Question 1

"Banging the gong" means that the Fed

Accepted Answer

A)  has lowered the discount rate and raised the fed funds target rate.
B)  has raised the discount rate and lowered the fed funds target rate.
C)  changes the discount rate and the fed funds target rate simultaneously.
D)  sells securities in the open market.

Question 2

Vault cash would be considered

Accepted Answer

A)  a primary reserve.
B)  a secondary reserve.
C)  both a primary and a secondary reserve.
D)  neither a primary nor a secondary reserve.

Question 3

If the Fed sells securities on the open market,bond prices will tend to ____ and interest rates will tend to ____.

Accepted Answer

The answer of If the Fed sells securities on the...

Question 4

Demand deposits $300 million
Time deposits:
Original maturity (less than 18 months): $200 million
Original maturity (over 18 months): $400 million
Use the information above to find the bank's required reserves.

Accepted Answer

The answer of Demand deposits $300 million
Time deposits:
Original maturity (less...

Question 5

Bank panics were the result of

Accepted Answer

A)  banks holding 100% of their deposits on reserve.
B)  depositors attempting to withdraw more deposits than the banks held in reserve.
C)  banks hoarding greenbacks during the Civil War.
D)  the United States going off the gold standard in 1933.
E)  money circulating too slowly.

Question 6

Which statement is true?

Accepted Answer

A)  The chairman of the Federal Reserve Board is appointed to that position for one 14-year term.
B)  The chairman may be fired at any time by the President.
C)  Most presidents get to appoint all the members of the Federal Reserve Board.
D)  None of the statements are true.

Question 7

Until the year ____,there was a clear line of demarcation between commercial banks and thrift institutions.

Accepted Answer

The answer of Until the year ____,there was a clear...

Question 8

If a bank's actual reserves are greater than its required reserves,it has _______.

Accepted Answer

The answer of If a bank's actual reserves are greater...

Question 9

Money is destroyed when

Accepted Answer

A)  a bank gives you a $1,000 loan.
B)  you pay back a $1,000 loan to a bank.
C)  you deposit $1,000 cash to be deposited in your checking account.
D)  you cash a check for $1,000 at your bank.

Question 10

When a person cashes a check drawn on her own account,the money supply

Accepted Answer

A)  increases.
B)  decreases.
C)  remains the same.
D)  increases because of interest rates.

Question 11

Which statement is true?

Accepted Answer

A)  We have had a central bank since 1789.
B)  We have never had a central bank.
C)  Our central bank was formed in 1913.
D)  We did not have a central bank prior to the Federal Reserve.

Question 12

The rate of growth of our money supply is controlled by

Accepted Answer

A)  the president.
B)  Congress.
C)  the Federal Reserve.
D)  the United States Treasury.
E)  tax legislation.

Question 13

What was the stated purpose of the TARP $700 billion bailout?

Accepted Answer

A)  Give it to financial institutions to keep them from going bankrupt.
B)  Purchase illiquid assets from banks and other financial institutions to restore market.
C)  Loan money to the automobile industry to save the market for automobiles.
D)  Provide incentives to homebuyers to improve the housing market.

Question 14

A money supply that expands when the economy is growing rapidly and businesses need more money is known as an ______________.

Accepted Answer

The answer of A money supply that expands when the...

Question 15

Monetary policy to avert the Great Recession of 2008 -2009 was initiated in ________ and the government stimulus package was passed in __________.

Accepted Answer

A)  2006;2007.
B)  2007;2008.
C)  2008;2009.
D)  2008;2008.

Question 16

The most important job of the Federal Reserve is to _____.

Accepted Answer

conduct mo...

Question 17

According to the concept of the liquidity trap,

Accepted Answer

A)  at very low interest rates people would put their money in the bank.
B)  at very low interest rates people would simply hold their money.
C)  at very high interest rates people would simply hold their money.
D)  people will lend out their money no matter what the interest rate happens to be.

Question 18

The monetary policy weapon least often used by the Fed is ___________.

Accepted Answer

changing r...

Question 19

When the Fed buys securities

Accepted Answer

A)  it is conducting open market operations.
B)  it wants to increase the money supply.
C)  it offers a high price on those securities which drives down interest rates.
D)  All of the choices are true when the Fed buys securities.

Question 20

The longest and least predictable lag affecting the effectiveness of monetary policy is the

Accepted Answer

A)  recognition lag
B)  decision lag
C)  impact lag

Exam 14: The Federal Reserve and Monetary Policy

Which statement is true?

Correct AnswerverifiedShow Answer

Bank panics were the result of

Correct AnswerverifiedShow Answer

Money is destroyed when

Correct AnswerverifiedShow Answer

"Banging the gong" means that the Fed

Correct AnswerverifiedShow Answer

Until the year ____,there was a clear line of demarcation between commercial banks and thrift institutions.

Correct AnswerverifiedShow Answer

Which statement is true?

Correct AnswerverifiedShow Answer

The most important job of the Federal Reserve is to _____.

Correct Answerverifiedconduct mo...View AnswerShow Answer

If a bank's actual reserves are greater than its required reserves,it has _______.

Correct AnswerverifiedShow Answer

The monetary policy weapon least often used by the Fed is ___________.

Correct Answerverifiedchanging r...View AnswerShow Answer

Vault cash would be considered

Correct AnswerverifiedShow Answer

What was the stated purpose of the TARP $700 billion bailout?

Correct AnswerverifiedShow Answer

Monetary policy to avert the Great Recession of 2008 -2009 was initiated in ________ and the government stimulus package was passed in __________.

Correct AnswerverifiedShow Answer

A money supply that expands when the economy is growing rapidly and businesses need more money is known as an ______________.

Correct AnswerverifiedShow Answer

Demand deposits $300 million Time deposits: Original maturity (less than 18 months): $200 million Original maturity (over 18 months): $400 million Use the information above to find the bank's required reserves.

Correct AnswerverifiedShow Answer

According to the concept of the liquidity trap,

Correct AnswerverifiedShow Answer

When a person cashes a check drawn on her own account,the money supply

Correct AnswerverifiedShow Answer

The rate of growth of our money supply is controlled by

Correct AnswerverifiedShow Answer

If the Fed sells securities on the open market,bond prices will tend to ____ and interest rates will tend to ____.

Correct AnswerverifiedShow Answer

When the Fed buys securities

Correct AnswerverifiedShow Answer

The longest and least predictable lag affecting the effectiveness of monetary policy is the

Correct AnswerverifiedShow Answer

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conduct mo...
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changing r...
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Monetary policy to avert the Great Recession of 2008 -2009 was initiated in and the government stimulus package was passed in __.

Correct Answer
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If the Fed sells securities on the open market,bond prices will tend to and interest rates will tend to .

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