1. Which of the following statements is correct?

In the theoretical market for reserves, the demand for reserves comes from __________ while the supply for reserves is issued by ___________.

	A.	lending banks;borrowing banks
	B.	the central bank;the banks
	C.	issuers;investors
	D.	banks;the central bank
	E.	borrowing banks;lending banks

2.

Which of the following statements is correct?

The reason why central banks have enlarged the list of eligible securities for reverse reposduring theGFC was because __________.

	A.	many government bonds had been written off.
	B.	central banks wanted to provide central bank money to non ADIs.
	C.	central banks had not enough government bonds.
	D.	government bondswere not in enough quantity in banks' assets to allow a massive injection of central bank money.
	E.	the interest rate target could not be lowered anymore.

3.

Assume the Fed funds rate is initially on target.

The demand for reserves by commercial banks increases by $million 2. Households receive allowances from the government account held at the Federal Reservefor $million 7.

Which of the following statements is correct?

If the Federal Reserve wants to keep the Fed funds rate on target, it must ________ through its the open market operations$million _____ .

	A.	withdraw Fed funds;5
	B.	inject Fed funds;2
	C.	withdraw Fed funds; 9
	D.	injectFed funds; 7
	E.	inject Fed funds;9

4.

Which of the following statements iscorrect?

Consider a given bond yield on a yield curve.A year later, considering the samegovernmentbond, __________________________.

	A.	the yield of this bond has shifted to the right, away fromthe y axis, and down.
	B.	the yield of this bond has shifted to the left, towards the y axis, and up.
	C.	the yield of this bond has shifted to the left, towards the y axis, but one cannot tell if it went up or down.
	D.	the yield of this bond has shifted to the right, away from the y axis, and up.
	E.	the yield of this bond has shifted to the right, away from the y axis, but one cannot tell if it went up or down.