Question 4 (2 points)

Saved

Which of the following represents an action by the Federal Reserve that is designed to increase the money supply?

Question 4 options:

	Buying government securities (bonds) on the open market
	An increase in the required reserve ratio
	An increase on the interest rate on excess reserves
	An increase in the discount rate

Question 5 (2 points)

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When the Federal Reserve raises the required reserve ratio, the bank's excess reserve _____ and the money supply _____. [Hint: Remember the following: Total Reserves = Required Reserves + Excess Reserves]

Question 5 options:

	Remains constant; decreases
	Decrease; decreases
	Increase; remain constant
	Increase; Increases

Question 6 (2 points)

Saved

An open market purchase (buying) of government securities (bonds) by the Federal Reserve results in _____ in bank excess reserves and _____ in the money supply.

Question 6 options:

	An increase; a decrease
	A decrease; a decrease
	An increase; an increase
	A decrease; an increase

Question 7 (2 points)

An open market sale of government securities (bonds) by the Federal Reserve results in _____ in excess reserves and _____in the money supply.

Question 7 options:

	An increase; a decrease
	An increase; an increase
	A decrease; an increase
	A decrease; a decrease

Question 8 (2 points)

Holding all else constant, if banks choose to hold less excess reserves, the money multiplier will decrease

Question 8 options:

	True
	False

Question 9 (2 points)

Holding all else constant, if the Federal Reserve decreases the required reserve ratio, the money multiplier will increase.

Question 9 options:

	True
	False

Question 10 (2 points)

Holding all else constant, if households choose to hold less of their income as cash outside the bank, the money multiplier will increase

Question 10 options:

	True
	False