Question 1

Which of the following is NOT a tool used by the Fed to implement monetary policy?

Accepted Answer

A)  Printing Federal Reserve notes and minting coins
B)  The discount rate
C)  The reserve requirement
D)  Open market operationsE) A) and B)
F) A) and C)

Question 2

Open market operations refer to purchase and sales of

Accepted Answer

A)  bonds by the United States Treasury.
B)  United States Treasury securities on the open market by the Fed.
C)  corporate stocks and bonds by the corporation commission.
D)  corporate securities on the open market by the FeD.E) A) and D)
F) A) and C)

Question 3

An individual bank may legally loan out an amount equal to its _________.

Accepted Answer

The answer of An individual bank may legally loan out...

Question 4

Primary reserves are held in the form of ____ and _____;secondary reserves are held in the form of ____.

Accepted Answer

vault cash;deposits ...

Question 5

The purpose of a tight money policy is to

Accepted Answer

A)  alleviate recessions.
B)  raise interest rates and restrict the availability of bank credit.
C)  run budget surpluses.
D)  increase investment spending.E) A) and B)
F) All of the above

Question 6

Statement I: Trillions of dollars are transferred electronically every day in the United States.
Statement II: In terms of dollars transferred,the main electronic network is run by the Federal Reserve.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.E) All of the above
F) B) and C)

Question 7

The discount rate is the interest

Accepted Answer

A)  rate at which the central banks lend to the United States Treasury.
B)  rate at which the Federal Reserve Banks lend to commercial banks and thrift institutions.
C)  yield on long-term government bonds.
D)  rate at which commercial banks and thrifts lend to the public.E) None of the above
F) A) and B)

Question 8

Sales of government securities to banks ____ total and excess reserves and ____ the money supply.

Accepted Answer

A)  increase;decrease
B)  decrease;increase
C)  decrease;decrease
D)  increase;increaseE) B) and D)
F) C) and D)

Question 9

Which one of the following equations is correct?

Accepted Answer

A)  Total reserves minus excess reserves equals required reserves.
B)  Excess reserves minus required reserves equals total reserves.
C)  Required reserves equals excess reserves divided by total reserves.
D)  Total reserves equals excess reserves divided by required reserves.
E)  Excess reserves plus outstanding loans equals total reserves.F) A) and E)
G) C) and D)

Question 10

The deposit expansion multiplier on bank reserves is

Accepted Answer

A)  the reserve requirement.
B)  one minus the reserve requirement.
C)  one.
D)  one divided by the reserve requirement.E) A) and B)
F) C) and D)

Question 11

If all banks are subject to a uniform 20% reserve requirement and demand deposits are the only form of money,a $1,000 open market purchase by the Fed would cause the money supply to

Accepted Answer

A)  increase by $1,000.
B)  decrease by $1,000.
C)  decrease by $5,000.
D)  increase by $5,000.E) B) and C)
F) A) and D)

Question 12

Which statement is true?

Accepted Answer

A)  The Fed can induce people to buy United States government securities,but it can't induce them to sell.
B)  The Fed can induce people to sell United States government securities,but it can't induce them to buy.
C)  The Fed can induce people to buy and sell United States government securities.
D)  The Fed cannot induce people to buy or sell United States government securities.E) B) and C)
F) All of the above

Question 13

Which is not a job of the Federal Reserve?

Accepted Answer

A)  Check clearing
B)  Issuing currency
C)  Insuring bank deposits
D)  Controlling the rate of growth of the money supplyE) All of the above
F) C) and D)

Question 14

A commercial bank can add to its actual reserves by

Accepted Answer

A)  lending money to bank customers.
B)  buying bonds from the public.
C)  buying bonds from a Federal Reserve Bank.
D)  borrowing from a Federal Reserve Bank.E) All of the above
F) B) and C)

Question 15

Which of the following will tend to make the deposit expansion multiplier a larger number?

Accepted Answer

A)  A decrease in loans made by commercial banks.
B)  An increase in loans made by commercial banks.
C)  An increase in the prime interest rate.
D)  An increase in the money supply.
E)  A decrease in the required reserve ratio.F) B) and D)
G) A) and B)

Question 16

The most powerful individual in the Federal Reserve System is the

Accepted Answer

A)  senior member of the Federal Open Market Committee.
B)  Superintendent of the Board of Governors.
C)  Chairman of the Federal Reserve Board.
D)  New York District Bank President.E) B) and C)
F) A) and D)

Question 17

When there is a great deal of inflation the Fed will

Accepted Answer

A)  sell securities on the open market.
B)  buy securities on the open market.
C)  both sell and buy securities on the open market.
D)  not sell nor buy securities on the open market.E) B) and C)
F) None of the above

Question 18

Which of the following policy action by the Fed is likely to cause the money supply to increase?

Accepted Answer

A)  An open market sale.
B)  An increase in required reserve ratios.
C)  An increase in the discount rate.
D)  An open market purchase.E) B) and D)
F) None of the above

Question 19

Which statement is true?

Accepted Answer

A)  Banks get a significant part of their total revenue from interest on their primary reserves.
B)  Banks try to carry as much in excess reserves as they possibly can.
C)  Only a small fraction of the nation's banks are subject to the reserve requirements of the Federal Reserve.
D)  The banks have received interest on their reserves since October,2008.E) C) and D)
F) None of the above

Question 20

The main reason that banks borrow from the Fed is that they _________.

Accepted Answer

have short...

Exam 14: The Federal Reserve and Monetary Policy

Which is not a job of the Federal Reserve?

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Which of the following policy action by the Fed is likely to cause the money supply to increase?

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An individual bank may legally loan out an amount equal to its _________.

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Sales of government securities to banks ____ total and excess reserves and ____ the money supply.

Correct AnswerverifiedShow Answer

Which statement is true?

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The discount rate is the interest

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The main reason that banks borrow from the Fed is that they _________.

Correct Answerverifiedhave short...View AnswerShow Answer

The purpose of a tight money policy is to

Correct AnswerverifiedShow Answer

When there is a great deal of inflation the Fed will

Correct AnswerverifiedShow Answer

The deposit expansion multiplier on bank reserves is

Correct AnswerverifiedShow Answer

Open market operations refer to purchase and sales of

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Which of the following will tend to make the deposit expansion multiplier a larger number?

Correct AnswerverifiedShow Answer

Statement I: Trillions of dollars are transferred electronically every day in the United States. Statement II: In terms of dollars transferred,the main electronic network is run by the Federal Reserve.

Correct AnswerverifiedShow Answer

A commercial bank can add to its actual reserves by

Correct AnswerverifiedShow Answer

Which statement is true?

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Primary reserves are held in the form of ____ and _____;secondary reserves are held in the form of ____.

Correct Answerverifiedvault cash;deposits ...View AnswerShow Answer

If all banks are subject to a uniform 20% reserve requirement and demand deposits are the only form of money,a $1,000 open market purchase by the Fed would cause the money supply to

Correct AnswerverifiedShow Answer

Which one of the following equations is correct?

Correct AnswerverifiedShow Answer

The most powerful individual in the Federal Reserve System is the

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Which of the following is NOT a tool used by the Fed to implement monetary policy?

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Sales of government securities to banks total and excess reserves and the money supply.

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have short...
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Primary reserves are held in the form of __ and _;secondary reserves are held in the form of __.

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vault cash;deposits ...
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