Question 1

When the Fed wants to expand the money supply through open market operation,it

Accepted Answer

A)  sells government securities to the Treasury. 
B)  sells government securities to member banks. 
C)  buys government securities from member banks. 
D)  buys government securities from the Treasury. 
A)  sells government securities to the Treasury. 
B)  sells government securities to member banks. 
C)  buys government securities from member banks. 
D)  buys government securities from the Treasury.

Question 2

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 3

The Federal Reserve System is controlled by the

Accepted Answer

A)  U.S. Department of the Treasury. 
B)  House of Representatives and the Senate. 
C)  Board of Governors. 
D)  President of the United States. 
A)  U.S. Department of the Treasury. 
B)  House of Representatives and the Senate. 
C)  Board of Governors. 
D)  President of the United States.

Question 4

When the Fed buys a Treasury bill from the public,how does it usually pay for the T-bill?

Accepted Answer

A)  by writing a check on a commercial bank account 
B)  by printing new Federal Reserve notes 
C)  by creating new reserves in bank accounts 
D)  by prepaying taxes into the Treasury's account 
A)  by writing a check on a commercial bank account 
B)  by printing new Federal Reserve notes 
C)  by creating new reserves in bank accounts 
D)  by prepaying taxes into the Treasury's account

Question 5

The immediate impetus for the establishment of the Federal Reserve System came from

Accepted Answer

A)  severe outbreaks of inflation in the early 1900s. 
B)  four severe banking panics between 1873 and 1907. 
C)  the discovery of gold in Alaska. 
D)  the desire to copy the founding of the Bank of England. 
A)  severe outbreaks of inflation in the early 1900s. 
B)  four severe banking panics between 1873 and 1907. 
C)  the discovery of gold in Alaska. 
D)  the desire to copy the founding of the Bank of England.

Question 6

Open market operations have their initial effect on bank

Accepted Answer

A)  lending. 
B)  reserves. 
C)  profits. 
D)  revenues. 
A)  lending. 
B)  reserves. 
C)  profits. 
D)  revenues.

Question 7

Currently,in the United States,you can expect the discount rate to be

Accepted Answer

A)  used often to change the money supply. 
B)  raised in periods of recession. 
C)  fixed at the bank rate. 
D)  adjusted to follow market rates of interest. 
A)  used often to change the money supply. 
B)  raised in periods of recession. 
C)  fixed at the bank rate. 
D)  adjusted to follow market rates of interest.

Question 8

In reality,commercial banks function most like ____ of the district Federal Reserve Banks.

Accepted Answer

A)  stockholders 
B)  regulators 
C)  customers 
D)  competitors 
A)  stockholders 
B)  regulators 
C)  customers 
D)  competitors

Question 9

The money supply can be increased by decreasing the required reserve ratio.

Accepted Answer

A) True 
 B)False

Question 10

At higher interest rates,banks will want to hold more reserves.

Accepted Answer

A) True 
 B)False

Question 11

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 12

The Fed has which of the following as its strongest control over the money supply?

Accepted Answer

A)  interest rate changes 
B)  the discount rate 
C)  open market operations 
D)  the required reserve rate 
A)  interest rate changes 
B)  the discount rate 
C)  open market operations 
D)  the required reserve rate

Question 13

Although a corporation that is owned by its member banks,the Federal Reserve System

Accepted Answer

A)  reports directly to the president in an annual report. 
B)  is quite independent of them, and they receive almost none of the Fed's profits. 
C)  is administered by Congress and all its profits are distributed to the member banks. 
D)  turns all its profits over to the state governments of each district bank. 
A)  reports directly to the president in an annual report. 
B)  is quite independent of them, and they receive almost none of the Fed's profits. 
C)  is administered by Congress and all its profits are distributed to the member banks. 
D)  turns all its profits over to the state governments of each district bank.

Question 14

Which of the following will cause movement along the reserve demand schedule?

Accepted Answer

A)  a change in the price level 
B)  a change in real GDP 
C)  a change in tax rates 
D)  a change in interest rates 
A)  a change in the price level 
B)  a change in real GDP 
C)  a change in tax rates 
D)  a change in interest rates

Question 15

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 16

Monetary policy is the system of actions taken by the Fed to influence the money supply.

Accepted Answer

A) True 
 B)False

Question 17

The Federal Reserve System functions as America's

Accepted Answer

A)  tax collector. 
B)  stock and bond market. 
C)  savings bank. 
D)  central bank. 
A)  tax collector. 
B)  stock and bond market. 
C)  savings bank. 
D)  central bank.

Question 18

Which of the following phrases would be used to describe an income amount?

Accepted Answer

A)  per year 
B)  per month 
C)  per week 
D)  All of the above are correct. 
A)  per year 
B)  per month 
C)  per week 
D)  All of the above are correct.

Question 19

Open market operations generally involve the purchase and sales of

Accepted Answer

A)  government securities. 
B)  stocks and bonds. 
C)  coins and currency. 
D)  Federal Reserve notes. 
A)  government securities. 
B)  stocks and bonds. 
C)  coins and currency. 
D)  Federal Reserve notes.

Question 20

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

Accepted Answer

A) True 
 B)False

When the Fed wants to expand the money supply through open market operation,it

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

The Federal Reserve System is controlled by the

When the Fed buys a Treasury bill from the public,how does it usually pay for the T-bill?

The immediate impetus for the establishment of the Federal Reserve System came from

Open market operations have their initial effect on bank

Currently,in the United States,you can expect the discount rate to be

In reality,commercial banks function most like ____ of the district Federal Reserve Banks.

The money supply can be increased by decreasing the required reserve ratio.

At higher interest rates,banks will want to hold more reserves.

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

The Fed has which of the following as its strongest control over the money supply?

Although a corporation that is owned by its member banks,the Federal Reserve System

Which of the following will cause movement along the reserve demand schedule?

The monetary policies carried out by the Fed

Monetary policy is the system of actions taken by the Fed to influence the money supply.

The Federal Reserve System functions as America's

Which of the following phrases would be used to describe an income amount?

Open market operations generally involve the purchase and sales of

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

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

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Exam 13: Monetary Policy: Conventional and Unconventional

When the Fed wants to expand the money supply through open market operation,it

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

The Federal Reserve System is controlled by the

When the Fed buys a Treasury bill from the public,how does it usually pay for the T-bill?

The immediate impetus for the establishment of the Federal Reserve System came from

Open market operations have their initial effect on bank

Currently,in the United States,you can expect the discount rate to be

In reality,commercial banks function most like ____ of the district Federal Reserve Banks.

The money supply can be increased by decreasing the required reserve ratio.

At higher interest rates,banks will want to hold more reserves.

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

The Fed has which of the following as its strongest control over the money supply?

Although a corporation that is owned by its member banks,the Federal Reserve System

Which of the following will cause movement along the reserve demand schedule?

The monetary policies carried out by the Fed

Monetary policy is the system of actions taken by the Fed to influence the money supply.

The Federal Reserve System functions as America's

Which of the following phrases would be used to describe an income amount?

Open market operations generally involve the purchase and sales of

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

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