25. The Federal Reserve focuses its monetary policy decisions on the federal funds rate (FFR) primarily because: (a) monetary policy aims mainly to control the level and shape of the Treasury yield curve; (b) the spread, or gap, between the FFR and the 10-year Treasury note rate is the main determinant of monetary policy actions; (c) securities traded in the federal funds market get securitized and become financial instruments purchased by investors seeking high rates of return; (d) the FFR used to be - and, perhaps, still is - the rate most sensitive to changes in demand for and supply of bank reserves

26. Maintenance of the federal funds rate target takes place generally via: (a) printing of new currency, especially $2 bills; (b) dart-throwing at local pubs and bars; (c)the trading of repos (repurchase agreements or RPs) that allow the Fed to inject reserves into the banking system temporarily. (Reverse repos allow for the temporary withdrawal of reserves.); (d) the Fed issuing new Treasury government securities.

27. According to Modern Phillips Curve Theory, an increase in the sensitivity of inflation to changes in real GDP results in: (a) lower Durbin-Watson statistics across econometric estimations; (b) a movement to the left of the long-run aggregate supply curve; (c) decreased employment volatility over several economic cycles;(d) more inflation.

28. According to the Permanent Income Hypothesis, which of the following would NOT be considered part of an individual's permanent income? (a) expected income over the current year and three years thereafter; (b) human capital; (c) wealth; (d) winnings at a Las Vegas casino.