Biology Forums - Study Force

If the Federal Reserve wants to increase the availability of money and credit, it can:
 a. lower the discount rate.
  b. raise the reserve requirements.
  c. sell U.S. government bonds to the public.
  d. encourage banks to increase their prime lending rate.

QUESTION 2

The discount rate is the interest rate:
 a. commercial banks charge their low-risk customers for a loan.
  b. savings and loan associations pay for using savings deposit funds.
  c. the U.S. Treasury pays individuals who buy Treasury bonds in denominations of 10,000 or more.
  d. the Federal Reserve charges banking institutions for borrowing its funds.

QUESTION 3

If the economy is inflationary, the Fed would most likely:
 a. encourage banks to provide loans by buying government securities.
  b. encourage banks to provide loans by raising the discount rate.
  c. encourage banks to provide loans by selling government securities.
  d. restrict bank lending by selling government securities.
  e. restrict bank lending by lowering the federal funds rate.

QUESTION 4

If the economy is inflationary, the Fed would most likely:
 a. increase bank reserves by raising the discount rate.
  b. increase bank reserves by buying government securities
  c. decrease bank reserves by lowering the discount rate.
  d. decrease bank reserves by selling government securities.
  e. decrease bank reserves by lowering the legal reserve requirement.

QUESTION 5

If there is a recession, the Fed would most likely encourage banks to provide loans by:
 a. buying government securities. b. raising the discount rate.
  c. selling government securities. d. raising the federal funds rate.

[Answer to ques. #1]  a

[Answer to ques. #2]  d

[Answer to ques. #3]  d

[Answer to ques. #4]  d

[Answer to ques. #5]  a

All correct!

Happy to help