Question 1

In its current execution of monetary policy,the Fed does not usually have a specific _____________ target,but rather it tries to target a specific ________________.

Accepted Answer

A)  money supply; federal funds rate 
B)  federal funds rate; money supply 
C)  money supply; discount rate 
D)  required reserves ratio; discount rate 
A)  money supply; federal funds rate 
B)  federal funds rate; money supply 
C)  money supply; discount rate 
D)  required reserves ratio; discount rate

Question 2

Which of the following will increase the money supply?

Accepted Answer

A)  increasing the required reserve ratio 
B)  an open market sale 
C)  raising the discount rate relative to the federal funds rate 
D)  none of the above 
A)  increasing the required reserve ratio 
B)  an open market sale 
C)  raising the discount rate relative to the federal funds rate 
D)  none of the above

Question 3

One of the Fed's functions is to be the government's banker.This means that the

Accepted Answer

A)  Fed issues government securities. 
B)  Fed extends loans to the government whenever it spends more than it collects in tax revenues. 
C)  government's checking account is at the Fed. 
D)  all of the above 
A)  Fed issues government securities. 
B)  Fed extends loans to the government whenever it spends more than it collects in tax revenues. 
C)  government's checking account is at the Fed. 
D)  all of the above

Question 4

The Fed can change the federal funds rate by issuing an order,but it cannot change the discount rate this way.

Accepted Answer

A) True 
 B)False

Question 5

To decrease the money supply,the Fed may sell government securities or lower taxes.

Accepted Answer

A) True 
 B)False

Question 6

When the Fed increases the required reserve ratio,a bank's

Accepted Answer

A)  excess reserves are unaffected. 
B)  excess reserves are increased. 
C)  excess reserves are decreased. 
D)  required reserves are decreased. 
E)  b and d 
A)  excess reserves are unaffected. 
B)  excess reserves are increased. 
C)  excess reserves are decreased. 
D)  required reserves are decreased. 
E)  b and d

Question 7

William Jennings Bryan,Secretary of State at the time of the passage of the Federal Reserve Act,argued in favor of having ______ district banks.

Accepted Answer

A)  six 
B)  not less than eight nor more than twelve 
C)  twelve 
D)  fifty 
A)  six 
B)  not less than eight nor more than twelve 
C)  twelve 
D)  fifty

Question 8

A bank is reserve deficient when

Accepted Answer

A)  its reserves fall short of the level determined by the required reserve ratio. 
B)  its excess reserves are greater than its required reserves. 
C)  its required reserves are greater than its excess reserves. 
D)  it purchases government securities from the Fed. 
A)  its reserves fall short of the level determined by the required reserve ratio. 
B)  its excess reserves are greater than its required reserves. 
C)  its required reserves are greater than its excess reserves. 
D)  it purchases government securities from the Fed.

Question 9

To decrease the money supply,the Fed may

Accepted Answer

A)  buy government securities in the open market. 
B)  decrease the discount rate. 
C)  increase the required reserve ratio. 
D)  b and c 
E)  all of the above 
A)  buy government securities in the open market. 
B)  decrease the discount rate. 
C)  increase the required reserve ratio. 
D)  b and c 
E)  all of the above

Question 10

If the Fed wants to decrease the money supply,it can __________ the required reserve ratio,conduct an open market __________,or __________ the discount rate.

Accepted Answer

A)  raise; purchase; lower 
B)  lower; purchase; lower 
C)  raise; sale; raise 
D)  lower; sale; lower 
E)  none of the above 
A)  raise; purchase; lower 
B)  lower; purchase; lower 
C)  raise; sale; raise 
D)  lower; sale; lower 
E)  none of the above

Question 11

Which of the following has never been a monetary policy tool of the Fed?

Accepted Answer

A)  open market operations 
B)  the required reserve ratio 
C)  the discount rate 
D)  the term auction facility (TAF) program 
E)  income tax rates 
A)  open market operations 
B)  the required reserve ratio 
C)  the discount rate 
D)  the term auction facility (TAF) program 
E)  income tax rates

Question 12

Use the simple deposit multiplier to help show why the money supply increases when the Fed lowers the required reserve ratio (r).

Accepted Answer

The used to determine the simp

Question 13

If Bank A borrows from Bank B,reserves in the banking system __________.If Bank A borrows from the Fed,reserves in the banking system __________.

Accepted Answer

A)  rise; fall 
B)  fall; remain unchanged 
C)  remain unchanged; remain unchanged 
D)  remain unchanged; rise 
E)  rise; remain unchanged 
A)  rise; fall 
B)  fall; remain unchanged 
C)  remain unchanged; remain unchanged 
D)  remain unchanged; rise 
E)  rise; remain unchanged

Question 14

The original boundaries for the Federal Reserve districts were determined based on

Accepted Answer

A)  Congressional district boundaries. 
B)  population distributions obtained from the census. 
C)  trade boundaries. 
D)  state lines. 
E)  none of the above 
A)  Congressional district boundaries. 
B)  population distributions obtained from the census. 
C)  trade boundaries. 
D)  state lines. 
E)  none of the above

Question 15

When the Fed was created,its governing body was called the Federal Reserve Board,but it was later officially renamed the Board of Governors of the Federal Reserve System.

Accepted Answer

A) True 
 B)False

Question 16

List and describe five of the eight major functions or responsibilities of the Fed.

Accepted Answer

The eight major functions or responsibil

Question 17

Under free banking,banks are regulated by the Federal Reserve.

Accepted Answer

A) True 
 B)False

Question 18

Suppose that the current federal funds rate is above the federal funds target rate. In order to lower the federal funds rate the Fed will ________________ securities on the open market which will ________________ the supply of reserves in the market for reserves,pushing the rate closer to the target rate.

Accepted Answer

A)  sell; increase 
B)  purchase; increase 
C)  purchase; decrease 
D)  sell; decrease 
A)  sell; increase 
B)  purchase; increase 
C)  purchase; decrease 
D)  sell; decrease

Question 19

To expand the money supply the Fed could lower the required reserve ratio,lower the discount rate,or purchase government securities.

Accepted Answer

A) True 
 B)False

Question 20

Open Market Operations are conducted by

Accepted Answer

A)  the main Fed office in Washington, D.C. 
B)  the U.S. Treasury on behalf of the Fed. 
C)  the Federal Reserve Bank of New York. 
D)  a consortium of private banks contracted by the Fed. 
A)  the main Fed office in Washington, D.C. 
B)  the U.S. Treasury on behalf of the Fed. 
C)  the Federal Reserve Bank of New York. 
D)  a consortium of private banks contracted by the Fed.

Exam 13: The Federal Reserve System

In its current execution of monetary policy,the Fed does not usually have a specific _____________ target,but rather it tries to target a specific ________________.

Which of the following will increase the money supply?

One of the Fed's functions is to be the government's banker.This means that the

The Fed can change the federal funds rate by issuing an order,but it cannot change the discount rate this way.

To decrease the money supply,the Fed may sell government securities or lower taxes.

When the Fed increases the required reserve ratio,a bank's

William Jennings Bryan,Secretary of State at the time of the passage of the Federal Reserve Act,argued in favor of having ______ district banks.

A bank is reserve deficient when

To decrease the money supply,the Fed may

If the Fed wants to decrease the money supply,it can __________ the required reserve ratio,conduct an open market __________,or __________ the discount rate.

Which of the following has never been a monetary policy tool of the Fed?

Use the simple deposit multiplier to help show why the money supply increases when the Fed lowers the required reserve ratio (r).

If Bank A borrows from Bank B,reserves in the banking system __________.If Bank A borrows from the Fed,reserves in the banking system __________.

The original boundaries for the Federal Reserve districts were determined based on

When the Fed was created,its governing body was called the Federal Reserve Board,but it was later officially renamed the Board of Governors of the Federal Reserve System.

List and describe five of the eight major functions or responsibilities of the Fed.

Under free banking,banks are regulated by the Federal Reserve.

To expand the money supply the Fed could lower the required reserve ratio,lower the discount rate,or purchase government securities.

Open Market Operations are conducted by

What Economics Is About

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Filters

In its current execution of monetary policy,the Fed does not usually have a specific _ target,but rather it tries to target a specific ____.

If the Fed wants to decrease the money supply,it can the required reserve ratio,conduct an open market ,or __ the discount rate.

If Bank A borrows from Bank B,reserves in the banking system .If Bank A borrows from the Fed,reserves in the banking system .