Yellen Says Balance-Sheet Unwind Will Be Predictable

Yellen Says Balance-Sheet Unwind Will Be Predictable

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Business

University

Hard

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The video discusses a balance sheet normalization program starting in October, which aims to gradually reduce reinvestments from maturing treasury and agency securities. The program sets caps on the decline of securities holdings, which will increase over the next year. The goal is to prevent market disruptions and interest rate volatility. The balance sheet is not intended as an active monetary policy tool, but adjustments may occur if economic conditions worsen.

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5 questions

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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the main goal of the balance sheet normalization program starting in October?

To gradually decrease reinvestments from maturing securities

To immediately stop all reinvestments

To double the reinvestments in agency securities

To increase the balance sheet size

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What are the initial caps on the decline of securities holdings from October to December?

$8 billion for Treasurys and $6 billion for agencies

$12 billion for Treasurys and $8 billion for agencies

$6 billion for Treasurys and $4 billion for agencies

$10 billion for Treasurys and $5 billion for agencies

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How will the caps on securities holdings change over the following year?

They will fluctuate monthly

They will decrease to zero

They will remain constant

They will gradually rise to maximums

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the primary tool for adjusting the stance of monetary policy?

Balance sheet adjustments

Federal funds rate

Treasury securities reinvestment

Agency securities reinvestment

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Under what condition would the committee consider resuming reinvestments?

If there is a material improvement in the economic outlook

If there is a material deterioration in the economic outlook

If the balance sheet becomes too large

If the federal funds rate is too high