latinachica08
New member
1. An open market purchase of securities by the Fed will decrease the supply of securities. This causes the price of securities to increase and interest rates on those securities to
(a) increase.
(b) decrease, then increase.
(c) decrease.
(d) increase, then decrease.
2.What is the most commonly used method of controlling the money supply in the United States?
(a) Changing the discount rate.
(b) Changing the required reserve ratio.
(c) Changes in government spending.
(d) Open market operations.
3.The money demand curve illustrates
(a) the positive relationship between the quantity of money demanded and the interest rate.
(b) the inverse relationship between the quantity of money demanded and the interest rate.
(c) the positive relationship between the demand for money and the discount rate.
(d) the inverse relationship between investment and the interest rate.
4.Which of the following policies by the Fed would help the economy out of a recession?
(a) Open market purchases of government securities.
(b) An increase in the discount rate.
(c) Open market sales of government securities.
(d) An increase in reserve requirements.
5.If the price of Treasury bills goes up,
(a) their yield will be unaffected.
(b) their yield will go down.
(c) their yield will also go up.
(d) no one will buy any.
5.If the Fed sells Treasury bills,
(a) the price of Treasury bills will fall.
(b) the yield on Treasury bills will rise.
(c) Both (a) and (b).
(d) neither the price of nor the yield on Treasury bills will be affected
(a) increase.
(b) decrease, then increase.
(c) decrease.
(d) increase, then decrease.
2.What is the most commonly used method of controlling the money supply in the United States?
(a) Changing the discount rate.
(b) Changing the required reserve ratio.
(c) Changes in government spending.
(d) Open market operations.
3.The money demand curve illustrates
(a) the positive relationship between the quantity of money demanded and the interest rate.
(b) the inverse relationship between the quantity of money demanded and the interest rate.
(c) the positive relationship between the demand for money and the discount rate.
(d) the inverse relationship between investment and the interest rate.
4.Which of the following policies by the Fed would help the economy out of a recession?
(a) Open market purchases of government securities.
(b) An increase in the discount rate.
(c) Open market sales of government securities.
(d) An increase in reserve requirements.
5.If the price of Treasury bills goes up,
(a) their yield will be unaffected.
(b) their yield will go down.
(c) their yield will also go up.
(d) no one will buy any.
5.If the Fed sells Treasury bills,
(a) the price of Treasury bills will fall.
(b) the yield on Treasury bills will rise.
(c) Both (a) and (b).
(d) neither the price of nor the yield on Treasury bills will be affected