Question
Exer 1. Each Federal Reserve Bank is Answer a corporation. a government owned enterprise. a government subsidized entity. a government-sponsored enterprise. A transaction in which
Exer 1.
Each Federal Reserve Bank is
Answer
a corporation.
a government owned enterprise.
a government subsidized entity.
a government-sponsored enterprise.
A transaction in which the Fed agrees to buy a security one day and sell it back the next day is
Answer
an overnight securitization operation.
a repurchase agreement.
a legal tender.
a rebate sale.
The Federal Reserve document that states the goals of the FOMC and the target for the federal funds rate is known as the
Answer
Directive.
Beige
book.
Bluebook.
Green book.
How long is the normal term in office for a Governor of the Federal Reserve Board?
Answer
Five years
Seven years
Fourteen years
Life
The federal funds rate is the interest rate on
Answer
loans to banks from the Fed.
loans by banks to the Fed.
short-term loans between banks.
Treasury bills.
Expenditures of each Federal Reserve Bank are approved by
Answer
the U.S. Senate.
the President of the United States.
the U.S. Treasury Department.
the Federal Reserve Board of Governors.
Federal Reserve Banks pay for their central banking operations through
Answer
government tax revenue.
interest on the securities they own.
fees charged to banks that use their services.
dividends paid by local banks.
When the Fed engages in open-market operations, the transactions are conducted by
Answer
the Open Market Desk at the Federal Reserve Bank of New York.
the Open Market Desk at the Federal Reserve Board in Washington, D.C.
the National Bureau of Economic Research.
the Federal Open Market Committee.
In 2006, Chairman Greenspan left the Fed because
Answer
President Bush wanted him to resign.
he reached mandatory retirement age.
his term as Governor expired.
his term as Chairman expired.
The Federal Reserve publication that discusses forecasts for the economy is known as the
Answer
Redbook.
Beigebook.
Bluebook.
Greenbook.
The FOMC directive
Answer
describes forecasts for the economy.
states the target for the federal funds rate.
discusses the regional economies around the country.
shows the Fed's balance sheet.
The chairman of the Federal Reserve Board who reduced the inflation rate from over 10 percent to about 3 percent in the early 1980s was
Answer
Arthur Burns.
G. William Miller.
Paul Volcker.
Alan Greenspan.
Which Fed chairman ensured the independence of the Federal Reserve in the 1950s?
Answer
William McChesney Martin
Arthur Burns
Paul Volcker
G. William Miller
There are ____ Federal Reserve Banks.
Answer
seven
ten
twelve
fifteen
Purchases and sales of government securities in the secondary market are known as
Answer
discount borrowing and lending.
federal funds purchases and sales.
discounting.
open-market operations.
The monetary base can be divided into
Answer
currency plus transactions deposits.
vault cash plus reserves held at the Fed.
required clearing balances plus currency.
reserves plus currency.
The Fed does not generally change reserve requirements to affect the money supply because
Answer
the impact is too large.
the Fed needs the approval of Congress to do so.
it's not legal for the Fed to do so.
the Fed needs the approval of the President of the United States to do so.
The Fed has decided to tighten monetary policy, so it decreases the money supply through
Answer
defensive open-market operations.
dynamic open-market operations.
reduced discount loans for profit.
reduced discount loans for business needs.
A haircut is
Answer
the extra collateral the Fed requires above the value of a discount loan.
the extra principal a commercial bank requires the Fed to pay when making a discount loan.
the difference between what an investor pays for a bond and what the investor sells the bond for.
expected personal grooming for a member of the Board of Governors.
Currency held by the nonbank public plus banks' vault cash plus banks' deposits at the Fed equals
Answer
the Fed's capital stock.
discount loans.
the monetary base.
required clearing balances.
The extra collateral the Fed requires above the value of a discount loan is known as
Answer
the term premium.
a haircut.
a covenant.
secondary credit.
Currency held by the nonbank public plus banks' reserves equals
Answer
the Fed's capital stock.
discount loans.
the monetary base.
required clearing balances.
The money supply divided by the monetary base equals
Answer
the reserve ratio.
velocity.
high-powered money.
the money multiplier.
The main liability on the Federal Reserve's balance sheet is
Answer
discount loans.
securities.
monetary base.
capital.
A bank in good condition may take out a loan without the Fed questioning the purpose or nature of the loan. Such a loan is known as
Answer
a no documentation discount loan.
a haircut.
a covenant.
a primary credit discount loan.
If the Open-Market Desk at the Fed buys securities when the federal funds rate is below the primary credit discount rate, the most likely effect is that the
Answer
federal funds rate decreases.
primary credit discount rate decreases.
primary credit discount rate increases.
federal funds rate increases.
In November and December, people use more currency than usual, so the Fed increases the money supply through
Answer
defensive open-market operations.
dynamic open-market operations.
discount loans for profit.
discount loans for business needs.
Reserves held by banks at the Fed that earn implicit interest payments in the form of earnings credits for Fed services are known as
Answer
required clearing balances.
reserve requirements.
excess reserves.
non-transaction deposits.
Required clearing balances
Answer
pay interest in the form of earnings credits.
count as reserves and can be used to meet reserve requirements.
pay interest equal to the federal funds rate minus one percent.
are required to be held against transactions deposits.
Exer 2.
11
Which of following is an example of a cartel?
A.)automotive industry
B.)health care industry
C.)airline industry
D.)OPEC
^
12
Perfectly competitive market structures have an incentive to enter or exit the market in the long run
True
False
^
14
When firms set diffrent prices for the same goods or services this is an example of price DISCRIMINATION?
True
False
^
15
For substitute goods is the cross price elasticity is:
A.) A positive value
B.) equal to one
C.) a negative value
D.) not enough information is given
16
A perfectly competitive market structure faces:
A.) A price floor
B.) market shortage
C.) A price ceiling
D.) market surplus
17
Oligoplistic market structures do not engage in game theory?
True
False
18
A perfectly competitive market structure and a monopolistic market structure are diffrent in terms of:
A.) Profit maximization
B.) Size of the firm
C.) Demand curve
D.) Efficiency
19
How does a monopolistic competitive market structure differ froma perfectly competitive market structure
A.) A monopolstic market structure is a price taker
B.) A monopolistic competitive market structure has many sellers and buyers
C.) A monopolistic competitive market structure faces a downward sloping demand curve and differentiated products or services
D.) A monopolistic competitive market structure and a perfectly competitive market structure maximize profits diffrently
20
All of teh following are characteristics of a perfectly competitive market structure except:
A.) Goods and services are differentiated
B.) All firms are price takers
C.) Little to no barriers to entry
D.) Similar vendors
21
Goods and services thatare essential to ones well being and daily life, the elasticity of demand would be:
A.) Positive
B.) Elastic
C.) negative
D.) inelastic
22
An oligopololistic market structure faces a(n):
A.) Downward sloping demand curve
B.) Upward sloping demand curve
C.) Kinked demand curve
D.) Inelastic demand curve
23
High barries to entry is at highest level, marginal utility is:
A.) Equal to zero
B.) Falling
C.) Equal to one
D.) Rising
24
Total surplus is equal to:
A.) Total surplus minus producer suplus
B.) Producer surplus minus consumer surplus
C.) Consumer surplus plus producer surplus
D.) Total surplus minus consumer surplus
25
What is the cause of scarcity?
A.) OPEC limiting the supply of oil
B.) Based on consumers who have unlimited wants
C.) Firms that employ first degree price discrimination
D.) based on consumers who have limited wants.
Part B.
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The World Economy Geography, Business, Development
Authors: Frederick P. Stutz, Barney Warf
6th edition
321722508, 321722507, 978-0321722508
