Test 6

A  Jerome Powell

B  Janet Yellen

C  Alan Greenspan

D  Ben Bernanke

A  an increase in the federal funds rate and an increase in the money supply

B  an increase in the federal funds rate and a decrease in the money supply

C  a decrease in the federal funds rate and a decrease in the money supply

D  a decrease in the federal funds rate and an increase in the money supply

A  government spending

B  the imports of the economy

C  investment spending

D  tax rates

A  buying government securities and lowering the reserve ratio

B  selling government securities and raising the discount rate

C  selling government securities and lowering the discount rate

D  buying government securities and lowering the discount rate

A  a prime interest rate policy

B  a discretionary fiscal policy

C  an expansionary monetary policy

D  a restrictive monetary policy

A  banks charge for overnight use of excess reserves held at the Federal Reserve banks

B  the Federal Reserve charges for short-term loans to commercial banks

C  banks charge for loans to the most creditworthy customers

D  is charged for government bonds sold in the open market operations of the Federal Reserve

A  changes required reserves to excess reserves

B  increases the amount of excess reserves banks must keep

C  decreases the discount rate

D  increases the discount rate

A  open-market operations

B  the reserve ratio

C  interest on reserves

D  the discount rate

A  Bond prices and the interest rate are directly related.

B  The supply of money is directly related to the interest rate.

C  A lower interest rate raises the opportunity cost of holding money.

D  The total demand for money is inversely related to the interest rate.

A  Federal Reserve

B  Congress of the United States

C  U.S. Treasury

D  Internal Revenue Service

A  protect the deposits in the commercial bank against losses

B  add to the liquidity of the commercial bank and protect it against a “run” on the bank

C  provide the Fed with a means of controlling the lending ability of the commercial bank

D  provide the means by which checks drawn on the commercial bank and deposited in other commercial banks can be collected

A  issuing paper money in excess of the amount of gold stored with them

B  issuing receipts for the gold stored with them

C  accepting deposits of gold for safe storage

D  using deposited gold to produce products for sale to others

A  set up the Troubled Asset Relief Program (TARP)

B  set up the commercial paper funding facility (CPFF)

C  set up the money market investor funding facility (MMIFF)

D  set up the primary dealer credit facility (PDCF)

A  underestimating the risk of losses on mortgage-backed securities

B  overstating the moral hazard problem

C  understating the benefits of devaluing the U.S. dollar

D  overestimating the expected profits made by oil companies

A  supervising the operation of banks to make sure they follow regulations and monitoring banks so they do not engage in fraud

B  handling the Fed’s collection of checks and adjusting legal reserves among banks

C  acting as the fiscal agent for the federal government and issuing currency

D  setting the Fed’s monetary policy and directing the buying and selling of government securities

A  the public as do commercial banks and thrifts

B  commercial banks and thrifts as those institutions do for the public

C  commercial banks and thrifts as does the Federal Deposit Insurance Corporation

D  federal government as does the U.S. Treasury

A  privately owned and controlled

B  privately owned but publicly controlled

C  publicly owned but privately controlled

D  publicly owned and controlled

A  employs fiscal policy

B  buys corporate stock

C  uses price and wage controls

D  controls the money supply

A  decrease the use of money as a medium of exchange

B  increase the use of money as a measure of value

C  decrease the conversion of money to gold

D  increase the purchasing power of money

A  20%

B  16.67%

C  14.14%

D  25%

A  assets of the Federal Reserve Banks

B  token money

C  debts, or promises to pay

D  legal tender

A  the willingness of banks and the government to surrender something of value in exchange for money

B  the gold bullion that is stored in Fort Knox, Kentucky

C  the belief of holders of money that it can be exchanged for desirable goods and services

D  the confidence of the public in the ability of government to pay off the national debt

A  Yes, because their value is included in the calculation of M 1.

B  No, because they provide a short-term loan to cardholders from a financial institution that issued the card.

C  Yes, because their value is included in the calculation of M 2.

D  No, because the card transactions are not insured by either the Federal Reserve banks or the U.S. Treasury.

A  a medium of exchange

B  token money

C  fiat money

D  legal tender