]1: The monetary base consists of

A: currency in circulation and Federal Reserve notes.

B currency in circulation and the U.S. Treasury's monetary liabilities.

Ccurrency in circulation and reserves.

Dreserves and Federal Reserve Notes.

2.[] Suppose that from a new checkable deposit, First National Bank holds two million dollars in vault cash, eight million dollars on deposit with the Federal Reserve, and one million dollars in required reserves. Given this information, we can say First National Bank faces a required reserve ratio of ________ percent.

Aten

Btwenty

Ceighty

Dninety

3.[] When the Federal Reserve purchases a government bond from a primary dealer, reserves in the banking system ________ and the monetary base ________, everything else held constant.

Aincrease; increases

Bincrease; decreases

Cdecrease; increases

Ddecrease; decreases

4.[] If the Fed decides to reduce bank reserves, it can

Apurchase government bonds.

Bextend discount loans to banks.

Csell government bonds.

Dprint more currency.

5.[] All else the same, when the Fed calls in a $100 discount loan previously extended to the First National Bank, reserves in the banking system

Aincrease by $100.

Bincrease by more than $100.

Cdecrease by $100.

Ddecrease by more than $100.

6.[] The interest rate the Fed charges banks borrowing from the Fed is the

Afederal funds rate.

BTreasury bill rate.

Cdiscount rate.

Dprime rate.

7.[] An increase in ________ leads to an equal ________ in the monetary base in the short run.

Afloat; decrease

Bfloat; increase

Cdiscount loans; decrease

DTreasury deposits at the Fed; increase

8.[] When a primary dealer buys a government bond from the Federal Reserve, reserves in the banking system ________ and the monetary base ________, everything else held constant.

Aincrease; increases

Bincrease; decreases

Cdecrease; increases

Ddecrease; decreases

9.[] The Fed does not tightly control the monetary base because it does NOT completely control

Aopen market purchases.

Bopen market sales.

Cborrowed reserves.

Dthe discount rate.

10.[] The monetary base minus reserves equals

Acurrency in circulation.

Bthe borrowed base.

Cthe nonborrowed base.

Ddiscount loans.