1)Which of the following does not describe the Federal Reserve's role in the US economy?

a)Manipulate the money supply.

b)Set the Federal Funds rate.

c)Set the Discount Rate.

d)Purchase and sell financial securities in the open market.

1)Commercial banks play an important role in the money supply of a country because:

a)Deposits are insured, so no one loses their money as a result of a bank run.

b)Maintaining prudent lending practices ensures their capital reserve is adequate.

c)Commercial banks are the lender of last resort.

d)Commercial banks increase the money supply through fractional reserve banking.

1)The Federal Reserve has set the reserve rate at 15%.How much M1 could result from a $1,000 deposit?

a)$1,150.00

b)$150.00

c)$6,666.67

d)$1,176.47

1)Inflation can be said to:

a)Favor borrowers and punish savers.

b)Favor savers and punish borrowers.

c)Lead to an appreciation of a currency.

d)Lead to a decrease in interest rates.