Question
1.Members of the Board of Governors of the Federal Reserve System: a.Include the U.S. Treasury Secretary b.Are appointed by the President of the United States
1.Members of the Board of Governors of the Federal Reserve System:
a.Include the U.S. Treasury Secretary
b.Are appointed by the President of the United States for 14-year terms (subject to confirmation by the Senate)
c.Are appointed by the President of the United States for life terms like U.S. Supreme Court Justices
2.The balance sheets provided below indicate that the Fed has:
a.conducted an open market purchase
b.conducted an open market sale
c.lowered the discount rate
d.raised reserve requirements
BALANCE SHEETS OF BANKS AND THE FED
Banking System(In millions of dollars)FED
Assets Reserves +$10
U.S. Government
Bonds -$10
Liabilities
AssetsU.S. Government
Bonds+$10
LiabilitiesBank Reserves
+$10
3.Using the balance sheets provided above, if the required reserve ratio for banks is 20 percent, what will happen to the money supply?Assume that banks do not hold excess reserves and that the public does not wish to hold additional cash.
a.The money supply will decrease $50 million
b.The money supply will decrease $10million
c.The money supply will increase $50 million
d.The money supply will increase $10 million
e.The money supply will increase $40 million
4.If the U.S. dollar depreciates in value on foreign exchange markets relative to the euro, then U.S. exports to Europe will be __________ and imports from Europe into the U.S. will be __________:
a.more expensive; more expensive
b.cheaper; cheaper
c.less expensive, more expensive
d.more expensive; less expensive
5.Which of the following is not part of M1?
a.currency held by the public
b.deposits in checking accounts
c.money market mutual fund accounts
6.If a bank has $1.5 million in reserves and checking deposits of $4 million, what is the bank's reserve position if the required reserve ratio is 20 percent?
a.the bank has $300,000 of required reserves and $1,200,000 of excess reserves
b.the bank has $300,000 of required reserves and $3,700,000 of excess reserves
c.the bank has $800,000 of required reserves and $700,000 of excess reserves
d.the bank has $800,000 of required reserves and $3,200,000 of excess reserves
7.The Fed's sale of U.S. government bonds and securities in its open-market operations constitutes:
a.a contractionary policy, because it lowers the amount of total reserves in the banking system
b.a contractionary policy, because it lowers the amount of required reserves in the banking system
c.an expansionary policy, because it raises the amount of total and excess reserves in the banking system
d.an expansionary policy, because it raises the amount of excess reserves and lowers the amount of required reserves in the banking system
e.an expansionary policy, because it raises the amount of required reserves in the banking system
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started