Which of the following is not a tool directly under the control of the FED?

a. setting the discount rate b. open market operations

c. adjusting the reserve requirement ratio d. setting the federal funds rate

Total funds of commercial banks will initially _____ by the dollar amount of the securities _____ by the FED.

a. decrease; sold b. increase; sold

c. remain unchanged; purchased d. decrease; purchased

A tight money policy tends to ____ economic growth and ____ the inflation rate.

dampen; place downward pressure on

dampen; place upward pressure on

stimulate; place upward pressure on

stimulate; place downward pressure on

Subordinate notes and debentures are used as ___________ at ________:

a. primary capital; insurance companies b. secondary capital; pension funds

c. depository sources; mutual funds d. secondary capital; banks.

Which of the following best describes the relationship between the FED and the Administration?

The Administration must receive approval from the FED before implementing fiscal policy.

The FED must implement a monetary policy specifically to support the Administrations policy.

The FED must receive approval by the Administration before conducting monetary policy.

None of these is an accurate description.

During a period of falling interest rates, a banks net interest margin (GAP) will likely _______ if its liabilities are _________ rate-sensitive than its assets.

a. increase; equally b. decrease; equally c. increase; more d. decrease; more