Question 1

Which of the following was not a responsibility of the early Federal Reserve System?

Accepted Answer

A)  replace the National Banking system 
B)  improve the payments system 
C)  establish more rigorous bank supervision 
D)  act as "lender of last resort" 
A)  replace the National Banking system 
B)  improve the payments system 
C)  establish more rigorous bank supervision 
D)  act as "lender of last resort"

Question 2

The monetary base will decrease when:

Accepted Answer

A)  banks withdraw currency from the Fed. 
B)  the Fed makes loans at the discount window. 
C)  the Fed sells securities on the open market. 
D)  the Fed buys securities on the open market. 
A)  banks withdraw currency from the Fed. 
B)  the Fed makes loans at the discount window. 
C)  the Fed sells securities on the open market. 
D)  the Fed buys securities on the open market.

Question 3

If the money supply increases too rapidly

Accepted Answer

A)  inflationary expectations will rise. 
B)  government spending will decrease. 
C)  bank lending will decrease. 
D)  investment spending will fall. 
A)  inflationary expectations will rise. 
B)  government spending will decrease. 
C)  bank lending will decrease. 
D)  investment spending will fall.

Question 4

High stock prices are a goal of monetary policy.

Accepted Answer

A) True 
 B)False

Question 5

When the Fed increases the Fed Funds Rate, financial institutions "go to the Window".

Accepted Answer

A) True 
 B)False

Question 6

Influence of monetary policy on the financial sector is

Accepted Answer

A)  negligible 
B)  inevitable 
C)  limited 
D)  insignificant 
A)  negligible 
B)  inevitable 
C)  limited 
D)  insignificant

Question 7

Which of the following tools of monetary policy has the greatest impact?

Accepted Answer

A)  discount rate 
B)  Regulation Q 
C)  open market operations 
D)  bank examination 
A)  discount rate 
B)  Regulation Q 
C)  open market operations 
D)  bank examination

Question 8

An increase in the assets of Federal Reserve banks

Accepted Answer

A)  decreases the monetary base. 
B)  increases the monetary base. 
C)  has no effect on monetary base. 
D)  always decreases another Federal Reserve Bank asset. 
A)  decreases the monetary base. 
B)  increases the monetary base. 
C)  has no effect on monetary base. 
D)  always decreases another Federal Reserve Bank asset.

Question 9

Monetary policy only works in the short term.

Accepted Answer

A) True 
 B)False

Question 10

The money supply

Accepted Answer

A)  is exclusively controlled by the Fed. 
B)  is smaller than the monetary base 
C)  excludes any interest-bearing deposits 
D)  none of the above. 
A)  is exclusively controlled by the Fed. 
B)  is smaller than the monetary base 
C)  excludes any interest-bearing deposits 
D)  none of the above.

Question 11

The cash-holding behavior of the public affects the monetary base.

Accepted Answer

A) True 
 B)False

Question 12

An increase in Federal Reserve float increases the monetary base.

Accepted Answer

A) True 
 B)False

Question 13

Monetary policy only works in the long term.

Accepted Answer

A) True 
 B)False

Question 14

Monetarists think changing the money supply impacts economic units directly rather than just through interest rates.

Accepted Answer

A) True 
 B)False

Question 15

What should happen to consumption if the monetary base increases? Explain.

Accepted Answer

Excess increase, pressuring the "benchma

Question 16

The primary policy tool used by the Fed to meet its monetary policy goals are to
change reserve requirements, to devaluing the US$, and to change bank regulations.

Accepted Answer

A) True 
 B)False

Question 17

The monetary base exceeds the money supply.

Accepted Answer

A) True 
 B)False

Question 18

A decrease in the monetary base is related to

Accepted Answer

A)  decrease in credit availability. 
B)  increasing interest rates. 
C)  decreased investment. 
D)  all of the above 
A)  decrease in credit availability. 
B)  increasing interest rates. 
C)  decreased investment. 
D)  all of the above

Question 19

The Fed substantially controls M1 by controlling total reserves of depository institutions.

Accepted Answer

A) True 
 B)False

Question 20

Monetary policy impacts the economy

Accepted Answer

A)  by affecting real spending directly. 
B)  by affecting real spending through the financial sector. 
C)  by changing interest rates and the cost of housing. 
D)  all of the above 
A)  by affecting real spending directly. 
B)  by affecting real spending through the financial sector. 
C)  by changing interest rates and the cost of housing. 
D)  all of the above

Which of the following was not a responsibility of the early Federal Reserve System?

The monetary base will decrease when:

If the money supply increases too rapidly

High stock prices are a goal of monetary policy.

When the Fed increases the Fed Funds Rate, financial institutions "go to the Window".

Influence of monetary policy on the financial sector is

Which of the following tools of monetary policy has the greatest impact?

An increase in the assets of Federal Reserve banks

Monetary policy only works in the short term.

The money supply

The cash-holding behavior of the public affects the monetary base.

An increase in Federal Reserve float increases the monetary base.

Monetary policy only works in the long term.

Monetarists think changing the money supply impacts economic units directly rather than just through interest rates.

What should happen to consumption if the monetary base increases? Explain.

The primary policy tool used by the Fed to meet its monetary policy goals are to change reserve requirements, to devaluing the US$, and to change bank regulations.

The monetary base exceeds the money supply.

A decrease in the monetary base is related to

The Fed substantially controls M1 by controlling total reserves of depository institutions.

Monetary policy impacts the economy

An Overview of Financial Markets and Institutions

The Federal Reserve and Its Powers

The Level of Interest Rates

Bond Prices and Interest Rate Risk

The Structure of Interest Rates

Money Markets

Bond Markets

Mortgage Markets

Equity Markets

Derivatives Markets

International Markets

Commercial Bank Operations

International Banking

Regulation of Financial Institutions

Thrift Institutions and Finance Companies

Insurance Companies and Pension Funds

Investment Banking

Investment Companies

Risk Management in Financial Institutions

Filters

Exam 3: The Fed and Interest Rates

Which of the following was not a responsibility of the early Federal Reserve System?

The monetary base will decrease when:

If the money supply increases too rapidly

High stock prices are a goal of monetary policy.

When the Fed increases the Fed Funds Rate, financial institutions "go to the Window".

Influence of monetary policy on the financial sector is

Which of the following tools of monetary policy has the greatest impact?

An increase in the assets of Federal Reserve banks

Monetary policy only works in the short term.

The money supply

The cash-holding behavior of the public affects the monetary base.

An increase in Federal Reserve float increases the monetary base.

Monetary policy only works in the long term.

Monetarists think changing the money supply impacts economic units directly rather than just through interest rates.

What should happen to consumption if the monetary base increases? Explain.

The primary policy tool used by the Fed to meet its monetary policy goals are to change reserve requirements, to devaluing the US$, and to change bank regulations.

The monetary base exceeds the money supply.

A decrease in the monetary base is related to

The Fed substantially controls M1 by controlling total reserves of depository institutions.

Monetary policy impacts the economy

An Overview of Financial Markets and Institutions

The Federal Reserve and Its Powers

The Level of Interest Rates

Bond Prices and Interest Rate Risk

The Structure of Interest Rates

Money Markets

Bond Markets

Mortgage Markets

Equity Markets

Derivatives Markets

International Markets

Commercial Bank Operations

International Banking

Regulation of Financial Institutions

Thrift Institutions and Finance Companies

Insurance Companies and Pension Funds

Investment Banking

Investment Companies

Risk Management in Financial Institutions

Filters