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1. Question #89
(Points: 2)
If the level of excess reserves in the banking system drops suddenly, we might expect that the:
a. discount rate would rise.
b. Federal funds rate would rise.
c. required reserve ratio would fall.
d. prime rate would fall.
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2. Question #85
(Points: 2)
A reduction in the Federal funds rate could be caused by:
a. lower than expected bank deposits.
b. higher than expected bank reserves.
c. higher than expected loan demand.
d. higher than expected withdrawals.
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3. Question #39
(Points: 2)
One of the duties of the Fed is to:
a. change the demand for money.
b. define the market interest rate.
c. offer financial advising to the government.
d. offer financial advising to the public.
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4. Question #151
(Points: 2)
On June 30, 2004 the Federal Reserve boosted its target for the Federal funds rate for the first time in four years, increasing it from a 46-year low of 1% to 1.25%. What tool of monetary policy will the Fed use to increase the Federal funds rate from 1% to 1.25%?
a. Open-market operations.
b. The discount rate.
c. A change in reserve requirements.
d. Margin requirements.
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5. Question #120
(Points: 2)
The effect of a contractionary monetary policy is to:
a. increase investment spending.
b. shift the aggregate demand curve to the right.
c. raise interest rates and restrict credit availability.
d. lower interest rates and increase credit availability.
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6. Question #78
(Points: 2)
Who determines U.S. monetary policy?
a. Congress
b. The president
c. The Internal Revenue Service
d. The Federal Reserve
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7. Question #67
(Points: 2)
In 2001, the Fed followed an expansionary monetary policy, which was evident by the:
a. decrease in the Fed funds rate from 6 percent in 2000 to 1.25 percent in 2002.
b. increase in the Fed funds rate from 1.25 percent in 2000 to 6 percent in 2002.
c. increase in the discount rate from 6 percent in 2000 to 1 percent in 2002.
d. increase in the discount rate and decrease in the Fed fund rate by the same percentage points.
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8. Question #88
(Points: 2)
The monetary base includes:
a. currency and coin in circulation plus checkable deposits.
b. currency and coin in circulation only.
c. vault cash plus checkable deposits.
d. currency and cash plus commercial bank deposits at the Fed.
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9. Question #196
(Points: 2)
If prices are inflexible, monetary policy:
a. affects both inflation and output.
b. affects output but not inflation.
c. affects inflation but not output.
d. doesn't affect output or inflation.
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10. Question #82
(Points: 2)
If the actual Federal funds rate is 9 percent and the Fed's target Federal funds rate is 8 percent, the Fed is most likely to adopt which of the following policies?
a. A sale of government bonds.
b. An increase in the discount rate.
c. A reduction in the reserve requirement.
d. A more contractionary monetary policy.
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11. Question #12
(Points: 2)
If the SAS curve is upward sloping but not vertical, monetary policy that affects nominal income but not real income must result in the shift of:
a. both the AD and SAS curves.
b. only the AD curve.
c. only the SAS curve.
d. neither the SAS curve nor the AD curve.
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12. Question #168
(Points: 2)
If inflation is one percentage point above the Fed's target, the Taylor rule predicts that the Fed will:
a. raise the Federal funds rate by 0.5 percentage points.
b. raise the Federal funds rate by 1.0 percentage points.
c. raise the Federal funds rate by 1.5 percentage points.
d. reduce the Federal funds rate by 1 percentage point.
Save Answer
13. Question #115
(Points: 2)
When the Fed purchases bonds, the Fed:
a. reduces the reserves and the Federal funds rate increases.
b. increases the reserves and the Federal funds rate decreases.
c. reduces the reserves and the Federal funds rate decreases.
d. increases the reserves and the Federal funds rate increases.
Save Answer
14. Question #44
(Points: 2)
Picture
Refer to the graph above. When the Fed conducts an expansionary monetary policy, it:
a. shifts the money supply from M0 to M1.
b. shifts the money supply from M0 to M2.
c. neither the money supply nor money demand shift.
d. shifts money demand from D0 to D1.
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15. Question #54
(Points: 2)
Suppose the nominal interest rate in Brazil is 40 percent and the expected inflation rate is 150 percent. The real interest rate is:
a. -110 percent.
b. -190 percent.
c. 110 percent.
d. 190 percent.
Save Answer
16. Question #126
(Points: 2)
Open market operations are related to:
a. actions taken by the Fed to close or merge weakened banks.
b. changes in the r
(Points: 2)
If the level of excess reserves in the banking system drops suddenly, we might expect that the:
a. discount rate would rise.
b. Federal funds rate would rise.
c. required reserve ratio would fall.
d. prime rate would fall.
Save Answer
2. Question #85
(Points: 2)
A reduction in the Federal funds rate could be caused by:
a. lower than expected bank deposits.
b. higher than expected bank reserves.
c. higher than expected loan demand.
d. higher than expected withdrawals.
Save Answer
3. Question #39
(Points: 2)
One of the duties of the Fed is to:
a. change the demand for money.
b. define the market interest rate.
c. offer financial advising to the government.
d. offer financial advising to the public.
Save Answer
4. Question #151
(Points: 2)
On June 30, 2004 the Federal Reserve boosted its target for the Federal funds rate for the first time in four years, increasing it from a 46-year low of 1% to 1.25%. What tool of monetary policy will the Fed use to increase the Federal funds rate from 1% to 1.25%?
a. Open-market operations.
b. The discount rate.
c. A change in reserve requirements.
d. Margin requirements.
Save Answer
5. Question #120
(Points: 2)
The effect of a contractionary monetary policy is to:
a. increase investment spending.
b. shift the aggregate demand curve to the right.
c. raise interest rates and restrict credit availability.
d. lower interest rates and increase credit availability.
Save Answer
6. Question #78
(Points: 2)
Who determines U.S. monetary policy?
a. Congress
b. The president
c. The Internal Revenue Service
d. The Federal Reserve
Save Answer
7. Question #67
(Points: 2)
In 2001, the Fed followed an expansionary monetary policy, which was evident by the:
a. decrease in the Fed funds rate from 6 percent in 2000 to 1.25 percent in 2002.
b. increase in the Fed funds rate from 1.25 percent in 2000 to 6 percent in 2002.
c. increase in the discount rate from 6 percent in 2000 to 1 percent in 2002.
d. increase in the discount rate and decrease in the Fed fund rate by the same percentage points.
Save Answer
8. Question #88
(Points: 2)
The monetary base includes:
a. currency and coin in circulation plus checkable deposits.
b. currency and coin in circulation only.
c. vault cash plus checkable deposits.
d. currency and cash plus commercial bank deposits at the Fed.
Save Answer
9. Question #196
(Points: 2)
If prices are inflexible, monetary policy:
a. affects both inflation and output.
b. affects output but not inflation.
c. affects inflation but not output.
d. doesn't affect output or inflation.
Save Answer
10. Question #82
(Points: 2)
If the actual Federal funds rate is 9 percent and the Fed's target Federal funds rate is 8 percent, the Fed is most likely to adopt which of the following policies?
a. A sale of government bonds.
b. An increase in the discount rate.
c. A reduction in the reserve requirement.
d. A more contractionary monetary policy.
Save Answer
11. Question #12
(Points: 2)
If the SAS curve is upward sloping but not vertical, monetary policy that affects nominal income but not real income must result in the shift of:
a. both the AD and SAS curves.
b. only the AD curve.
c. only the SAS curve.
d. neither the SAS curve nor the AD curve.
Save Answer
12. Question #168
(Points: 2)
If inflation is one percentage point above the Fed's target, the Taylor rule predicts that the Fed will:
a. raise the Federal funds rate by 0.5 percentage points.
b. raise the Federal funds rate by 1.0 percentage points.
c. raise the Federal funds rate by 1.5 percentage points.
d. reduce the Federal funds rate by 1 percentage point.
Save Answer
13. Question #115
(Points: 2)
When the Fed purchases bonds, the Fed:
a. reduces the reserves and the Federal funds rate increases.
b. increases the reserves and the Federal funds rate decreases.
c. reduces the reserves and the Federal funds rate decreases.
d. increases the reserves and the Federal funds rate increases.
Save Answer
14. Question #44
(Points: 2)
Picture
Refer to the graph above. When the Fed conducts an expansionary monetary policy, it:
a. shifts the money supply from M0 to M1.
b. shifts the money supply from M0 to M2.
c. neither the money supply nor money demand shift.
d. shifts money demand from D0 to D1.
Save Answer
15. Question #54
(Points: 2)
Suppose the nominal interest rate in Brazil is 40 percent and the expected inflation rate is 150 percent. The real interest rate is:
a. -110 percent.
b. -190 percent.
c. 110 percent.
d. 190 percent.
Save Answer
16. Question #126
(Points: 2)
Open market operations are related to:
a. actions taken by the Fed to close or merge weakened banks.
b. changes in the r