Question 1

When the Federal Reserve sells assets from its portfolio to the public with the intent of changing the money supply,

Accepted Answer

A) those assets are government bonds and the Fed's reason for selling them is to increase the money supply. 
B) those assets are government bonds and the Fed's reason for selling them is to decrease the money supply. 
C) those assets are items that are included in M2 and the Fed's reason for selling them is to increase the money supply. 
D) those assets are items that are included in M2 and the Fed's reason for selling them is to decrease the money supply. 
A) those assets are government bonds and the Fed's reason for selling them is to increase the money supply. 
B) those assets are government bonds and the Fed's reason for selling them is to decrease the money supply. 
C) those assets are items that are included in M2 and the Fed's reason for selling them is to increase the money supply. 
D) those assets are items that are included in M2 and the Fed's reason for selling them is to decrease the money supply.

Question 2

All Fed purchases and sales of

Accepted Answer

A) corporate stocks and bonds are conducted at the New York Fed's trading desk. 
B) government bonds are conducted at the New York Fed's trading desk. 
C) real estate and other real assets are conducted by the Federal Open Market Committee. 
D) All of the above are correct. 
A) corporate stocks and bonds are conducted at the New York Fed's trading desk. 
B) government bonds are conducted at the New York Fed's trading desk. 
C) real estate and other real assets are conducted by the Federal Open Market Committee. 
D) All of the above are correct.

Question 3

When conducting an open-market purchase,the Fed

Accepted Answer

A) buys government bonds,and in so doing increases the money supply. 
B) buys government bonds,and in so doing decreases the money supply. 
C) sells government bonds,and in so doing increases the money supply. 
D) sells government bonds,and in so doing decreases the money supply. 
A) buys government bonds,and in so doing increases the money supply. 
B) buys government bonds,and in so doing decreases the money supply. 
C) sells government bonds,and in so doing increases the money supply. 
D) sells government bonds,and in so doing decreases the money supply.

Question 4

An important function of the U.S.Federal Reserve is to

Accepted Answer

A) set the debt ceiling. 
B) fund Congressional spending. 
C) control the supply of money. 
D) mint coins. 
A) set the debt ceiling. 
B) fund Congressional spending. 
C) control the supply of money. 
D) mint coins.

Question 5

Which of the following does the U.S.president appoint and the U.S.Senate confirm?

Accepted Answer

A) members of the Board of Governors and regional Federal Reserve Bank Presidents. 
B) members of the Board of Governors but not the regional Federal Reserve Bank Presidents. 
C) the regional Federal Reserve Bank Presidents,but not members of the Board of Governors. 
D) neither members of the Board of Governors nor regional Federal Reserve Bank Presidents. 
A) members of the Board of Governors and regional Federal Reserve Bank Presidents. 
B) members of the Board of Governors but not the regional Federal Reserve Bank Presidents. 
C) the regional Federal Reserve Bank Presidents,but not members of the Board of Governors. 
D) neither members of the Board of Governors nor regional Federal Reserve Bank Presidents.

Question 6

Which of the following does the Federal Reserve not do?

Accepted Answer

A) conduct monetary policy 
B) act as a lender of last resort 
C) convert Federal Reserve Notes into gold 
D) serve as a bank regulator 
A) conduct monetary policy 
B) act as a lender of last resort 
C) convert Federal Reserve Notes into gold 
D) serve as a bank regulator

Question 7

The Federal Reserve

Accepted Answer

A) is responsible for conducting the nation's monetary policy,and it plays a role in regulating banks. 
B) is responsible for conducing the nation's monetary policy,but it plays no role in regulating banks. 
C) is not responsible for conducting the nation's monetary policy,and it plays a role in regulating banks. 
D) is not responsible for conducing the nation's monetary policy,and it plays no role in regulating banks. 
A) is responsible for conducting the nation's monetary policy,and it plays a role in regulating banks. 
B) is responsible for conducing the nation's monetary policy,but it plays no role in regulating banks. 
C) is not responsible for conducting the nation's monetary policy,and it plays a role in regulating banks. 
D) is not responsible for conducing the nation's monetary policy,and it plays no role in regulating banks.

Question 8

The Federal Reserve Board of Governors

Accepted Answer

A) rotate each four years. 
B) are appointed by the President and confirmed by the Senate. 
C) are elected by popular vote. 
D) hold lifetime appointments. 
A) rotate each four years. 
B) are appointed by the President and confirmed by the Senate. 
C) are elected by popular vote. 
D) hold lifetime appointments.

Question 9

An open-market sale

Accepted Answer

A) increases the number of dollars and the number of bonds in the hands of the public. 
B) increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public. 
C) decreases the number of dollars and the number of bonds in the hands of the public. 
D) decreases the number of dollars in the hands of the public and increases the number of bonds in the hands of the public. 
A) increases the number of dollars and the number of bonds in the hands of the public. 
B) increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public. 
C) decreases the number of dollars and the number of bonds in the hands of the public. 
D) decreases the number of dollars in the hands of the public and increases the number of bonds in the hands of the public.

Question 10

Which of the following is not correct?

Accepted Answer

A) The president of the New York Federal Reserve bank is the only Federal Reserve Regional Bank President who gets to vote at every meeting of the Federal Open Market Committee. 
B) The Fed's policy decisions influence the economy's rate of inflation in the short run and the economy's employment and production in the long run. 
C) The Fed's primary monetary policy tool is open-market operations. 
D) All of the above are correct. 
A) The president of the New York Federal Reserve bank is the only Federal Reserve Regional Bank President who gets to vote at every meeting of the Federal Open Market Committee. 
B) The Fed's policy decisions influence the economy's rate of inflation in the short run and the economy's employment and production in the long run. 
C) The Fed's primary monetary policy tool is open-market operations. 
D) All of the above are correct.

Question 11

The regional Federal Reserve Banks

Accepted Answer

A) are not allowed to make loans to banks in their region. 
B) regulate banks in their regions. 
C) have more voting members on the FOMC than does the Board of Governors. 
D) are each headed by a member of the Board of Governors. 
A) are not allowed to make loans to banks in their region. 
B) regulate banks in their regions. 
C) have more voting members on the FOMC than does the Board of Governors. 
D) are each headed by a member of the Board of Governors.

Question 12

If the Federal Open Market Committee decides to increase the money supply,then the Federal Reserve

Accepted Answer

A) creates dollars and uses them to purchase government bonds from the public. 
B) sells government bonds from its portfolio to the public. 
C) creates dollars and uses them to purchase various types of stocks and bonds from the public. 
D) sells various types of stocks and bonds from its portfolio to the public. 
A) creates dollars and uses them to purchase government bonds from the public. 
B) sells government bonds from its portfolio to the public. 
C) creates dollars and uses them to purchase various types of stocks and bonds from the public. 
D) sells various types of stocks and bonds from its portfolio to the public.

Exam 16: The Monetary System: The Federal Reserve System

When the Federal Reserve sells assets from its portfolio to the public with the intent of changing the money supply,

All Fed purchases and sales of

When conducting an open-market purchase,the Fed

An important function of the U.S.Federal Reserve is to

Which of the following does the U.S.president appoint and the U.S.Senate confirm?

Which of the following does the Federal Reserve not do?

The Federal Reserve

The Federal Reserve Board of Governors

An open-market sale

Which of the following is not correct?

The regional Federal Reserve Banks

If the Federal Open Market Committee decides to increase the money supply,then the Federal Reserve

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A

Application International Trade: Part B

Measuring a Nations Income

Measuring a Nations Income: The Economy's Income and Expenditure

Measuring a Nations Income: The Measurement of GDP

Measuring a Nations Income: The Components of GDP

Measuring a Nations Income: Real Versus Nominal GDP

Measuring a Nations Income: Is GDP a Good Measure of Economic Well-Being