Question 1

There are __________ Federal Reserve Districts.

Accepted Answer

A)  seven 
B)  eleven 
C)  twelve 
D)  fourteen 
A)  seven 
B)  eleven 
C)  twelve 
D)  fourteen C

Question 2

Controlling the nation's money supply is the most important duty of the Federal Reserve.

Accepted Answer

A) True 
 B)False  True

Question 3

Suppose that the Fed undertakes an open market purchase of $25 million worth of securities from a bank.If the required reserve ratio is 9%,what is the resulting change in checkable deposits (or the money supply),assuming that there are no cash leakages and that banks hold zero excess reserves?

Accepted Answer

A)  $277.8 million 
B)  $225 million 
C)  $28 million 
D)  $34 million 
A)  $277.8 million 
B)  $225 million 
C)  $28 million 
D)  $34 million A

Question 4

Summarize the history of how the Federal Reserve came to have twelve districts.

Accepted Answer

The prevailing popular opinion of the ti

Question 5

Suppose that the Fed undertakes an open market sale,selling $3 million worth of securities to a bank.If the required reserve ratio is 11%,checkable deposits (or the money supply),would _______________ by ________________ million,assuming that there are no cash leakages and that banks hold zero excess reserves.

Accepted Answer

A)  rise; $27 
B)  decline; $33 
C)  decline; $27 
D)  rise; $33 
A)  rise; $27 
B)  decline; $33 
C)  decline; $27 
D)  rise; $33

Question 6

If the Fed wants to increase the money supply through open market operations,it will

Accepted Answer

A)  purchase government securities. 
B)  sell government securities. 
C)  first purchase,then sell,government securities. 
D)  lend more reserves to commercial banks. 
A)  purchase government securities. 
B)  sell government securities. 
C)  first purchase,then sell,government securities. 
D)  lend more reserves to commercial banks.

Question 7

Which of the following will increase the money supply?

Accepted Answer

A)  increasing the required reserve ratio 
B)  an open market sale 
C)  raising the discount rate relative to the federal funds rate 
D)  none of the above 
A)  increasing the required reserve ratio 
B)  an open market sale 
C)  raising the discount rate relative to the federal funds rate 
D)  none of the above

Question 8

If the Fed purchases government securities from a commercial bank,which of the following will happen?

Accepted Answer

A)  The Fed will increase the bank's reserves on deposit at the Fed. 
B)  The Fed will decrease the bank's reserves on deposit at the Fed. 
C)  The assets (government securities)of the Fed will decrease. 
D)  The assets (government securities)of the Fed will increase. 
E)  a and d 
A)  The Fed will increase the bank's reserves on deposit at the Fed. 
B)  The Fed will decrease the bank's reserves on deposit at the Fed. 
C)  The assets (government securities)of the Fed will decrease. 
D)  The assets (government securities)of the Fed will increase. 
E)  a and d

Question 9

When the Fed increases the required reserve ratio,a bank's

Accepted Answer

A)  excess reserves are unaffected. 
B)  excess reserves are increased. 
C)  excess reserves are decreased. 
D)  required reserves are decreased. 
E)  b and d 
A)  excess reserves are unaffected. 
B)  excess reserves are increased. 
C)  excess reserves are decreased. 
D)  required reserves are decreased. 
E)  b and d

Question 10

A bank is less likely to borrow from the Fed when the __________ falls relative to the __________.

Accepted Answer

A)  discount rate; required reserve ratio 
B)  excess reserve; required reserves 
C)  discount rate; federal funds rate 
D)  federal funds rate; discount rate 
A)  discount rate; required reserve ratio 
B)  excess reserve; required reserves 
C)  discount rate; federal funds rate 
D)  federal funds rate; discount rate

Question 11

The Board of Governors of the Federal Reserve is part of a larger policy-making group called the

Accepted Answer

A)  Senate Banking Committee. 
B)  Federal Deposit Insurance Corporation. 
C)  American Banking Association. 
D)  Federal Open Market Committee. 
A)  Senate Banking Committee. 
B)  Federal Deposit Insurance Corporation. 
C)  American Banking Association. 
D)  Federal Open Market Committee.

Question 12

Use the simple deposit multiplier to help show why the money supply increases when the Fed lowers the required reserve ratio (r).

Accepted Answer

The used to determine the simp

Question 13

When we speak of the Fed's responsibility to supervise member banks,we are saying that the

Accepted Answer

A)  Fed's advisory board will help member banks manage their assets and liabilities. 
B)  Fed's Open Market Committee will advise member banks regarding the purchase and sale of government securities. 
C)  Fed's Board of Governors will advise member banks regarding the appropriate interest rates to be charged on various loans. 
D)  Fed will advise member banks regarding the nature of loans and compliance with regulations. 
E)  Fed will advise member banks about the proper control of each individual bank's money supply. 
A)  Fed's advisory board will help member banks manage their assets and liabilities. 
B)  Fed's Open Market Committee will advise member banks regarding the purchase and sale of government securities. 
C)  Fed's Board of Governors will advise member banks regarding the appropriate interest rates to be charged on various loans. 
D)  Fed will advise member banks regarding the nature of loans and compliance with regulations. 
E)  Fed will advise member banks about the proper control of each individual bank's money supply.

Question 14

Lowering the required reserve ratio raises the simple deposit multiplier.

Accepted Answer

A) True 
 B)False

Question 15

List and describe the three major monetary policy tools the Federal Reserve can use to increase the money supply.Be specific in your response regarding which direction the tool would need to change in order for the money supply to grow.

Accepted Answer

Open market operations are when the Fed

Question 16

Which of the following is false?

Accepted Answer

A)  Under free banking,banks would not be subject to any special regulations beyond those which are required of other businesses. 
B)  Under free banking,banks would be allowed to issue their own currency. 
C)  The government would largely control the actions of banks under free banking. 
D)  The market forces would raise or lower the money supply under free banking. 
A)  Under free banking,banks would not be subject to any special regulations beyond those which are required of other businesses. 
B)  Under free banking,banks would be allowed to issue their own currency. 
C)  The government would largely control the actions of banks under free banking. 
D)  The market forces would raise or lower the money supply under free banking.

Question 17

A required reserve ratio of 7 percent gives rise to a simple deposit multiplier of

Accepted Answer

A)  14.29. 
B)  83.33. 
C)  1.43. 
D)  93. 
E)  7. 
A)  14.29. 
B)  83.33. 
C)  1.43. 
D)  93. 
E)  7.

Question 18

If the Fed lowers the discount rate (relative to the federal funds rate),banks will (likely)borrow __________ from the Fed,which will __________ reserves in the banking system,and eventually __________ the money supply.

Accepted Answer

A)  less; decrease; lower 
B)  more; increase; raise 
C)  the same amount; not change; lower 
D)  more; decrease; raise 
E)  none of the above 
A)  less; decrease; lower 
B)  more; increase; raise 
C)  the same amount; not change; lower 
D)  more; decrease; raise 
E)  none of the above

Question 19

List and describe five of the eight major functions or responsibilities of the Fed.

Accepted Answer

The eight major functions or responsibil

Question 20

When a bank repays a _________________ loan,the Fed _____________________ the bank's reserve account.

Accepted Answer

A)  overnight; subtracts the repayment from 
B)  overnight; adds the repayment to 
C)  discount; adds the repayment to 
D)  discount; subtracts the repayment from 
A)  overnight; subtracts the repayment from 
B)  overnight; adds the repayment to 
C)  discount; adds the repayment to 
D)  discount; subtracts the repayment from

Exam 13: Factor Markets: With Emphasis on the Labor Market

There are __________ Federal Reserve Districts.

Controlling the nation's money supply is the most important duty of the Federal Reserve.

Suppose that the Fed undertakes an open market purchase of $25 million worth of securities from a bank.If the required reserve ratio is 9%,what is the resulting change in checkable deposits (or the money supply),assuming that there are no cash leakages and that banks hold zero excess reserves?

Summarize the history of how the Federal Reserve came to have twelve districts.

If the Fed wants to increase the money supply through open market operations,it will

Which of the following will increase the money supply?

If the Fed purchases government securities from a commercial bank,which of the following will happen?

When the Fed increases the required reserve ratio,a bank's

A bank is less likely to borrow from the Fed when the __________ falls relative to the __________.

The Board of Governors of the Federal Reserve is part of a larger policy-making group called the

Use the simple deposit multiplier to help show why the money supply increases when the Fed lowers the required reserve ratio (r).

When we speak of the Fed's responsibility to supervise member banks,we are saying that the

Lowering the required reserve ratio raises the simple deposit multiplier.

List and describe the three major monetary policy tools the Federal Reserve can use to increase the money supply.Be specific in your response regarding which direction the tool would need to change in order for the money supply to grow.

Which of the following is false?

A required reserve ratio of 7 percent gives rise to a simple deposit multiplier of

If the Fed lowers the discount rate (relative to the federal funds rate),banks will (likely)borrow __________ from the Fed,which will __________ reserves in the banking system,and eventually __________ the money supply.

List and describe five of the eight major functions or responsibilities of the Fed.

When a bank repays a _________________ loan,the Fed _____________________ the bank's reserve account.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free,controlled,and Relative

Supply,demand,and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Wages,union,and Labor

The Distribution of Income and Poverty

Interest,rent,and Profit

Market Failure: Externalities, public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks,bonds,futures,and Options

Stocks,bonds,futures,and Options

Filters

A bank is less likely to borrow from the Fed when the falls relative to the .

If the Fed lowers the discount rate (relative to the federal funds rate),banks will (likely)borrow from the Fed,which will reserves in the banking system,and eventually __ the money supply.

When a bank repays a _ loan,the Fed _____ the bank's reserve account.