Question
DO NOT TYPE THE WHOLE ANSWER, JUST TYPE THE LETTER ONLY As market interest rates rise: Select one: a. a bank's opportunity cost of holding
DO NOT TYPE THE WHOLE ANSWER, JUST TYPE THE LETTER ONLY
As market interest rates rise:
Select one:
a.
a bank's opportunity cost of holding reserves rises.
b.
fewer loans will be extended since they are now more costly to banks.
c.
the money multiplier falls.
d.
the reserve ratio required by the Fed also rises.
Because the United States has a fractional reserve banking system, banks hold:
Select one:
a.
less than 100% of deposits as reserves.
b.
more than 100% of deposits as reserves.
c.
100% of deposits as reserves.
d.
no currency in their vaults.
The goal of an open market sale by the Federal Reserve is to:
Select one:
a.
reduce bank reserves and increase the money supply.
b.
increase bank reserves and reduce the money supply.
c.
reduce bank reserves and reduce the money supply.
d.
increase bank reserves and increase the money supply.
To reduce the money supply in the economy, the Fed would:
Select one:
a.
increase the discount rate.
b.
carry out open market purchases.
c.
carry out open market sales and/or lower the discount rate.
d.
carry out open market purchases and/or lower the discount rate.
Which is NOT a duty performed by the Federal Reserve System?
Select one:
a.
manage the nation's payment system
b.
print money
c.
regulate the U.S. banking system
d.
maintain the bank account for the U.S. Treasury
A money market mutual fund invests in:
Select one:
a.
short-term debt and government securities.
b.
long-term debt and government securities.
c.
stocks.
d.
real estate.
o increase the money supply in the economy, the Fed would:
Select one:
a.
increase the discount rate.
b.
carry out open market sales and/or raise the reserve ratio.
c.
carry out open market sales.
d.
carry out open market purchases and/or lower the discount rate.
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