QUESTION 1

Which of the statements below is true?

O The United States Federal Reserve supplies money to the US economy.

O The Fed has Board of Governors, which has 10 members each of whom must be appointed by both the President and Congress.

O One measure of money supply is M2. Every item included in M1 is also is also included in M2, along with several more liquid assets

O The Fed increases the money supply by bond purchases

QUESTION 2

How has the Federal Reserve (Fed) traditionally tried to end or reduce recessions?

O A. a process known as quantitative easing

QB. through open market operations

O C. taking actions to raise interest rates

O D. by printing paper money

QUESTION 3

When central banks want to lower the quantity of money in the economy, they

O A. lower the discount rate.

O B. buy bonds in open market operations.

O C. raise the reserve requirement.

O D. engage in quantitative easing

E. All of the above

QUESTION 4

If reserves are not ample and The Federal Reserve (Fed) decreases the reserve requirement, then:

a, the money supply increases, but the interest rates decrease

b,the money supply and interest rates both increases.

c,the money supply and interest rates both decreases.

d, the money supply decreases, but the interest rates increase.

e, the money supply decreases, and interest rates are both unaffected

QUESTION 5

If banks are worried about defaults and are therefore less likely to loan out excess reserves

Q it makes contractionary monetary policy more difficult

O it makes contractionary monetary policy easier

O it makes expansionary monetary policy more difficult

O it makes expansionary monetary policy easier

O monetary policy is not affected.