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32) When banks hold excess reserves, they increase the money supply. increase the amount of loans to the public. reduce the actual money multiplier. increase

32) When banks hold excess reserves, they

increase the money supply.

increase the amount of loans to the public.

reduce the actual money multiplier.

increase the reserve requirement.

35) One of the responsibilities of the Federal Reserve Bank is to serve as the banker for the U.S. Treasury.

False

True

37) When the Fed wants to decrease the money supply, it will

sell bonds.

lower taxes.

lower the federal funds rate.

buy bonds.

39) The equation of exchange applies only in the short run.

False

True

41) The Federal Reserve was the only major central bank that had to go beyond using the traditional tools of monetary policy to deal with the 2007-2009 financial crisis.

True

False

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