The yield on a perpetuity bond that has an interest payment of $60 and a price of $1,200 is:

a. 5%.

b. 6%.

c. 12%.

d. 25%.

If the reserve requirement is 2.5%, the potential money multiplier is:

a. 0.025

b. 2.5

c. 4

d. 40

Sumit deposits $1,500 cash into his checking account. The reserve requirement is 25%. How many dollars' worth of loans can the banking system create?

a. $1,500

b. $0

c. $4,500

d. $6,000

Sumit deposits $1,500 cash into his checking account. The reserve requirement is 25%. What is the change in his bank's excess reserves?

a. $1,500

b. $375

c. $1,125

d. $0

_______________ lags are shorter for monetary policy than for fiscal policy.

a. Information

b. Decision

c. Recognition

d. Implementation

The Fed policy of buying bonds, adding to bank reserves, can be referred to by any of the following terms EXCEPT:

a. quantitative easing.

b. expansionary monetary policy.

c. tight money policy.

d. easy money policy.