Question 1

The Fed wishes to expand the money supply. What three things can they do? Which has the most predictable effects? Be specific.

Accepted Answer

Buy U.S. government securities

Question 2

Recently oil prices have risen in the U.S, generating concerns that inflation may increase. If the Fed wishes to ensure that inflation does not get out of hand the Fed could:

Accepted Answer

A)  intervene in the currency markets to push the value of the dollar down. 
B)  decrease the discount rate. 
C)  lower the target fed funds rate. 
D)  lower the target money supply growth rate. 
E)  reduce reserve requirements at banks. 
A)  intervene in the currency markets to push the value of the dollar down. 
B)  decrease the discount rate. 
C)  lower the target fed funds rate. 
D)  lower the target money supply growth rate. 
E)  reduce reserve requirements at banks.

Question 3

Ceteris paribus, if the Fed was targeting the quantity of money supplied and money demand dropped the Fed would likely ______________. If the Fed was instead targeting interest rates and money demand dropped the Fed would likely _______________.

Accepted Answer

A)  increase the money supply; do nothing 
B)  do nothing; decrease the money supply 
C)  decrease the money supply; do nothing 
D)  do nothing; increase the money supply 
E)  increase the money supply; decrease the money supply 
A)  increase the money supply; do nothing 
B)  do nothing; decrease the money supply 
C)  decrease the money supply; do nothing 
D)  do nothing; increase the money supply 
E)  increase the money supply; decrease the money supply

Question 4

Explain how a change in open market operations can affect a new college graduate.

Accepted Answer

If the Fed increases bank reserves or ch

Question 5

The major liability of the Federal Reserve is

Accepted Answer

A)  U.S. Treasury securities. 
B)  depository institution reserves. 
C)  currency outside banks. 
D)  vault cash of commercial banks. 
E)  gold and foreign exchange. 
A)  U.S. Treasury securities. 
B)  depository institution reserves. 
C)  currency outside banks. 
D)  vault cash of commercial banks. 
E)  gold and foreign exchange.

Question 6

The Fed changes reserve requirements from 10% to 14%, thereby eliminating $750 million in excess reserves. The total change in deposits (with no drains) would be (rounded)

Accepted Answer

A)  $7.917 billion. 
B)  $6.630 billion. 
C)  $5.357 billion. 
D)  $4.934 billion. 
E)  none of the above. (1/0.14) F1F1F1S1F1F1F10 $750 million 
A)  $7.917 billion. 
B)  $6.630 billion. 
C)  $5.357 billion. 
D)  $4.934 billion. 
E)  none of the above. (1/0.14) F1F1F1S1F1F1F10 $750 million

The Fed wishes to expand the money supply. What three things can they do? Which has the most predictable effects? Be specific.

Recently oil prices have risen in the U.S, generating concerns that inflation may increase. If the Fed wishes to ensure that inflation does not get out of hand the Fed could:

Ceteris paribus, if the Fed was targeting the quantity of money supplied and money demand dropped the Fed would likely . If the Fed was instead targeting interest rates and money demand dropped the Fed would likely _.

Explain how a change in open market operations can affect a new college graduate.

The major liability of the Federal Reserve is

The Fed changes reserve requirements from 10% to 14%, thereby eliminating $750 million in excess reserves. The total change in deposits (with no drains) would be (rounded)

Introduction

Determinants of Interest Rates

Interest Rates and Security Valuation

Money Markets

Bond Markets

Mortgage Markets

Stock Markets

Foreign Exchange Markets

Derivative Securities Markets

Commercial Banks: Industry Overview

Commercial Banks Financial Statements and Analysis

Regulation of Commercial Banks

Other Lending Institutions: Savings Institutions, Credit Unions, and Finance Companies

Insurance Companies

Securities Firms and Investment Banks

Mutual Funds and Hedge Funds

Pension Funds

Types of Risks Incurred by Financial Institutions

Managing Credit Risk on the Balance Sheet

Managing Liquidity Risk on the Balance Sheet

Managing Interest Rate Risk and Insolvency Risk on the Balance Sheet

Managing Risk Off the Balance Sheet With Derivative Securities

Managing Risk Off the Balance Sheet With Loan Sales and Securitization

Filters

Exam 4: The Federal Reserve System, Monetary Policy, and Interest Rates

The Fed wishes to expand the money supply. What three things can they do? Which has the most predictable effects? Be specific.

Recently oil prices have risen in the U.S, generating concerns that inflation may increase. If the Fed wishes to ensure that inflation does not get out of hand the Fed could:

Ceteris paribus, if the Fed was targeting the quantity of money supplied and money demand dropped the Fed would likely ______________. If the Fed was instead targeting interest rates and money demand dropped the Fed would likely _______________.

Explain how a change in open market operations can affect a new college graduate.

The major liability of the Federal Reserve is

The Fed changes reserve requirements from 10% to 14%, thereby eliminating $750 million in excess reserves. The total change in deposits (with no drains) would be (rounded)

Introduction

Determinants of Interest Rates

Interest Rates and Security Valuation

Money Markets

Bond Markets

Mortgage Markets

Stock Markets

Foreign Exchange Markets

Derivative Securities Markets

Commercial Banks: Industry Overview

Commercial Banks Financial Statements and Analysis

Regulation of Commercial Banks

Other Lending Institutions: Savings Institutions, Credit Unions, and Finance Companies

Insurance Companies

Securities Firms and Investment Banks

Mutual Funds and Hedge Funds

Pension Funds

Types of Risks Incurred by Financial Institutions

Managing Credit Risk on the Balance Sheet

Managing Liquidity Risk on the Balance Sheet

Managing Interest Rate Risk and Insolvency Risk on the Balance Sheet

Managing Risk Off the Balance Sheet With Derivative Securities

Managing Risk Off the Balance Sheet With Loan Sales and Securitization

Filters

Ceteris paribus, if the Fed was targeting the quantity of money supplied and money demand dropped the Fed would likely . If the Fed was instead targeting interest rates and money demand dropped the Fed would likely _.