Question 1

Answer the indicated question on the basis of the information in Table 14.1.Each question is based on the original balance sheet.
 
-Using the reserve requirement in Table 14.1,if the Fed buys $25 billion worth of bonds in the open market,the lending capacity of the banking system will _______ by approximately ______.

Accepted Answer

A)   Rise;$25 billion
B)   Rise;$250 billion
C)   Fall;$25 billion
D)   Fall;$250 billionE) A) and D)
F) A) and C)

Question 2

Answer the indicated question on the basis of the information in Table 14.1.Each question is based on the original balance sheet.
 
-In Table 14.1,the level of total reserves is equal to:

Accepted Answer

A)   $1 trillion.
B)   $920 billion.
C)   $880 billion.
D)   $80 billion.E) None of the above
F) B) and D)

Question 3

By raising or lowering the ______,the Fed changes the cost of money for banks,which impacts the incentive to borrow reserves.

Accepted Answer

A)   Reserve ratio
B)   Discount rate
C)   Money multiplier
D)   YieldE) A) and B)
F) A) and C)

Question 4

Answer the indicated question on the basis of the information in Table 14.2.Each question is based on the original balance sheet.
 
-Using the reserve requirement in Table 14.2,if the Fed buys $20 billion worth of bonds in the open market,the lending capacity of the banking system will _______ by approximately ______.

Accepted Answer

A)   Rise;$20 billion
B)   Rise;$133 billion
C)   Fall;$20 billion
D)   Fall;$133 billionE) B) and C)
F) None of the above

Question 5

The twelve regional Federal Reserve banks are responsible for:

Accepted Answer

A)   Accepting deposits from nonbank businesses.
B)   Providing currency to other countries.
C)   Lending money to individuals.
D)   Lending reserves to private banks.E) None of the above
F) A) and B)

Question 6

The 12 regional Fed banks do all of the following except:

Accepted Answer

A)   Clear checks between private banks.
B)   Lend money to individuals.
C)   Provide currency to banks.
D)   Hold bank reserves.E) C) and D)
F) None of the above

Question 7

Ceteris paribus,the amount of required reserves decreases when the dollar volume of transactions accounts increases.

Accepted Answer

A) True 
 B)False

Question 8

Expansionary monetary policy will:

Accepted Answer

A)   Reduce the lending capacity for banks.
B)   Raise interest rates.
C)   Encourage people to borrow more money.
D)   Reduce the equilibrium price level.E) None of the above
F) B) and C)

Question 9

According to the monetarist view,the aggregate supply curve is:

Accepted Answer

A)   Upward sloping to the right.
B)   Perfectly vertical at the natural rate of unemployment.
C)   Flat or horizontal until full employment is reached.
D)   Flat or horizontal at all levels of output.E) A) and C)
F) C) and D)

Question 10

Which of the following is not a basic monetary policy tool used by the Fed?

Accepted Answer

A)   Deposit insurance
B)   The reserve requirement
C)   The discount rate
D)   The sale and purchase of Treasury bondsE) None of the above
F) A) and B)

Question 11

If the Fed wishes to decrease the money supply it can:

Accepted Answer

A)   Raise the discount rate.
B)   Buy bonds on the open market.
C)   Decrease the required reserve ratio.
D)   Decrease the federal funds rate.E) All of the above
F) C) and D)

Question 12

Which of the following best describes the eclectic aggregate supply curve?

Accepted Answer

A)   Horizontal until full employment is reached,and then it becomes vertical.
B)   Vertical at all output levels.
C)   First horizontal,then upward sloping,and finally vertical.
D)   Downward sloping.E) A) and D)
F) A) and C)

Question 13

Monetary policy involves the use of money and credit controls to:

Accepted Answer

A)   Move the economy along the aggregate demand curve.
B)   Move the economy along the aggregate supply curve.
C)   Shift the aggregate demand curve.
D)   Shift the aggregate supply curve.E) B) and D)
F) B) and C)

Question 14

If the Fed wants to increase bank reserves,it can:

Accepted Answer

A)   Buy bonds.
B)   Raise the discount rate.
C)   Raise the reserve requirement.
D)   Sell bonds.E) A) and B)
F) A) and C)

Question 15

The interest rate private banks charge each other for lending reserves is called the federal funds rate.

Accepted Answer

A) True 
 B)False

Question 16

The rate of interest banks charge each other for lending reserves is the:

Accepted Answer

A)   Federal funds rate.
B)   Discount rate.
C)   Money multiplier.
D)   Excess reserve rate.E) None of the above
F) A) and D)

Question 17

Briefly explain the theory of advocates of "discretionary: monetary policy and the theory of the advocates of "fixed rules" policy".

Accepted Answer

Advocates of discretionary monetary poli...

Question 18

Answer the indicated question on the basis of the information in Table 14.1.Each question is based on the original balance sheet.
 
-Based on the information in Table 14.1,the money multiplier is equal to:

Accepted Answer

A)   1.5.
B)   7.5.
C)   10.0.
D)   11.6E) C) and D)
F) A) and B)

Question 19

Answer the indicated question on the basis of the information in Table 14.2.Each question is based on the original balance sheet.
 
-Based on the information in Table 14.2,the required reserve ratio is:

Accepted Answer

A)   30 percent.
B)   20 percent.
C)   15 percent.
D)   10 percent.E) B) and C)
F) C) and D)

Question 20

For a given amount of total reserves,a decrease in required reserves causes an increase in excess reserves.

Accepted Answer

A) True 
 B)False

Exam 14: Monetary Policy

Ceteris paribus,the amount of required reserves decreases when the dollar volume of transactions accounts increases.

Correct Answer
verified

For a given amount of total reserves,a decrease in required reserves causes an increase in excess reserves.

Correct Answer
verified

Correct Answer
verified

Which of the following is not a basic monetary policy tool used by the Fed?

Correct Answer
verified

The twelve regional Federal Reserve banks are responsible for:

Correct Answer
verified

The rate of interest banks charge each other for lending reserves is the:

Correct Answer
verified

If the Fed wants to increase bank reserves,it can:

Correct Answer
verified

Monetary policy involves the use of money and credit controls to:

Correct Answer
verified

According to the monetarist view,the aggregate supply curve is:

Correct Answer
verified

By raising or lowering the ______,the Fed changes the cost of money for banks,which impacts the incentive to borrow reserves.

Correct Answer
verified

Which of the following best describes the eclectic aggregate supply curve?

Correct Answer
verified

The 12 regional Fed banks do all of the following except:

Correct Answer
verified

Answer the indicated question on the basis of the information in Table 14.1.Each question is based on the original balance sheet. -In Table 14.1,the level of total reserves is equal to:

Correct Answer
verified

Briefly explain the theory of advocates of "discretionary: monetary policy and the theory of the advocates of "fixed rules" policy".

Correct Answer
verified
Advocates of discretionary monetary poli...
View Answer

Answer the indicated question on the basis of the information in Table 14.2.Each question is based on the original balance sheet. -Based on the information in Table 14.2,the required reserve ratio is:

Correct Answer
verified

If the Fed wishes to decrease the money supply it can:

Correct Answer
verified

The interest rate private banks charge each other for lending reserves is called the federal funds rate.

Correct Answer
verified

Answer the indicated question on the basis of the information in Table 14.1.Each question is based on the original balance sheet. -Based on the information in Table 14.1,the money multiplier is equal to:

Correct Answer
verified

Correct Answer
verified

Expansionary monetary policy will:

Correct Answer
verified

Exam 14: Monetary Policy

Ceteris paribus,the amount of required reserves decreases when the dollar volume of transactions accounts increases.

Correct AnswerverifiedShow Answer

For a given amount of total reserves,a decrease in required reserves causes an increase in excess reserves.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not a basic monetary policy tool used by the Fed?

Correct AnswerverifiedShow Answer

The twelve regional Federal Reserve banks are responsible for:

Correct AnswerverifiedShow Answer

The rate of interest banks charge each other for lending reserves is the:

Correct AnswerverifiedShow Answer

If the Fed wants to increase bank reserves,it can:

Correct AnswerverifiedShow Answer

Monetary policy involves the use of money and credit controls to:

Correct AnswerverifiedShow Answer

According to the monetarist view,the aggregate supply curve is:

Correct AnswerverifiedShow Answer

By raising or lowering the ______,the Fed changes the cost of money for banks,which impacts the incentive to borrow reserves.

Correct AnswerverifiedShow Answer

Which of the following best describes the eclectic aggregate supply curve?

Correct AnswerverifiedShow Answer

The 12 regional Fed banks do all of the following except:

Correct AnswerverifiedShow Answer

Answer the indicated question on the basis of the information in Table 14.1.Each question is based on the original balance sheet. -In Table 14.1,the level of total reserves is equal to:

Correct AnswerverifiedShow Answer

Briefly explain the theory of advocates of "discretionary: monetary policy and the theory of the advocates of "fixed rules" policy".

Correct AnswerverifiedAdvocates of discretionary monetary poli...View AnswerShow Answer

Answer the indicated question on the basis of the information in Table 14.2.Each question is based on the original balance sheet. -Based on the information in Table 14.2,the required reserve ratio is:

Correct AnswerverifiedShow Answer

If the Fed wishes to decrease the money supply it can:

Correct AnswerverifiedShow Answer

The interest rate private banks charge each other for lending reserves is called the federal funds rate.

Correct AnswerverifiedShow Answer

Answer the indicated question on the basis of the information in Table 14.1.Each question is based on the original balance sheet. -Based on the information in Table 14.1,the money multiplier is equal to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Expansionary monetary policy will:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Advocates of discretionary monetary poli...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified