Which of the following actions by the Federal Reserve will decrease the money supply?
A) Buying government securities through open-market operations
B) Increasing the prime rate
C) Decreasing the reserve requirement
D) Decreasing the discount rate
E) Increasing the discount rate
Question 2 - A high-volume toy producer typically concentrated its quality control efforts on inspecting finished product and catching defective toys before they are shipped. As the new quality control manager, you believe that finding the root cause of defects is important. The factory produces 200,000 each day in toys and has a defect rate of 10. If you cut that defect rate in half, you could save the factory _____ each day.
A) 10,000
B) 20,000
C) 100,000
D) 120,000
E) 200,000
Question 3 - The discount rate is:
A) the lowest rate of interest at which money may be borrowed commercially.
B) the interest rate charged by the Fed for loans to member banks.
C) the interest rate at which banks lend reserve balances to other banks.
D) the stated interest rate of a US Treasury Bond.
E) the interest rate offered by commercial banks to its most creditworthy customers.
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