Question 1

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 2

If interest rates increase,what is most likely to happen to the total expenditure schedule?

Accepted Answer

A)  It will increase because G increases. 
B)  It will decrease because I decreases. 
C)  It will decrease because (X - IM)decreases. 
D)  It will increase because I increases. 
A)  It will increase because G increases. 
B)  It will decrease because I decreases. 
C)  It will decrease because (X - IM)decreases. 
D)  It will increase because I increases.

Question 3

If the Fed decreases the discount rate,what happens to reserves and the money supply?

Accepted Answer

A)  Reserves increase and the money supply decreases. 
B)  Both increase. 
C)  Reserves decrease and the money supply increases. 
D)  Both decrease. 
A)  Reserves increase and the money supply decreases. 
B)  Both increase. 
C)  Reserves decrease and the money supply increases. 
D)  Both decrease.

Question 4

Which of the following is correct?

Accepted Answer

A)  The Fed has very good control over the money supply and bank reserves. 
B)  The Fed has very poor control over the money supply and bank reserves. 
C)  The Fed has very good control over bank reserves but not over the money supply. 
D)  The Fed has very good control over the money supply but not over bank reserves. 
A)  The Fed has very good control over the money supply and bank reserves. 
B)  The Fed has very poor control over the money supply and bank reserves. 
C)  The Fed has very good control over bank reserves but not over the money supply. 
D)  The Fed has very good control over the money supply but not over bank reserves.

Question 5

What will happen to the demand for reserves if real GDP increases?

Accepted Answer

A)  It will shift outward. 
B)  It will shift inward. 
C)  It will remain unchanged. 
D)  It depends on what happens to interest rates. 
A)  It will shift outward. 
B)  It will shift inward. 
C)  It will remain unchanged. 
D)  It depends on what happens to interest rates.

Question 6

Describe the origins of the Fed and the arguments about the independence of the Fed.

Accepted Answer

The Fed was established in 1914 as a res

Question 7

If the Fed sells a U.S.Treasury bill to a member of the public,the banking system has

Accepted Answer

A)  less reserves and the money supply tends to fall. 
B)  more reserves and the money supply tends to fall. 
C)  less reserves and the money supply tends to grow. 
D)  more reserves and the money supply tends to grow. 
A)  less reserves and the money supply tends to fall. 
B)  more reserves and the money supply tends to fall. 
C)  less reserves and the money supply tends to grow. 
D)  more reserves and the money supply tends to grow.

Question 8

If the Fed raises the discount rate,what happens to reserves and the money supply?

Accepted Answer

A)  Reserves increase and the money supply decreases. 
B)  Both increase. 
C)  Reserves decrease and the money supply increases. 
D)  Both decrease. 
A)  Reserves increase and the money supply decreases. 
B)  Both increase. 
C)  Reserves decrease and the money supply increases. 
D)  Both decrease.

Question 9

The reason that the Fed does not actively use discount rate policy to control the money supply is because the Fed

Accepted Answer

A)  acts when a majority of member banks agree on policy and the banks rarely agree. 
B)  earns interest on discounting and cannot afford to lose the revenue. 
C)  does not know how banks will respond to discount rate changes. 
D)  has been directed by Congress to set the discount rate at a permanent level. 
A)  acts when a majority of member banks agree on policy and the banks rarely agree. 
B)  earns interest on discounting and cannot afford to lose the revenue. 
C)  does not know how banks will respond to discount rate changes. 
D)  has been directed by Congress to set the discount rate at a permanent level.

Question 10

In making policies about the nation's money supply,the Federal Reserve Board

Accepted Answer

A)  operates as an independent entity. 
B)  must consult each member bank. 
C)  must consult with Congress. 
D)  must coordinate all activity with the White House. 
A)  operates as an independent entity. 
B)  must consult each member bank. 
C)  must consult with Congress. 
D)  must coordinate all activity with the White House.

Question 11

Critics of Fed independence argue that

Accepted Answer

A)  monetary policy and fiscal policy are necessarily inconsistent. 
B)  political control ensures low rates of inflation. 
C)  monetary policy run by specialists is inherently inflationary. 
D)  unelected officials are undemocratic. 
A)  monetary policy and fiscal policy are necessarily inconsistent. 
B)  political control ensures low rates of inflation. 
C)  monetary policy run by specialists is inherently inflationary. 
D)  unelected officials are undemocratic.

Question 12

Assume that the Fed lowers the required reserve ratio.How will this affect the money supply?

Accepted Answer

A)  It would decrease. 
B)  It would increase. 
C)  It would remain unchanged. 
D)  It depends on the value of interest rates. 
A)  It would decrease. 
B)  It would increase. 
C)  It would remain unchanged. 
D)  It depends on the value of interest rates.

Question 13

If the Fed wants to reduce banks' reserves,it can

Accepted Answer

A)  buy securities in the open market. 
B)  lower the reserve ratio. 
C)  lower the federal funds rate. 
D)  raise the discount rate. 
A)  buy securities in the open market. 
B)  lower the reserve ratio. 
C)  lower the federal funds rate. 
D)  raise the discount rate.

Question 14

If the FOMC orders the sale of T-bills in the open market,then bank reserves are

Accepted Answer

A)  decreased,but the money supply will remain unchanged. 
B)  decreased,and a multiple contraction of the money supply will occur. 
C)  increased,but the money supply will remain unchanged. 
D)  increased,and a multiple expansion of the money supply will occur. 
A)  decreased,but the money supply will remain unchanged. 
B)  decreased,and a multiple contraction of the money supply will occur. 
C)  increased,but the money supply will remain unchanged. 
D)  increased,and a multiple expansion of the money supply will occur.

Question 15

The current chair of the Federal Reserve System is

Accepted Answer

A)  Tim Geithner. 
B)  Hillary Clinton. 
C)  Ben Bernanke. 
D)  Alan Greenspan. 
E)  Janet Yellen 
A)  Tim Geithner. 
B)  Hillary Clinton. 
C)  Ben Bernanke. 
D)  Alan Greenspan. 
E)  Janet Yellen

Question 16

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 17

Personal consumption spending is the most sensitive component of aggregate demand to monetary policy.

Accepted Answer

A) True 
 B)False

Question 18

Generally,most of the world's industrial countries believe that central banks should be independent of their governments.​

Accepted Answer

A) True 
 B)False

Question 19

The inflationary effect of an expansionary monetary policy depends on the slope of the aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 20

Members of the Board of Governors of the Fed are

Accepted Answer

A)  elected to two-year terms by the Electoral College. 
B)  appointed by the president for four-year terms and confirmed by the Congress. 
C)  appointed by the president for 14-year terms and confirmed by the Senate. 
D)  appointed by the president for 14-year terms and confirmed by the Supreme Court. 
A)  elected to two-year terms by the Electoral College. 
B)  appointed by the president for four-year terms and confirmed by the Congress. 
C)  appointed by the president for 14-year terms and confirmed by the Senate. 
D)  appointed by the president for 14-year terms and confirmed by the Supreme Court.

Open market operations have their initial effect on bank

If interest rates increase,what is most likely to happen to the total expenditure schedule?

If the Fed decreases the discount rate,what happens to reserves and the money supply?

Which of the following is correct?

What will happen to the demand for reserves if real GDP increases?

Describe the origins of the Fed and the arguments about the independence of the Fed.

If the Fed sells a U.S.Treasury bill to a member of the public,the banking system has

If the Fed raises the discount rate,what happens to reserves and the money supply?

The reason that the Fed does not actively use discount rate policy to control the money supply is because the Fed

In making policies about the nation's money supply,the Federal Reserve Board

Critics of Fed independence argue that

Assume that the Fed lowers the required reserve ratio.How will this affect the money supply?

If the Fed wants to reduce banks' reserves,it can

If the FOMC orders the sale of T-bills in the open market,then bank reserves are

The current chair of the Federal Reserve System is

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

Personal consumption spending is the most sensitive component of aggregate demand to monetary policy.

Generally,most of the world's industrial countries believe that central banks should be independent of their governments.

The inflationary effect of an expansionary monetary policy depends on the slope of the aggregate supply curve.

Members of the Board of Governors of the Fed are

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

Open market operations have their initial effect on bank

If interest rates increase,what is most likely to happen to the total expenditure schedule?

If the Fed decreases the discount rate,what happens to reserves and the money supply?

Which of the following is correct?

What will happen to the demand for reserves if real GDP increases?

Describe the origins of the Fed and the arguments about the independence of the Fed.

If the Fed sells a U.S.Treasury bill to a member of the public,the banking system has

If the Fed raises the discount rate,what happens to reserves and the money supply?

The reason that the Fed does not actively use discount rate policy to control the money supply is because the Fed

In making policies about the nation's money supply,the Federal Reserve Board

Critics of Fed independence argue that

Assume that the Fed lowers the required reserve ratio.How will this affect the money supply?

If the Fed wants to reduce banks' reserves,it can

If the FOMC orders the sale of T-bills in the open market,then bank reserves are

The current chair of the Federal Reserve System is

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

Personal consumption spending is the most sensitive component of aggregate demand to monetary policy.

Generally,most of the world's industrial countries believe that central banks should be independent of their governments.​

The inflationary effect of an expansionary monetary policy depends on the slope of the aggregate supply curve.

Members of the Board of Governors of the Fed are

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

Generally,most of the world's industrial countries believe that central banks should be independent of their governments.