Question 1

Easy monetary policy strengthens the dollar.

Accepted Answer

A) True 
 B)False

Question 2

List and briefly describe the channels of transmission of monetary policy.

Accepted Answer

Business investment in real assets. Pres

Question 3

An contraction in the U.S. money supply should

Accepted Answer

A)  increase domestic interest rates 
B)  cause the exchange value of the dollar to increase. 
C)  cause U.S. exports to decrease. 
D)  all of the above. 
A)  increase domestic interest rates 
B)  cause the exchange value of the dollar to increase. 
C)  cause U.S. exports to decrease. 
D)  all of the above.

Question 4

Reserve requirements are not useful for "fine tuning."

Accepted Answer

A) True 
 B)False

Question 5

When the Fed sells an asset to the private sector, the monetary base declines.

Accepted Answer

A) True 
 B)False

Question 6

An expansion in the U.S. money supply

Accepted Answer

A)  will increase domestic interest rates 
B)  will cause the exchange value of the dollar to increase. 
C)  will cause U.S. exports to increase. 
D)  will cause U.S. imports to increase. 
A)  will increase domestic interest rates 
B)  will cause the exchange value of the dollar to increase. 
C)  will cause U.S. exports to increase. 
D)  will cause U.S. imports to increase.

Question 7

Sustained open market buying by the Fed will cause

Accepted Answer

A)  the Fed Funds rate to rise. 
B)  planned inventory investment to fall. 
C)  depository institutions to lend more freely. 
D)  foreign investors to buy more T-Bills. 
A)  the Fed Funds rate to rise. 
B)  planned inventory investment to fall. 
C)  depository institutions to lend more freely. 
D)  foreign investors to buy more T-Bills.

Question 8

Unexpected high levels of inflation aid debtors at the expense of lenders.

Accepted Answer

A) True 
 B)False

Question 9

The intended longer run impact of monetary policy is

Accepted Answer

A)  to lower interest rates. 
B)  to raise security prices. 
C)  to influence change consumption and investment spending. 
D)  to reduce government spending. 
A)  to lower interest rates. 
B)  to raise security prices. 
C)  to influence change consumption and investment spending. 
D)  to reduce government spending.

Question 10

The Fed is powerless against "technical factors".

Accepted Answer

A) True 
 B)False

Question 11

"Cash drains" are an example of a "technical factor".

Accepted Answer

A) True 
 B)False

Question 12

The velocity of money measures:

Accepted Answer

A)  the rate of growth of the money supply. 
B)  the relationship between the monetary base and the money supply. 
C)  the relationship between the money supply and economic activity. 
D)  all of the above. 
A)  the rate of growth of the money supply. 
B)  the relationship between the monetary base and the money supply. 
C)  the relationship between the money supply and economic activity. 
D)  all of the above.

Question 13

Real investment is encouraged by rising interest rates.

Accepted Answer

A) True 
 B)False

Question 14

When reserve requirements are increased, interest rates should increase.

Accepted Answer

A) True 
 B)False

Question 15

The "tools" of monetary policy, whether "viable" or not, include all the following except

Accepted Answer

A)  changing the discount rate. 
B)  open market operations. 
C)  changes in reserve requirements. 
D)  changes in the Federal Funds rate. 
A)  changing the discount rate. 
B)  open market operations. 
C)  changes in reserve requirements. 
D)  changes in the Federal Funds rate.

Question 16

Stable employment is one of the objectives of monetary policy.

Accepted Answer

A) True 
 B)False

Question 17

M2 includes

Accepted Answer

A)  currency in circulation 
B)  demand deposits 
C)  both 
D)  neither 
A)  currency in circulation 
B)  demand deposits 
C)  both 
D)  neither

Question 18

Monetary policy first affects financial markets and institutions, then the real economy.

Accepted Answer

A) True 
 B)False

Question 19

An increase in the money supply should ultimately cause security prices to decrease.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not a channel of transmission of monetary policy?

Accepted Answer

A)  Reg Q interest rate ceilings 
B)  consumer spending for durable goods and housing 
C)  net exports 
D)  business investment in real assets 
A)  Reg Q interest rate ceilings 
B)  consumer spending for durable goods and housing 
C)  net exports 
D)  business investment in real assets

Easy monetary policy strengthens the dollar.

List and briefly describe the channels of transmission of monetary policy.

An contraction in the U.S. money supply should

Reserve requirements are not useful for "fine tuning."

When the Fed sells an asset to the private sector, the monetary base declines.

An expansion in the U.S. money supply

Sustained open market buying by the Fed will cause

Unexpected high levels of inflation aid debtors at the expense of lenders.

The intended longer run impact of monetary policy is

The Fed is powerless against "technical factors".

"Cash drains" are an example of a "technical factor".

The velocity of money measures:

Real investment is encouraged by rising interest rates.

When reserve requirements are increased, interest rates should increase.

The "tools" of monetary policy, whether "viable" or not, include all the following except

Stable employment is one of the objectives of monetary policy.

M2 includes

Monetary policy first affects financial markets and institutions, then the real economy.

An increase in the money supply should ultimately cause security prices to decrease.

Which of the following is not a channel of transmission of monetary policy?

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

Easy monetary policy strengthens the dollar.

List and briefly describe the channels of transmission of monetary policy.

An contraction in the U.S. money supply should

Reserve requirements are not useful for "fine tuning."

When the Fed sells an asset to the private sector, the monetary base declines.

An expansion in the U.S. money supply

Sustained open market buying by the Fed will cause

Unexpected high levels of inflation aid debtors at the expense of lenders.

The intended longer run impact of monetary policy is

The Fed is powerless against "technical factors".

"Cash drains" are an example of a "technical factor".

The velocity of money measures:

Real investment is encouraged by rising interest rates.

When reserve requirements are increased, interest rates should increase.

The "tools" of monetary policy, whether "viable" or not, include all the following except

Stable employment is one of the objectives of monetary policy.

M2 includes

Monetary policy first affects financial markets and institutions, then the real economy.

An increase in the money supply should ultimately cause security prices to decrease.

Which of the following is not a channel of transmission of monetary policy?

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