the oeprating budge has a surplus
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is it possible for teh debt held by the public to decline while national debt is unchanged?
yes, for ex. soc. sec. has a surplus and operating budget is balanced
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is it possible for debt held by the public to incerase while national debt is unchanged
yes, for ex. if soc. sec. has a deficit and operating budget is balanced
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what would be the immediate effect of an increase in teh social security tax rate on the OASI trust fund?
none
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which economic variable did milton friedman choose as the best available target for the federal resrve in his 1968 paper on the role of monetary policy?
the quanitity of money
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according to the author and financial analyst george cooper, which even marks the birth of the inflation monster?
exectuive order 6102: president franklin roosevelt prohibits US citizens from owning gold bullion
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during the spring of 2008, the fed reserve announced a return to a monetary policy that was abandoned after the accord. what is this policy?
chairman bernanke announced that the oopen market desk would purchase long term treasury bonds in order to maintain their price
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what ws the significance of the accord between the fed reserve and treasury?
fed asserted its independence of the treasury
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what was the relationship between state chartered banks and the fed reserve prior to 1980?
only those state chartered banks that had joined teh fed reserve system were granted access to the discount window
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how did the depository institutions deregulation and monetary control act of 1980 affect state and nationally chartered banks?
fed membership was not affected in 1980 but the practical advantage of statge charter was greatly reduced
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what was the significance of a state or national charter, prior to 1980?
membership in the federal reserve system was mandatory for national banks and optional for state banks
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according to economist allan meltzer, one even marks the "birth of the modern fed" which one"?
the accord between teh fed and treasury
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which monetary policy did the fed pursue during the period 1942-51?
pegging the tresury bond rate at 2.5%
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what is the difference between the fed reserve system and the US treasury?
the fed reserve can buy bonds or it can sell bonds from its portfolio, but only the tresury can issue new bonds
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what is the fed to treasury transfer?
excess profits of the federal resrve that are repatriated to the treasury
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what are reserve requiremetns?
reserves that financial institutions must maintain against depostits
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what was the primary tool of the fed during the 1920s?
discount window
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what is wicksells theory about the natural rate of interst?
holding the market rate below the natural rate will reulst in a continuous and accelerating invlation
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what are excess reserves?
reserves against deposits that exceed the legal minimum
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