QUESTION 1

1. On the Fed's balance sheet, you would find _____________ listed as assets and _____________ listed as liabilities.

a.T-bills; U.S. dollars

b.U.S. dollars; foreign currency

c.U.S. dollars; reserve deposits

d.T-bills; coins

1 points

QUESTION 2

1. The Fed's influence is primarily through actions that directly affect which part of the economy?

a.the factors market

b.the goods market

c.the financial sector

d.the government sector

1 points

QUESTION 3

1. Which group has primary responsibility for the Federal Reserve System?

a.the Congress of the United States

b.the Board of Governors of the Fed

c.the twelve regional Federal Reserve banks

d.none of the above

1 points

QUESTION 4

1. Which of the following is NOT a function of the Federal Reserve System?

a.To issue currency.

b.To regulate financial institutions.

c.To provide banking services for the federal government.

d.To regulate the stock markets.

1 points

QUESTION 5

1. If the Fed ______ government securities, the money supply ______, and the interest rate will _____.

a.buys, increases, fall

b.sells, increases, fall

c.buys, increases, rise

d.sells, decreases, fall

1 points

QUESTION 6

1. Which of the following statements is FALSE?

a.The United States has 12 Federal Reserve districts.

b.The Federal Open Market Committee oversees sales and purchases of government securities by the Fed.

c.The members of the Board of Governors of the Fed are appointed by the President.

d.Congress must approve any major changes in the Fed's monetary policy.

1 points

QUESTION 7

1. Monetary policy is set by

a.a consortium of depository institutions.

b.the Federal Reserve Board of Governors.

c.the Federal Open Market Committee.

d.the Federal Reserve Board Chairman.

1 points

QUESTION 8

1. Suppose the money market is in equilibrium. If the Fed sells government bonds, then the equilibrium interest rate will _____ and the equilibrium quantity of money will _____.

a.increase, increase

b.increase, decrease

c.decrease, increase

d.decrease, decrease

1 points

QUESTION 9

1. Which of the following would make a "run on a bank" more likely?

a.higher interest rates for savings accounts

b.a public announcement of increased reserve requirements

c.a suspicion that a bank is lending out too much money

d.a decrease in the market price of gold

1 points

QUESTION 10

1. Which of the following Federal Reserve actions would NOT result in a decrease in the money supply?

a.selling T-bills

b.lowering the reserve requirement

c.increasing the discount rate

d.increasing the import quota

1 points

QUESTION 11

1. The Fed's most important function is to

a.implement monetary policy.

b.regulate the banking industry.

c.regulate the stock markets.

d.implement fiscal policy.

1 points

QUESTION 12

1. When we say the Fed is the "lender of last resort," we mean

a.if the government cannot borrow money anywhere else, it goes to the Fed for funds.

b.it provides short-term financial help to businesses and individuals who cannot get loans elsewhere.

c.it extends credit to financial institutions experiencing temporary difficulties, but financial institutions prefer not to borrow from the Fed.

d.it lends money to the U.S. Treasury to help fund new currency.

1 points