Question 1

To decrease the money supply,the Fed may sell government securities or lower taxes.

Accepted Answer

A) True 
 B)False

Question 2

Every time the Fed buys or sells on the open market,the __________ changes.

Accepted Answer

A)  budget deficit 
B)  income tax rate 
C)  money supply 
D)  a and b 
E)  a,b,and c 
A)  budget deficit 
B)  income tax rate 
C)  money supply 
D)  a and b 
E)  a,b,and c

Question 3

What is the name and make-up of the policymaking group that has the authority to conduct open market operations? Describe how the use of open market operations helps to increase or decrease the money supply.

Accepted Answer

The group responsible for conducting ope

Question 4

The interest rate that a commercial bank pays when it borrows from the Fed is the __________ rate.

Accepted Answer

A)  discount 
B)  exchange 
C)  federal 
D)  bank 
A)  discount 
B)  exchange 
C)  federal 
D)  bank

Question 5

The Fed

Accepted Answer

A)  can examine the books of a member bank without warning. 
B)  can examine the books of a member bank after giving advance notice. 
C)  can examine the books of a member bank with the bank's permission. 
D)  is never allowed to see the books of a privately owned bank. 
A)  can examine the books of a member bank without warning. 
B)  can examine the books of a member bank after giving advance notice. 
C)  can examine the books of a member bank with the bank's permission. 
D)  is never allowed to see the books of a privately owned bank.

Question 6

There is an inverse relationship between the required reserve ratio and the money supply.

Accepted Answer

A) True 
 B)False

Question 7

If banks are currently holding zero excess reserves and the Fed lowers the required reserve ratio,which of the following will happen?

Accepted Answer

A)  Banks will have a reserve deficiency. 
B)  Banks will have positive excess reserves. 
C)  Banks will extend fewer loans. 
D)  Banks will call in some of their loans to meet the reserve deficiency. 
A)  Banks will have a reserve deficiency. 
B)  Banks will have positive excess reserves. 
C)  Banks will extend fewer loans. 
D)  Banks will call in some of their loans to meet the reserve deficiency.

Question 8

The discount rate is the interest rate

Accepted Answer

A)  banks pay on certificates of deposit. 
B)  the Fed pays on reserves held by banks. 
C)  the Fed charges when it lends reserves to banks. 
D)  banks charge their loan customers. 
E)  on short-term Treasury securities. 
A)  banks pay on certificates of deposit. 
B)  the Fed pays on reserves held by banks. 
C)  the Fed charges when it lends reserves to banks. 
D)  banks charge their loan customers. 
E)  on short-term Treasury securities.

Question 9

Which of the following is not a function of the Federal Reserve System?

Accepted Answer

A)  to clear checks 
B)  to supervise member banks 
C)  to serve as the lender of last resort 
D)  to handle the sale of U.S.Treasury securities 
E)  to serve as the government's tax collector 
A)  to clear checks 
B)  to supervise member banks 
C)  to serve as the lender of last resort 
D)  to handle the sale of U.S.Treasury securities 
E)  to serve as the government's tax collector

Question 10

When commercial banks borrow from other commercial banks,the immediate impact is that reserves in the banking system

Accepted Answer

A)  increase. 
B)  decrease. 
C)  are unaffected. 
D)  first increase,then decrease. 
E)  first decrease,then increase. 
A)  increase. 
B)  decrease. 
C)  are unaffected. 
D)  first increase,then decrease. 
E)  first decrease,then increase.

Question 11

The simple deposit multiplier is

Accepted Answer

A)  the reciprocal of the required reserve ratio. 
B)  always 1. 
C)  the same as the required reserve ratio. 
D)  different from bank to bank even if the required reserve ratio is the same for all banks. 
A)  the reciprocal of the required reserve ratio. 
B)  always 1. 
C)  the same as the required reserve ratio. 
D)  different from bank to bank even if the required reserve ratio is the same for all banks.

Question 12

When a bank obtains a loan from the Fed,it follows that the

Accepted Answer

A)  simple deposit multiplier rises. 
B)  bank (itself)can create more loans. 
C)  bank's reserves decrease. 
D)  bank's reserves remain unchanged. 
E)  none of the above 
A)  simple deposit multiplier rises. 
B)  bank (itself)can create more loans. 
C)  bank's reserves decrease. 
D)  bank's reserves remain unchanged. 
E)  none of the above

Question 13

The Federal Reserve System began operations in

Accepted Answer

A)  1834. 
B)  1896. 
C)  1914. 
D)  1935. 
A)  1834. 
B)  1896. 
C)  1914. 
D)  1935.

Question 14

Paper money is printed at the _______________________,but it is issued to commercial banks by the ______________________________.

Accepted Answer

A)  Bureau of Engraving and Printing; FOMC 
B)  U.S.Mint; 12 Federal Reserve District Banks 
C)  Federal Reserve building in Washington; D.C.,U.S.Treasury 
D)  Bureau of Engraving and Printing; 12 Federal Reserve District Banks 
E)  none of the above 
A)  Bureau of Engraving and Printing; FOMC 
B)  U.S.Mint; 12 Federal Reserve District Banks 
C)  Federal Reserve building in Washington; D.C.,U.S.Treasury 
D)  Bureau of Engraving and Printing; 12 Federal Reserve District Banks 
E)  none of the above

Question 15

Which of the following is not a major responsibility of the Fed?

Accepted Answer

A)  controlling the money supply 
B)  serving as the federal government's banker 
C)  determining tax rates 
D)  acting as a lender of last resort 
A)  controlling the money supply 
B)  serving as the federal government's banker 
C)  determining tax rates 
D)  acting as a lender of last resort

Question 16

When Bank A obtains a loan from the Fed,the

Accepted Answer

A)  discount rate is probably higher than the federal funds rate. 
B)  bank's reserves increase. 
C)  simple deposit multiplier decreases. 
D)  b and c 
E)  none of the above 
A)  discount rate is probably higher than the federal funds rate. 
B)  bank's reserves increase. 
C)  simple deposit multiplier decreases. 
D)  b and c 
E)  none of the above

Question 17

If the Fed raises the discount rate at the same time it conducts an open market sale,it follows that the money supply will

Accepted Answer

A)  fall. 
B)  rise. 
C)  remain unchanged. 
D)  There is not enough information to answer the question. 
A)  fall. 
B)  rise. 
C)  remain unchanged. 
D)  There is not enough information to answer the question.

Question 18

When the Fed is acting as fiscal agent for the Treasury,it will

Accepted Answer

A)  buy securities from the Treasury,thereby providing the Treasury with money to pay the government's bills. 
B)  receive and process bids for Treasury securities in preparation for the Treasury's auction of securities. 
C)  serve as a lender of last resort. 
D)  supply the Treasury with paper money whenever the Treasury does not have enough funds to meet its bills. 
E)  supervise the Treasury by examining its books. 
A)  buy securities from the Treasury,thereby providing the Treasury with money to pay the government's bills. 
B)  receive and process bids for Treasury securities in preparation for the Treasury's auction of securities. 
C)  serve as a lender of last resort. 
D)  supply the Treasury with paper money whenever the Treasury does not have enough funds to meet its bills. 
E)  supervise the Treasury by examining its books.

Question 19

Which of the following will decrease the money supply?

Accepted Answer

A)  an increase in the discount rate (relative to the federal funds rate) 
B)  an increase in the required reserve ratio 
C)  an open market purchase by the Fed 
D)  a and b 
E)  a,b,and c 
A)  an increase in the discount rate (relative to the federal funds rate) 
B)  an increase in the required reserve ratio 
C)  an open market purchase by the Fed 
D)  a and b 
E)  a,b,and c

Question 20

The funds the Fed receives from selling government securities

Accepted Answer

A)  are deposited in a commercial bank. 
B)  disappear into thin air. 
C)  are turned over to the Office of Management and Budget in Washington,D.C. 
D)  are deposited in the U.S.Treasury. 
A)  are deposited in a commercial bank. 
B)  disappear into thin air. 
C)  are turned over to the Office of Management and Budget in Washington,D.C. 
D)  are deposited in the U.S.Treasury.

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

To decrease the money supply,the Fed may sell government securities or lower taxes.

Every time the Fed buys or sells on the open market,the __________ changes.

What is the name and make-up of the policymaking group that has the authority to conduct open market operations? Describe how the use of open market operations helps to increase or decrease the money supply.

The interest rate that a commercial bank pays when it borrows from the Fed is the __________ rate.

The Fed

There is an inverse relationship between the required reserve ratio and the money supply.

If banks are currently holding zero excess reserves and the Fed lowers the required reserve ratio,which of the following will happen?

The discount rate is the interest rate

Which of the following is not a function of the Federal Reserve System?

When commercial banks borrow from other commercial banks,the immediate impact is that reserves in the banking system

The simple deposit multiplier is

When a bank obtains a loan from the Fed,it follows that the

The Federal Reserve System began operations in

Paper money is printed at the _______________________,but it is issued to commercial banks by the ______________________________.

Which of the following is not a major responsibility of the Fed?

When Bank A obtains a loan from the Fed,the

If the Fed raises the discount rate at the same time it conducts an open market sale,it follows that the money supply will

When the Fed is acting as fiscal agent for the Treasury,it will

Which of the following will decrease the money supply?

The funds the Fed receives from selling government securities

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

Paper money is printed at the _,but it is issued to commercial banks by the ________.