Question 1

The interest rate that banks charge on loans to their best customers is called the:

Accepted Answer

A) federal funds rate. 
B) discount rate. 
C) mortgage interest rate. 
D) prime rate. 
A) federal funds rate. 
B) discount rate. 
C) mortgage interest rate. 
D) prime rate.

Question 2

In the money market, an excess supply of money will:

Accepted Answer

A) increase the demand for bonds, increase bond prices, and decrease interest rates. 
B) increase the demand for bonds, decrease bond prices, and decrease interest rates. 
C) decrease the demand for bonds, increase bonds prices, and increase interest rates. 
D) decrease the demand for bonds, decrease bond prices, and increase interest rates. 
A) increase the demand for bonds, increase bond prices, and decrease interest rates. 
B) increase the demand for bonds, decrease bond prices, and decrease interest rates. 
C) decrease the demand for bonds, increase bonds prices, and increase interest rates. 
D) decrease the demand for bonds, decrease bond prices, and increase interest rates.

Question 3

An increase in the reserve requirement would:

Accepted Answer

A) decrease excess reserves and reflect an expansionary monetary policy. 
B) decrease excess reserves and reflect a contractionary monetary policy. 
C) increase excess reserves and reflect an expansionary monetary policy. 
D) increase excess reserves and reflect a contractionary monetary policy. 
A) decrease excess reserves and reflect an expansionary monetary policy. 
B) decrease excess reserves and reflect a contractionary monetary policy. 
C) increase excess reserves and reflect an expansionary monetary policy. 
D) increase excess reserves and reflect a contractionary monetary policy.

Question 4

Open market purchase of government securities by the Fed increases the federal funds rate.

Accepted Answer

A) True 
 B)False

Question 5

Contractionary monetary policy is achieved by:

Accepted Answer

A) decreasing the amount of bank reserves and lowering the federal funds rate. 
B) decreasing the amount of bank reserves and raising the federal funds rate. 
C) increasing the amount of bank reserves and lowering the federal funds rate. 
D) increasing the amount of bank reserves and raising the federal funds rate. 
A) decreasing the amount of bank reserves and lowering the federal funds rate. 
B) decreasing the amount of bank reserves and raising the federal funds rate. 
C) increasing the amount of bank reserves and lowering the federal funds rate. 
D) increasing the amount of bank reserves and raising the federal funds rate.

Question 6

If $1000 was deposited in a bank and the reserve requirement is 0.10, how much is available for loans?

Accepted Answer

A) $900 
B) $910 
C) $920 
D) $930 
A) $900 
B) $910 
C) $920 
D) $930

Question 7

In the context of the money market, graphically illustrate and explain the impact of a contractionary monetary policy on interest rates.

Accepted Answer

A decrease in the nominal money supply w

Question 8

The monetary base is $1,000 billion and the money multiplier is 5.5.What is the size of the money supply?

Accepted Answer

Monetary base x mone

Question 9

The monetary base is smaller than the money supply.

Accepted Answer

A) True 
 B)False

Question 10

In the money market, an increase in money demand will:

Accepted Answer

A) result in a rightward shift in the money demand curve increasing interest rates. 
B) result in a rightward shift in the money demand curve decreasing interest rates. 
C) result in a leftward shift in the money demand curve increasing interest rates. 
D) result in a leftward shift in the money demand curve decreasing interest rates. 
A) result in a rightward shift in the money demand curve increasing interest rates. 
B) result in a rightward shift in the money demand curve decreasing interest rates. 
C) result in a leftward shift in the money demand curve increasing interest rates. 
D) result in a leftward shift in the money demand curve decreasing interest rates.

Question 11

In the money market, an excess demand of money will:

Accepted Answer

A) increase the supply of bonds, increase bond prices, and decrease interest rates. 
B) increase the supply of bonds, decrease bond prices, and decrease interest rates. 
C) increase the supply of bonds, increase bonds prices, and increase interest rates. 
D) increase the supply of bonds, decrease bond prices, and increase interest rates. 
A) increase the supply of bonds, increase bond prices, and decrease interest rates. 
B) increase the supply of bonds, decrease bond prices, and decrease interest rates. 
C) increase the supply of bonds, increase bonds prices, and increase interest rates. 
D) increase the supply of bonds, decrease bond prices, and increase interest rates.

Question 12

The primary monetary policy tool is reserve requirements.

Accepted Answer

A) True 
 B)False

Question 13

What are the three monetary policy tools of the Fed? Briefly describe how each tool can be used to implement an expansionary monetary policy and a contractionary monetary policy.

Accepted Answer

Open market operations, the discount rat

Question 14

Open market purchases and sales are conducted at the:

Accepted Answer

A) Federal Reserve Bank of Kansas City. 
B) Federal Reserve Bank of New York. 
C) Federal Reserve Bank of Chicago. 
D) Federal Reserve Bank of St. Louis. 
A) Federal Reserve Bank of Kansas City. 
B) Federal Reserve Bank of New York. 
C) Federal Reserve Bank of Chicago. 
D) Federal Reserve Bank of St. Louis.

Question 15

Open market purchase of government securities results in:

Accepted Answer

A) an increase in bank reserves. 
B) a decrease in bank reserves. 
C) an increase in interest rates. 
D) none of the above. 
A) an increase in bank reserves. 
B) a decrease in bank reserves. 
C) an increase in interest rates. 
D) none of the above.

Question 16

A goal of expansionary monetary policy is to:

Accepted Answer

A) decrease the rate of growth of real GDP. 
B) increase the rate of growth of real GDP. 
C) increase inflation. 
D) none of the above. 
A) decrease the rate of growth of real GDP. 
B) increase the rate of growth of real GDP. 
C) increase inflation. 
D) none of the above.

Question 17

You are given the following information on the banking system.
   
Compute the simple deposit and money multipliers.

Accepted Answer

Simple deposit multiplier 1/rr

Question 18

The discount rate is influenced by Fed actions whereas the Fed sets the federal funds rate.

Accepted Answer

A) True 
 B)False

Question 19

You are given the following information on the banking system.
   
Excess reserve ratio e = 0.00
Compute the simple deposit and money multipliers.

Accepted Answer

Simple deposit multiplier 1/rr

Question 20

Expansionary monetary policy decreases the federal funds rate.

Accepted Answer

A) True 
 B)False

The interest rate that banks charge on loans to their best customers is called the:

In the money market, an excess supply of money will:

An increase in the reserve requirement would:

Open market purchase of government securities by the Fed increases the federal funds rate.

Contractionary monetary policy is achieved by:

If $1000 was deposited in a bank and the reserve requirement is 0.10, how much is available for loans?

In the context of the money market, graphically illustrate and explain the impact of a contractionary monetary policy on interest rates.

The monetary base is $1,000 billion and the money multiplier is 5.5.What is the size of the money supply?

The monetary base is smaller than the money supply.

In the money market, an increase in money demand will:

In the money market, an excess demand of money will:

The primary monetary policy tool is reserve requirements.

What are the three monetary policy tools of the Fed? Briefly describe how each tool can be used to implement an expansionary monetary policy and a contractionary monetary policy.

Open market purchases and sales are conducted at the:

Open market purchase of government securities results in:

A goal of expansionary monetary policy is to:

You are given the following information on the banking system. Compute the simple deposit and money multipliers.

The discount rate is influenced by Fed actions whereas the Fed sets the federal funds rate.

You are given the following information on the banking system. Excess reserve ratio e = 0.00 Compute the simple deposit and money multipliers.

Expansionary monetary policy decreases the federal funds rate.

Managers and Economics

Demand, Supply, and Equilibrium Prices

Demand Elasticities

Techniques for Understanding Consumer Demand and Behavior

Production and Cost Analysis in the Short Run

Production and Cost Analysis in the Long Run

Market Structure: Perfect Competition

Market Structure: Monopoly and Monopolistic Competition

Market Structure: Oligopoly

Pricing Strategies for the Firm

Measuring Macroeconomic Activity

Spending by Individuals, Firms, and Governments on Real Goods and Services

The Aggregate Model of the Macro Economy

International and Balance of Payments Issues in the Macro Economy

Combining Micro and Macro Analysis for Managerial Decision Making

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Exam 13: The Role of Money in the Macro Economy

The interest rate that banks charge on loans to their best customers is called the:

In the money market, an excess supply of money will:

An increase in the reserve requirement would:

Open market purchase of government securities by the Fed increases the federal funds rate.

Contractionary monetary policy is achieved by:

If $1000 was deposited in a bank and the reserve requirement is 0.10, how much is available for loans?

In the context of the money market, graphically illustrate and explain the impact of a contractionary monetary policy on interest rates.

The monetary base is $1,000 billion and the money multiplier is 5.5.What is the size of the money supply?

The monetary base is smaller than the money supply.

In the money market, an increase in money demand will:

In the money market, an excess demand of money will:

The primary monetary policy tool is reserve requirements.

What are the three monetary policy tools of the Fed? Briefly describe how each tool can be used to implement an expansionary monetary policy and a contractionary monetary policy.

Open market purchases and sales are conducted at the:

Open market purchase of government securities results in:

A goal of expansionary monetary policy is to:

You are given the following information on the banking system. Compute the simple deposit and money multipliers.

The discount rate is influenced by Fed actions whereas the Fed sets the federal funds rate.

You are given the following information on the banking system. Excess reserve ratio e = 0.00 Compute the simple deposit and money multipliers.

Expansionary monetary policy decreases the federal funds rate.

Managers and Economics

Demand, Supply, and Equilibrium Prices

Demand Elasticities

Techniques for Understanding Consumer Demand and Behavior

Production and Cost Analysis in the Short Run

Production and Cost Analysis in the Long Run

Market Structure: Perfect Competition

Market Structure: Monopoly and Monopolistic Competition

Market Structure: Oligopoly

Pricing Strategies for the Firm

Measuring Macroeconomic Activity

Spending by Individuals, Firms, and Governments on Real Goods and Services

The Aggregate Model of the Macro Economy

International and Balance of Payments Issues in the Macro Economy

Combining Micro and Macro Analysis for Managerial Decision Making

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