Test 6

A  Janet Yellen

B  Jerome Powell

C  Ben Bernanke

D  Alan Greenspan

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

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

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

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

A  investment spending

B  tax rates

C  the imports of the economy

D  government spending

A  selling government securities and lowering the discount rate

B  selling government securities and raising the discount rate

C  buying government securities and lowering the discount rate

D  buying government securities and lowering the reserve ratio

A  an expansionary monetary policy

B  a restrictive monetary policy

C  a discretionary fiscal policy

D  a prime interest rate policy

A  banks charge for loans to the most creditworthy customers

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

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

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

A  increases the amount of excess reserves banks must keep

B  increases the discount rate

C  changes required reserves to excess reserves

D  decreases the discount rate

A  the discount rate

B  open-market operations

C  the reserve ratio

D  interest on reserves

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  U.S. Treasury

C  Congress of the United States

D  Internal Revenue Service

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

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

C  protect the deposits in the commercial bank against losses

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

A  using deposited gold to produce products for sale to others

B  issuing receipts for the gold stored with them

C  accepting deposits of gold for safe storage

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

A  set up the Troubled Asset Relief Program (TARP)

B  set up the primary dealer credit facility (PDCF)

C  set up the commercial paper funding facility (CPFF)

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

A  overestimating the expected profits made by oil companies

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

C  overstating the moral hazard problem

D  underestimating the risk of losses on mortgage-backed securities

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

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

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

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  federal government as does the U.S. Treasury

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

A  privately owned and controlled

B  publicly owned but privately controlled

C  privately owned but publicly controlled

D  publicly owned and controlled

A  uses price and wage controls

B  employs fiscal policy

C  buys corporate stock

D  controls the money supply

A  increase the use of money as a measure of value

B  decrease the use of money as a medium of exchange

C  increase the purchasing power of money

D  decrease the conversion of money to gold

A  25%

B  14.14%

C  16.67%

D  20%

A  legal tender

B  assets of the Federal Reserve Banks

C  debts, or promises to pay

D  token money

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

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

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

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

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

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

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  token money

B  legal tender

C  a medium of exchange

D  fiat money