21

1. What is the main advantage of owning bonds over stock in a firm?
2. priority claim on the firm's cash flows and assets
3. higher returns over time
4. voice in the management of the firm
5. guaranteed quarterly dividend payments over the life of the bond

2.5 points

QUESTION 22

1. Short-term debt instruments issued by corporations are called
2. corporate stocks
3. corporate bonds
4. revenue bonds
5. commercial paper

2.5 points

QUESTION 23

1. Monetary policy has two objectives:
2. none of the options
3. to ensure that sufficient money and credit are available to meet the needs of the economy and to minimize fluctuationsrecessions and inflationary boomsaround a long-term trend.
4. to reduce the costs of government deficit spending and keep interest rates low.
5. to ensure full employment and low interest rates.

2.5 points

QUESTION 24

1. An increase in the money supply will cause investment to __________ and consumption to __________.
3. decrease;increase
4. decrease;decrease
5. increase;decrease
6. increase;increase

2.5 points

QUESTION 25

1. Open market operations is the buying and selling of government securities.
2. True
3. False

2.5 points

QUESTION 26

1. The Federal Open Market Committee (FOMC)
2. consists of 12 voting members.
3. All of theoptions are correct.
4. is the principal policy-making body of the Federal Reserve
5. formulates monetary policy and oversees its implementation.

2.5 points

QUESTION 27

1. The Federal Open Market Committee is responsible for _____________.
3. defining the foreign exchange value
4. implementing monetary policy
5. maintaining competition among the nation's banks
6. establishing the official price of gold

2.5 points

QUESTION 28

1. The __________ is the rate banksare charged to borrow reserves from the Fed
2. fed fund rate
3. required reserve ratio
4. discount rate
5. None of the options

2.5 points

QUESTION 29

1. The fed fund rate is the interest rates bank charge each other to borrow funds.
2. True
3. False

2.5 points

QUESTION 30

1. The full term of a member of the Board of Governors of the Fed is
2. 14 years
3. 7 years
4. 2 years
5. 11 years

2.5 points

QUESTION 31

1. Which of the following is considered a tight monetary policy?
2. none of the options are correct
3. decrease in the discount rate
4. open market purchased of bonds by the Fed
5. Increase the reserve requirement