21.1Â Â The FOMC Directive 1) The Federal Open Market Committee directive is a A) general statement of Federal Reserve policy goals. B) detailed description of government security purchases to be carried out by the New York Federal Reserve bank. C) statement specifying the maximum level of inflation the Federal Reserve will accept. D) statement specifying the maximum level of unemployment the Federal Reserve will accept. 2) When forecasting interest rates and the direction of monetary policy, economists often examine the A) Federal Deposit Insurance Corporation Report. B) Economic Report of the President. C) Federal Advisory Council Statement. D) Federal Open Market Committee directive. 3) The FOMC directive contains a target growth rate for A) nominal GDP. B) real GDP. C) the inflation rate. D) M2. 4) The FOMC directive does not contain a target A) growth rate for M1. B) growth rate for M2. C) growth rate for M3. D) federal funds interest rate. 21.2Â Â The Fed’s Strategy 1) Which of the following is an ultimate objective of the Federal Reserve? A) Real GDP growth B) M1 growth C) M2 growth D) Low interest rates 2) Which of the following is a goal of the Federal Reserve? A) The federal funds rate target B) Changes in reserve aggregates C) Changes in monetary aggregates D) Control of the rate of inflation 3) The unemployment rate is an example of a Federal Reserve A) tool. B) operating target. C) intermediate target. D) ultimate objective. 4) Which order does the Federal Reserve’s plan for implementing monetary policy follow? A) Tools => Intermediate Targets => Operating Targets => Goals B) Goals => Tools => Intermediate Targets => Operating Targets C) Tools => Operating Targets => Intermediate Targets => Goals D) Tools => Goals => Operating Targets => Intermediate Targets 5) Which of the following is a reserve target specified in the FOMC directive? A) Bank reserves B) Commercial bank capital requirements C) Demand deposits D) The prime rate 6) Which of the following is an interest rate target specified in the FOMC directive? A) Discount rate B) Treasury bond rate C) Federal funds rate D) The prime rate