Question 1

Member banks of the Federal Reserve System

Accepted Answer

A)  advise the Fed on monetary policy. 
B)  are immune from the effects of monetary policy. 
C)  vote on members of the Board of Governors. 
D)  have little control over the system they "own." 
A)  advise the Fed on monetary policy. 
B)  are immune from the effects of monetary policy. 
C)  vote on members of the Board of Governors. 
D)  have little control over the system they "own."

Question 2

Which of the following is an unconventional monetary policy?

Accepted Answer

A)  ​lending to banks in unprecedented volume 
B)  ​lending to companies other than banks 
C)  ​reducing the federal funds rate to zero 
D)  ​All of these are unconventional monetary policies. 
A)  ​lending to banks in unprecedented volume 
B)  ​lending to companies other than banks 
C)  ​reducing the federal funds rate to zero 
D)  ​All of these are unconventional monetary policies.

Question 3

Open market operations refer to the purchase and sales of stocks listed on the New York Stock Exchange.

Accepted Answer

A) True 
 B)False

Question 4

A system that requires banks to keep 100 percent reserves

Accepted Answer

A)  would reduce the Fed's ability to control the money supply. 
B)  would undermine the effectiveness of reserve requirement changes. 
C)  would increase the Fed's ability to control the money supply. 
D)  could be implemented with little change in bank policy. 
A)  would reduce the Fed's ability to control the money supply. 
B)  would undermine the effectiveness of reserve requirement changes. 
C)  would increase the Fed's ability to control the money supply. 
D)  could be implemented with little change in bank policy.

Question 5

The Federal Reserve Board of Governors

Accepted Answer

A)  serve at the pleasure of the president similar to other cabinet positions. 
B)  report directly to Congress and are controlled by Congress. 
C)  consists of 12 members,one from each district bank. 
D)  is structurally independent of the executive and legislative branches of the federal government. 
A)  serve at the pleasure of the president similar to other cabinet positions. 
B)  report directly to Congress and are controlled by Congress. 
C)  consists of 12 members,one from each district bank. 
D)  is structurally independent of the executive and legislative branches of the federal government.

Question 6

The Fed has control over bank reserves and complete control over the money supply.

Accepted Answer

A) True 
 B)False

Question 7

When someone asks how much money you made this year,they are using the term "money" correctly.

Accepted Answer

A) True 
 B)False

Question 8

Proponents of Fed independence maintain that

Accepted Answer

A)  independence helps ensure low unemployment rates. 
B)  money is too important to be left to the bankers. 
C)  independence permits objective decisions not based on politics. 
D)  only the Federal Reserve knows how to act wisely. 
A)  independence helps ensure low unemployment rates. 
B)  money is too important to be left to the bankers. 
C)  independence permits objective decisions not based on politics. 
D)  only the Federal Reserve knows how to act wisely.

Question 9

To increase the money supply,the Fed purchases government securities from banks,paying for them with new reserves.

Accepted Answer

A) True 
 B)False

Question 10

Figure 13-1  
-In Figure 13-1,which panel shows the effect of inflation on the interest rate?

Accepted Answer

A)  Panel (
A)  
B)  Panel (
B)  
C)  Panel (
C)  
D)  Panel (
D)  
A)  Panel (
A)  
B)  Panel (
B)  
C)  Panel (
C)  
D)  Panel (
D)

Question 11

The monetary policies carried out by the Fed

Accepted Answer

A)  must be ratified by Congress. 
B)  must be consistent with fiscal policies passed by Congress. 
C)  are sometimes inconsistent with fiscal policy. 
D)  must be approved by the president. 
A)  must be ratified by Congress. 
B)  must be consistent with fiscal policies passed by Congress. 
C)  are sometimes inconsistent with fiscal policy. 
D)  must be approved by the president.

Question 12

When you use the word income,you mean a value that must be qualified by a length of time.

Accepted Answer

A) True 
 B)False

Question 13

During the stock market crash of October 1987,the Fed

Accepted Answer

A)  raised the discount rate. 
B)  raised reserve requirements. 
C)  increased lending to member banks. 
D)  sold government securities. 
A)  raised the discount rate. 
B)  raised reserve requirements. 
C)  increased lending to member banks. 
D)  sold government securities.

Question 14

If the Federal Open Market Committee decides to expand the money supply,then it will

Accepted Answer

A)  raise the discount rate to member banks. 
B)  issue directions to purchase government securities,thus putting more reserves in member banks. 
C)  issue directions to sell government securities,thus taking reserves from member banks. 
D)  order new Federal Reserve notes delivered to member banks. 
A)  raise the discount rate to member banks. 
B)  issue directions to purchase government securities,thus putting more reserves in member banks. 
C)  issue directions to sell government securities,thus taking reserves from member banks. 
D)  order new Federal Reserve notes delivered to member banks.

Question 15

At the time of its founding,which tool was thought to be the most useful for the Fed?

Accepted Answer

A)  changing the reserve requirement 
B)  altering deposit interest rates 
C)  lending to banks 
D)  open market operations 
A)  changing the reserve requirement 
B)  altering deposit interest rates 
C)  lending to banks 
D)  open market operations

Question 16

People are often heard saying,"She makes good money." An economic interpretation of this statement would be that

Accepted Answer

A)  she has an honest job. 
B)  she makes money that is not counterfeit. 
C)  she has a high income. 
D)  there is little inflation. 
A)  she has an honest job. 
B)  she makes money that is not counterfeit. 
C)  she has a high income. 
D)  there is little inflation.

Question 17

The Fed's principal objective is to

Accepted Answer

A)  make profits to pay into the U.S.Treasury. 
B)  collect tax revenues. 
C)  supervise the business decisions of banks. 
D)  manage the money supply and interest rates. 
A)  make profits to pay into the U.S.Treasury. 
B)  collect tax revenues. 
C)  supervise the business decisions of banks. 
D)  manage the money supply and interest rates.

Question 18

The Fed cannot predict the effects of open market operations with perfect accuracy because of

Accepted Answer

A)  changes in people's desires for cash. 
B)  foreigners desire to hold U.S.dollars. 
C)  banks' desires to hold excess reserves. 
D)  All of the above are correct. 
A)  changes in people's desires for cash. 
B)  foreigners desire to hold U.S.dollars. 
C)  banks' desires to hold excess reserves. 
D)  All of the above are correct.

Question 19

The original goal of the Fed's founders was to prevent the

Accepted Answer

A)  supply of money from increasing too rapidly. 
B)  supply of money from decreasing during downturns. 
C)  possibility of hyperinflation. 
D)  possibility of interest rates falling too rapidly. 
A)  supply of money from increasing too rapidly. 
B)  supply of money from decreasing during downturns. 
C)  possibility of hyperinflation. 
D)  possibility of interest rates falling too rapidly.

Question 20

Figure 13-1  
-In Figure 13-1,which panel shows the effect of a recession on the interest rate?

Accepted Answer

A)  Panel (
A)  
B)  Panel (
B)  
C)  Panel (
C)  
D)  Panel (
D)  
A)  Panel (
A)  
B)  Panel (
B)  
C)  Panel (
C)  
D)  Panel (
D)

Member banks of the Federal Reserve System

Which of the following is an unconventional monetary policy?

Open market operations refer to the purchase and sales of stocks listed on the New York Stock Exchange.

A system that requires banks to keep 100 percent reserves

The Federal Reserve Board of Governors

The Fed has control over bank reserves and complete control over the money supply.

When someone asks how much money you made this year,they are using the term "money" correctly.

Proponents of Fed independence maintain that

To increase the money supply,the Fed purchases government securities from banks,paying for them with new reserves.

Figure 13-1 -In Figure 13-1,which panel shows the effect of inflation on the interest rate?

The monetary policies carried out by the Fed

When you use the word income,you mean a value that must be qualified by a length of time.

During the stock market crash of October 1987,the Fed

If the Federal Open Market Committee decides to expand the money supply,then it will

At the time of its founding,which tool was thought to be the most useful for the Fed?

People are often heard saying,"She makes good money." An economic interpretation of this statement would be that

The Fed's principal objective is to

The Fed cannot predict the effects of open market operations with perfect accuracy because of

The original goal of the Fed's founders was to prevent the

Figure 13-1 -In Figure 13-1,which panel shows the effect of a recession on the interest rate?

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters

Exam 13: Monetary Policy Conventional and Unconventional

Member banks of the Federal Reserve System

Which of the following is an unconventional monetary policy?

Open market operations refer to the purchase and sales of stocks listed on the New York Stock Exchange.

A system that requires banks to keep 100 percent reserves

The Federal Reserve Board of Governors

The Fed has control over bank reserves and complete control over the money supply.

When someone asks how much money you made this year,they are using the term "money" correctly.

Proponents of Fed independence maintain that

To increase the money supply,the Fed purchases government securities from banks,paying for them with new reserves.

Figure 13-1 -In Figure 13-1,which panel shows the effect of inflation on the interest rate?

The monetary policies carried out by the Fed

When you use the word income,you mean a value that must be qualified by a length of time.

During the stock market crash of October 1987,the Fed

If the Federal Open Market Committee decides to expand the money supply,then it will

At the time of its founding,which tool was thought to be the most useful for the Fed?

People are often heard saying,"She makes good money." An economic interpretation of this statement would be that

The Fed's principal objective is to

The Fed cannot predict the effects of open market operations with perfect accuracy because of

The original goal of the Fed's founders was to prevent the

Figure 13-1 -In Figure 13-1,which panel shows the effect of a recession on the interest rate?

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters