Economics

A reduction of the discount rate by the Federal Reserve Banks has the direct effect of

A reduction of the discount rate by the Federal Reserve Banks has the direct effect of

A reduction of the discount rate by the Federal Reserve Banks has the direct effect of
A) making it less costly for commercial banks to borrow from the Fed.
B) making it more costly for the Treasury to finance deficits.
C) increasing c

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The Federal Reserve uses open market operations rather than changes in legal reserve requirements as

The Federal Reserve uses open market operations rather than changes in legal reserve requirements as

The Federal Reserve uses open market operations rather than changes in legal reserve requirements as its principal tool of monetary management because changes in legal reserve requirements
A) can be easily evaded by commercial banks.
B) mus

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In trying to control the size of the money stock from day to day, the Fed relies principally on

In trying to control the size of the money stock from day to day, the Fed relies principally on

In trying to control the size of the money stock from day to day, the Fed relies principally on
A) adjustments in legal reserve requirements.
B) changes in the central bank discount rate.
C) purchases and sales of U.S. government bonds

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Which is the most popular tool of the Fed used to control the stock of money?

Which is the most popular tool of the Fed used to control the stock of money?

Which is the most popular tool of the Fed used to control the stock of money?
A) Manipulating reserve requirements.
B) Buying and selling government bonds.
C) Manipulating the discount rate.
D) Issuing new U.S. Treasury bonds.

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The term for the Fed's day-to-day technique for controlling the stock of money is called

The term for the Fed's day-to-day technique for controlling the stock of money is called

The term for the Fed's day-to-day technique for controlling the stock of money is called
A) discounting operations.
B) interest-rate operations.
C) liquidity operations.
D) open heart operations.
E) none of the above.

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The term for the Fed's day-to-day technique for controlling the stock of money is

The term for the Fed's day-to-day technique for controlling the stock of money is

The term for the Fed's day-to-day technique for controlling the stock of money is
A) discounting operations.
B) interest-rate operations.
C) liquidity operations.
D) open market operations.
E) treasury operations.

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The "discount rate" is the rate used by the Fed when

The "discount rate" is the rate used by the Fed when

The "discount rate" is the rate used by the Fed when
A) the Fed extends a short-term loan directly to a commercial bank.
B) the Fed extends a short-term loan to one of the regional Federal Reserve banks.
C) the Fed calculates

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The money supply would tend to fall if the Fed

The money supply would tend to fall if the Fed

The money supply would tend to fall if the Fed
A) sells bonds.
B) buys bonds.
C) lowers the discount rate.
D) lowers reserve requirements.

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At the moment, the Federal Reserve keeps the discount rate above the fed funds rate. In so doing, th

At the moment, the Federal Reserve keeps the discount rate above the fed funds rate. In so doing, th

At the moment, the Federal Reserve keeps the discount rate above the fed funds rate. In so doing, they are
A) discouraging commercial banks from borrowing from the Fed.
B) encouraging commercial banks to borrow from each other.
C) doin

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Which Fed policy would be part of an expansionary monetary policy?

Which Fed policy would be part of an expansionary monetary policy?

Which Fed policy would be part of an expansionary monetary policy?
A) Selling government bonds.
B) Reducing the discount rate.
C) Increasing the required reserve ratio.
D) All of the above.
E) None of the above.

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Which Fed policy would be part of an expansionary monetary policy?

Which Fed policy would be part of an expansionary monetary policy?

Which Fed policy would be part of an expansionary monetary policy?
A) Buying government bonds.
B) Raising the discount rate.
C) Both of the above.
D) None of the above.

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Which Fed policy would be part of a restrictive monetary policy?

Which Fed policy would be part of a restrictive monetary policy?

Which Fed policy would be part of a restrictive monetary policy?
A) Raising tax rates.
B) Lowering the discount rate.
C) Selling government bonds.
D) Reducing the required reserve ratio.
E) None of the above.

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Open market operations refers to the Fed's

Open market operations refers to the Fed's

Open market operations refers to the Fed's
A) manipulation of the required reserve ratio.
B) purchase and sale of government bonds.
C) manipulation of the discount rate.
D) use of all of the above techniques.

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A purchase of government bonds from the public by the Federal Reserve Banks

A purchase of government bonds from the public by the Federal Reserve Banks

A purchase of government bonds from the public by the Federal Reserve Banks
A) adds to the money stock.
B) has the effect of pulling wealth and therefore money out of the private sector.
C) increases the money stock directly and simult

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If the Fed were to attempt to increase the money supply, it would most likely do so

If the Fed were to attempt to increase the money supply, it would most likely do so

If the Fed were to attempt to increase the money supply, it would most likely do so
A) by manipulating the discount rate.
B) by manipulating the required reserve ratio.
C) by altering the amount of gold held in Fort Knox.
D) by en

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When the Fed sells bonds on a mass scale

When the Fed sells bonds on a mass scale

When the Fed sells bonds on a mass scale
A) bonds go to the Fed, and dollars go into the banking system, so the money supply tends to rise.
B) bonds go to the Fed, and dollars exit the banking system, so the money supply tends to fall.

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When the Fed buys bonds on a mass scale

When the Fed buys bonds on a mass scale

When the Fed buys bonds on a mass scale
A) bonds go to the Fed, and dollars go into the banking system, so the money supply tends to rise.
B) bonds go to the Fed, and dollars exit the banking system, so the money supply tends to fall.

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When we hear on the news, "The Fed has lowered interest rates today," the Fed has most likely

When we hear on the news, "The Fed has lowered interest rates today," the Fed has most likely

When we hear on the news, "The Fed has lowered interest rates today," the Fed has most likely
A) raised the discount rate.
B) lowered the required reserve ratio.
C) raised the federal funds rate.
D) purchased government

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Which activity of the Fed would tend to increase the nation's money supply?

Which activity of the Fed would tend to increase the nation's money supply?

Which activity of the Fed would tend to increase the nation's money supply?
A) Sales of government bonds
B) Lowering the discount rate
C) Raising the required reserve ratio
D) None of the above.

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The overall money supply would tend to increase if the Fed were to

The overall money supply would tend to increase if the Fed were to

The overall money supply would tend to increase if the Fed were to
A) increase the required reserve ratio.
B) increase the discount rate.
C) buy government bonds.
D) exchange crisp dollar bills for worn and tattered dollar bills.

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Which activity of the Fed would tend to increase excess reserves throughout the banking system?

Which activity of the Fed would tend to increase excess reserves throughout the banking system?

Which activity of the Fed would tend to increase excess reserves throughout the banking system?
A) Purchases of government bonds on a mass scale
B) An increase in the required reserve ratio
C) An increase of the discount rate
D) S

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Every dollar added to the total reserves of the commercial banking system

Every dollar added to the total reserves of the commercial banking system

Every dollar added to the total reserves of the commercial banking system
A) compels the banks to reduce their loans by more than a dollar.
B) compels the banks to expand their loans by more than a dollar.
C) enables the banks to expan

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The deposit expansion multiplier would increase if the Fed were to

The deposit expansion multiplier would increase if the Fed were to

The deposit expansion multiplier would increase if the Fed were to
A) raise the required reserve ratio.
B) lower the required reserve ratio.
C) raise the discount rate.
D) sell bonds.

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Suppose you find $1000 in your attic and decide to deposit it all into your local bank, which must h

Suppose you find $1000 in your attic and decide to deposit it all into your local bank, which must h

Suppose you find $1000 in your attic and decide to deposit it all into your local bank, which must hold 20% as required reserves. The deposit expansion multiplier suggests that this $1,000 "injection" of new money will most likely
A) i

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Suppose you find $1000 in your attic and decide to deposit it all into your local bank, which must h

Suppose you find $1000 in your attic and decide to deposit it all into your local bank, which must h

Suppose you find $1000 in your attic and decide to deposit it all into your local bank, which must hold 10% as required reserves. The deposit expansion multiplier suggests that this $1,000 "injection" of new money can, in the theoretical li

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Suppose you find $1000 in your attic and decide to deposit it all into your local bank, which must h

Suppose you find $1000 in your attic and decide to deposit it all into your local bank, which must h

Suppose you find $1000 in your attic and decide to deposit it all into your local bank, which must hold 10% as required reserves. The deposit expansion multiplier suggests that this $1,000 "injection" of new money will, in reality, most lik

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Suppose the Fed buys $1 billion worth of bonds and the required reserve ratio is 5%. In theoretical

Suppose the Fed buys $1 billion worth of bonds and the required reserve ratio is 5%. In theoretical

Suppose the Fed buys $1 billion worth of bonds and the required reserve ratio is 5%. In theoretical limit, the money supply could
A) decrease by $5 billion.
B) increase by $5 billion.
C) increase by $20 billion.
D) decrease by $20

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Suppose the Fed buys $1 billion worth of bonds and the required reserve ratio is 10%. In the theoret

Suppose the Fed buys $1 billion worth of bonds and the required reserve ratio is 10%. In the theoret

Suppose the Fed buys $1 billion worth of bonds and the required reserve ratio is 10%. In the theoretical limit, the money supply could
A) decrease by $1 billion.
B) increase by $1 billion.
C) decrease by $10 billion.
D) increase b

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If the Fed were to lower the required reserve ratio,

If the Fed were to lower the required reserve ratio,

If the Fed were to lower the required reserve ratio,
A) excess reserves would decrease.
B) excess reserves would increase.
C) there would be no effect on the level of excess reserves.
D) there would tend to be no effect on the nat

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If the Fed were to raise the required reserve ratio,

If the Fed were to raise the required reserve ratio,

If the Fed were to raise the required reserve ratio,
A) excess reserves would decrease.
B) excess reserves would increase.
C) there would be no effect on the level of excess reserves.
D) there would tend to be no effect on the nat

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Roughly what is the required reserve ratio within the U.S. banking system?

Roughly what is the required reserve ratio within the U.S. banking system?

Roughly what is the required reserve ratio within the U.S. banking system?
A) Less than 10 percent.
B) 15%
C) 25%
D) 50%
E) 90%

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Suppose Marquette Bank and Trust has $10 million in total deposits and the required reserve ratio is

Suppose Marquette Bank and Trust has $10 million in total deposits and the required reserve ratio is

Suppose Marquette Bank and Trust has $10 million in total deposits and the required reserve ratio is 7%. How many dollars must the bank keep in its vaults or on deposit at a Federal Reserve Bank?
A) $9.3 million
B) $7 million
C) $930,0

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Suppose Acme County Bank and Trust has $1 million in total deposits and the required reserve ratio i

Suppose Acme County Bank and Trust has $1 million in total deposits and the required reserve ratio i

Suppose Acme County Bank and Trust has $1 million in total deposits and the required reserve ratio is 8%. How many dollars must the bank keep in its vaults or on deposit at a Federal Reserve Bank?
A) 0
B) $80,000
C) $920,000
D) $1

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Suppose Acme County Bank and Trust has $1 million in total deposits and the required reserve ratio i

Suppose Acme County Bank and Trust has $1 million in total deposits and the required reserve ratio i

Suppose Acme County Bank and Trust has $1 million in total deposits and the required reserve ratio is 5%. How many dollars is Acme bank allowed to use to seek profits?
A) 0
B) $50,000
C) $500,000
D) $950,000
E) Trick question

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Suppose Acme County Bank and Trust has $1 million in total deposits and the required reserve ratio i

Suppose Acme County Bank and Trust has $1 million in total deposits and the required reserve ratio i

Suppose Acme County Bank and Trust has $1 million in total deposits and the required reserve ratio is 10%. How many dollars is Acme allowed to use to seek profits?
A) 0
B) $100,000
C) $900,000
D) $1 million
E) $10 million

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If bank depositors in the U.S. suddenly decided to withdraw in currency everything in their checking

If bank depositors in the U.S. suddenly decided to withdraw in currency everything in their checking

If bank depositors in the U.S. suddenly decided to withdraw in currency everything in their checking accounts, commercial banks would
A) be better off because their legally required reserves would decline.
B) be unable to meet their demands

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The number of dollars that the commercial banking system can add to the money supply for each dollar

The number of dollars that the commercial banking system can add to the money supply for each dollar

The number of dollars that the commercial banking system can add to the money supply for each dollar of new reserves created by the Fed
A) cannot legally be greater than 8 nor less than 2.
B) is governed largely by reserve requirements and

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The Fed controls bank lending and thus the process of money creation through its power to

The Fed controls bank lending and thus the process of money creation through its power to

The Fed controls bank lending and thus the process of money creation through its power to
A) alter legal reserve requirements and the dollar amount of reserves.
B) establish maximum and minimum interest rates on bank loans and deposits made

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The primary function of the reserve requirements imposed by the Fed upon commercial banks is to

The primary function of the reserve requirements imposed by the Fed upon commercial banks is to

The primary function of the reserve requirements imposed by the Fed upon commercial banks is to
A) assure that Federal Reserve Banks will receive deposits with which they can purchase income-earning assets.
B) enable the government to borro

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When a commercial bank lends $1000 to a customer, and the loan proceeds are spent by the customer, t

When a commercial bank lends $1000 to a customer, and the loan proceeds are spent by the customer, t

When a commercial bank lends $1000 to a customer, and the loan proceeds are spent by the customer, the legal reserves of the banking system
A) decline by $1000.
B) do not change unless the loan proceeds are withdrawn in currency.
C) ri

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