1. You just bought a big house and have plans to buy a bunch of furniture, top-notch appliances, and complete some extensive landscaping. The budget for these activities is significant, but you are in no hurry. You plan to retire in this house. As you are considering your options, you read that the Federal Reserve has abruptly decided to sell a significant quantity of government securities in the coming months. What is your most likely conclusion about this action?

a. The Fed predicts inflation and wants to speed the economy by increasing money supply.

b. The Fed predicts inflation and wants slow the economy by decreasing money supply.

c. The Fed predicts deflation and wants to speed up the economy by decreasing money supply.

d. The Fed predicts deflation and wants to slow the economy by increasing money supply.

2. For years you have deposited your money in a local community bank. Unfortunately, the banks lending policy was lax and last year the bank was forced by the FDIC to close its doors. You had $600,000 on deposit at the bank in a joint savings account with your spouse. The FDIC sold all of the deposits and loans of the failing bank to Wells Fargo, which is a much more stable bank. What affect will this have on your savings account?

a. You will lose it all because you did not withdraw your money before the accounts were sold to Wells Fargo.

b. You will receive a $250,000 check from FDIC for the insured amount of your joint account.

c. You will now become a customer of Wells Fargo, but youll start over with a $0 balance.

d. You will receive a $500,000 check from the FDIC, since there were two people on your account.

e. You will now become a customer of Wells Fargo and will lose no money.