Question 1

Which of the following would shift the supply curve for loans to the right,reducing short-term interest rates?

Accepted Answer

A)  An increase in the amount of money the Fed makes available to banks. 
B)  An increase in margin requirements. 
C)  A reduction in discount lending by the Fed to banks. 
D)  An increase in the desire of consumers to borrow money. 
A)  An increase in the amount of money the Fed makes available to banks. 
B)  An increase in margin requirements. 
C)  A reduction in discount lending by the Fed to banks. 
D)  An increase in the desire of consumers to borrow money.

Question 2

Cutting the interest rate paid on reserves should make banks

Accepted Answer

A)  less willing to use their funds for lending. 
B)  more willing to use their funds for lending. 
C)  less willing to meet the margin requirement. 
D)  more willing to meet the margin requirement. 
A)  less willing to use their funds for lending. 
B)  more willing to use their funds for lending. 
C)  less willing to meet the margin requirement. 
D)  more willing to meet the margin requirement.

Question 3

The Federal Reserve was founded by Congress in 1913 in response to

Accepted Answer

A)  the Great Depression. 
B)  the first World War. 
C)  a financial panic in 1907. 
D)  a request by President FranklinD. Roosevelt. 
A)  the Great Depression. 
B)  the first World War. 
C)  a financial panic in 1907. 
D)  a request by President FranklinD. Roosevelt.

Question 4

In the United States and in virtually every other country,the printing of money is

Accepted Answer

A)  Strictly a government monopoly. 
B)  Open to the free market so that different monies can compete for acceptance with one another. 
C)  Limited by the supplies of gold and silver the central bank holds in reserve. 
D)  A privilege that is allowed only to banks that are members of the Federal Reserve System. 
A)  Strictly a government monopoly. 
B)  Open to the free market so that different monies can compete for acceptance with one another. 
C)  Limited by the supplies of gold and silver the central bank holds in reserve. 
D)  A privilege that is allowed only to banks that are members of the Federal Reserve System.

Question 5

Members of the Board of Governors of the Federal Reserve are

Accepted Answer

A)  appointed by the outgoing chairman of the Board of Governors and confirmed by Congress. 
B)  appointed by the president of the United States. 
C)  elected by the stockholders of the eight largest banks in the United States. 
D)  appointed by the Treasury Secretary. 
A)  appointed by the outgoing chairman of the Board of Governors and confirmed by Congress. 
B)  appointed by the president of the United States. 
C)  elected by the stockholders of the eight largest banks in the United States. 
D)  appointed by the Treasury Secretary.

Question 6

Money can be used to buy goods and services,and is accepted in turn as payment.This is the ________ use of money.

Accepted Answer

A)  medium of exchange 
B)  store of value 
C)  standard of value 
D)  inflationary 
A)  medium of exchange 
B)  store of value 
C)  standard of value 
D)  inflationary

Question 7

When the Federal Reserve acts as a lender of last resort,it is making sure that banks have the money they need to continue to operate.

Accepted Answer

A) True 
 B)False

Question 8

The Federal Reserve is under the ultimate direction of the Congress of the United States because Congress can cut the budget of the Federal Reserve if the Federal Reserve Board of Governors does not follow the instructions of Congress.

Accepted Answer

A) True 
 B)False

Question 9

In response to the financial crisis of 2007-2009,the Federal Reserve

Accepted Answer

A)  cut the fed funds rate from 5.25 percent to 2.0 percent. 
B)  cut the discount rate from 5.25 percent to 2.0 percent. 
C)  raised the fed funds rate from 2.0 percent to 5.25 percent. 
D)  raised the discount rate from 2.0 percent to 5.25 percent. 
A)  cut the fed funds rate from 5.25 percent to 2.0 percent. 
B)  cut the discount rate from 5.25 percent to 2.0 percent. 
C)  raised the fed funds rate from 2.0 percent to 5.25 percent. 
D)  raised the discount rate from 2.0 percent to 5.25 percent.

Question 10

Which of the following would be the result of increasing the money available for banks to lend?

Accepted Answer

A)  An increase in the reserve requirement. 
B)  An increase in the discount rate. 
C)  A decrease in the federal funds rate. 
D)  A decrease in the Fed's holdings of U.S. Treasury securities. 
A)  An increase in the reserve requirement. 
B)  An increase in the discount rate. 
C)  A decrease in the federal funds rate. 
D)  A decrease in the Fed's holdings of U.S. Treasury securities.

Question 11

The Fed's control over interest rates,direct lending to financial institutions,and other policy tools is called

Accepted Answer

A)  fiscal policy. 
B)  monetary policy. 
C)  discount policy. 
D)  margin controls. 
A)  fiscal policy. 
B)  monetary policy. 
C)  discount policy. 
D)  margin controls.

Question 12

One potential problem with having private currencies-such as "Bank of Sam" dollars and "Bank of Fred" dollars-is that it will be difficult for individuals to

Accepted Answer

A)  compare Sam dollars to Fred dollars. 
B)  trade Sam dollars for Fred dollars. 
C)  discourage both Sam and Fred from inflating their currencies. 
D)  keep both Sam dollars and Fred dollars in their wallets. 
A)  compare Sam dollars to Fred dollars. 
B)  trade Sam dollars for Fred dollars. 
C)  discourage both Sam and Fred from inflating their currencies. 
D)  keep both Sam dollars and Fred dollars in their wallets.

Question 13

When financial institutions borrow from the Federal Reserve,this is called

Accepted Answer

A)  borrowing on margin. 
B)  fiscal policy. 
C)  open market operations. 
D)  going to the discount window. 
A)  borrowing on margin. 
B)  fiscal policy. 
C)  open market operations. 
D)  going to the discount window.

Question 14

The current chairman of the Federal Reserve Board is

Accepted Answer

A)  Alan Greenspan. 
B)  Paul Volcker. 
C)  Ben Bernanke. 
D)  Morgan Stanley. 
A)  Alan Greenspan. 
B)  Paul Volcker. 
C)  Ben Bernanke. 
D)  Morgan Stanley.

Question 15

An element of trust is built into money because

Accepted Answer

A)  the government maintains a monopoly over the money supply, and people tend to trust monopolies. 
B)  one must expect that it will still have value when the holder of money wants to spend it in the future. 
C)  people must trust that the government can always print more of it if necessary. 
D)  people must trust the Federal Reserve to prevent banks from failing. 
A)  the government maintains a monopoly over the money supply, and people tend to trust monopolies. 
B)  one must expect that it will still have value when the holder of money wants to spend it in the future. 
C)  people must trust that the government can always print more of it if necessary. 
D)  people must trust the Federal Reserve to prevent banks from failing.

Question 16

Money serves as a medium of exchange.This means that you can

Accepted Answer

A)  use money to buy goods and services, and accept it as payment for the goods and services you sell. 
B)  hold on to money to use at a later time. 
C)  compare values across several items by looking at the prices in terms of money. 
D)  increase the economic growth rate in the long run by printing more money. 
A)  use money to buy goods and services, and accept it as payment for the goods and services you sell. 
B)  hold on to money to use at a later time. 
C)  compare values across several items by looking at the prices in terms of money. 
D)  increase the economic growth rate in the long run by printing more money.

Question 17

The Federal Reserve Act establishing the Federal Reserve System was passed by Congress in

Accepted Answer

A)  1788. 
B)  1863. 
C)  1913. 
D) 1934. 
A)  1788. 
B)  1863. 
C)  1913. 
D) 1934.

Question 18

Having government-issued money makes it easier for policy makers to

Accepted Answer

A)  completely prevent inflation. 
B)  keep wages high in certain key industries. 
C)  guide and control the economy. 
D)  keep oil prices stable. 
A)  completely prevent inflation. 
B)  keep wages high in certain key industries. 
C)  guide and control the economy. 
D)  keep oil prices stable.

Question 19

Lowering the federal funds rate will tend to reduce the overall price level in the economy.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not one of the three purposes served by money?

Accepted Answer

A)  Serving as a medium of exchange. 
B)  Serving as a store of value. 
C)  Providing a means for regulators to track economic activity. 
D)  Providing a standard of value. 
A)  Serving as a medium of exchange. 
B)  Serving as a store of value. 
C)  Providing a means for regulators to track economic activity. 
D)  Providing a standard of value.

Which of the following would shift the supply curve for loans to the right,reducing short-term interest rates?

Cutting the interest rate paid on reserves should make banks

The Federal Reserve was founded by Congress in 1913 in response to

In the United States and in virtually every other country,the printing of money is

Members of the Board of Governors of the Federal Reserve are

Money can be used to buy goods and services,and is accepted in turn as payment.This is the ________ use of money.

When the Federal Reserve acts as a lender of last resort,it is making sure that banks have the money they need to continue to operate.

The Federal Reserve is under the ultimate direction of the Congress of the United States because Congress can cut the budget of the Federal Reserve if the Federal Reserve Board of Governors does not follow the instructions of Congress.

In response to the financial crisis of 2007-2009,the Federal Reserve

Which of the following would be the result of increasing the money available for banks to lend?

The Fed's control over interest rates,direct lending to financial institutions,and other policy tools is called

One potential problem with having private currencies-such as "Bank of Sam" dollars and "Bank of Fred" dollars-is that it will be difficult for individuals to

When financial institutions borrow from the Federal Reserve,this is called

The current chairman of the Federal Reserve Board is

An element of trust is built into money because

Money serves as a medium of exchange.This means that you can

The Federal Reserve Act establishing the Federal Reserve System was passed by Congress in

Having government-issued money makes it easier for policy makers to

Lowering the federal funds rate will tend to reduce the overall price level in the economy.

Which of the following is not one of the three purposes served by money?

Introduction

Demand and Supply: The Basics of the Market Economy

Market Equilibrium and Shifts

How Businesses Work

Competition and Market Power

Government and the Economy

The First Step Into Macroeconomics

Inflation

Growth

Business Cycles, unemployment and Inflation

Fiscal Policy

The Financial Markets

International Trade

Technological Change

Economics of the Labor Market

The Distribution of Income

Economics of Retirement and Healthcare

Economics of Energy, the Environment, and Global Climate Change Glossary

Filters

Exam 12: Monetary Policy

Which of the following would shift the supply curve for loans to the right,reducing short-term interest rates?

Cutting the interest rate paid on reserves should make banks

The Federal Reserve was founded by Congress in 1913 in response to

In the United States and in virtually every other country,the printing of money is

Members of the Board of Governors of the Federal Reserve are

Money can be used to buy goods and services,and is accepted in turn as payment.This is the ________ use of money.

When the Federal Reserve acts as a lender of last resort,it is making sure that banks have the money they need to continue to operate.

The Federal Reserve is under the ultimate direction of the Congress of the United States because Congress can cut the budget of the Federal Reserve if the Federal Reserve Board of Governors does not follow the instructions of Congress.

In response to the financial crisis of 2007-2009,the Federal Reserve

Which of the following would be the result of increasing the money available for banks to lend?

The Fed's control over interest rates,direct lending to financial institutions,and other policy tools is called

One potential problem with having private currencies-such as "Bank of Sam" dollars and "Bank of Fred" dollars-is that it will be difficult for individuals to

When financial institutions borrow from the Federal Reserve,this is called

The current chairman of the Federal Reserve Board is

An element of trust is built into money because

Money serves as a medium of exchange.This means that you can

The Federal Reserve Act establishing the Federal Reserve System was passed by Congress in

Having government-issued money makes it easier for policy makers to

Lowering the federal funds rate will tend to reduce the overall price level in the economy.

Which of the following is not one of the three purposes served by money?

Introduction

Demand and Supply: The Basics of the Market Economy

Market Equilibrium and Shifts

How Businesses Work

Competition and Market Power

Government and the Economy

The First Step Into Macroeconomics

Inflation

Growth

Business Cycles, unemployment and Inflation

Fiscal Policy

The Financial Markets

International Trade

Technological Change

Economics of the Labor Market

The Distribution of Income

Economics of Retirement and Healthcare

Economics of Energy, the Environment, and Global Climate Change Glossary

Filters