Question 1

1pts

Currently, which of the following is the Fed's MOST important function?

Group of answer choices

to be a lender of last resort

to manage the size of the money supply to promote growth and employment

to regulate banks to keep them from jeopardizing the safety of deposits

to propose the federal budget

Flag question: Question 2

Question 2

1pts

All but which one of the following are tools of the Fed to influence money supply?

Group of answer choices

open market operations

the discount rate window

U.S. Treasury gold purchases

reserve ratio changes

Chapter 13 Test Bank Questions

Monetary Policy in Theory and Practice

Flag question: Question 3

Question 3

1pts

If the Fed sells government bonds on the open market, which of the following is MOST likely to occur?

Group of answer choices

The yield on government bonds will increase.

The yield on corporate bonds will decrease.

The amount of investment spending will increase.

The amount of investment spending will decrease.

Flag question: Question 4

Question 4

1pts

A bank can expand its loans, provided __________.

Group of answer choices

its net worth is positive

someone is willing to borrow

it has enough vault cash

it has enough excess reserves

Flag question: Question 5

Question 5

1pts

What is the Fed's preferred monetary tool?

Group of answer choices

changes in the discount rate

changes in legal reserve requirements

loans to the public

open market operations

Flag question: Question 6

Question 6

1pts

If Clarice deposits $2,000 in her bank, then her bank's __________.

Group of answer choices

liabilities fall by $2,000

net worth rises by $2,000

vault cash falls by $2,000

reserves and liabilities increase by $2,000

Flag question: Question 7

Question 7

1pts

Monetarists believe that the Fed should emphasize controlling the size of __________.

Group of answer choices

interest rates

the money supply

the money demand

structured payments

Flag question: Question 8

Question 8

1pts

Which of the following tends to reduce the effect of an expansionary open market operation on the money supply?

Group of answer choices

the sale of bonds to the Fed by banks

the sale of bonds to the Fed by the public

increases in banks' excess reserves

increases in banks' lending activity

Flag question: Question 9

Question 9

1pts

KaleeAnn keeps $50 a month in her drawer to be used 2 years from now. Which function of money are those dollars performing?

Group of answer choices

medium of exchange

standard of wealth

deferred payment

store of value

Flag question: Question 10

Question 10

1pts

A primary function of money is to avoid the need for double coincidence of wants. This is the __________ function.

Group of answer choices

medium of exchange

unit of account

store of value

standard of credit