Chapter 17 - The Federal Reserve and the Money Supply

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Quiz sobre Chapter 17 - The Federal Reserve and the Money Supply, criado por lseyer436 em 01-10-2015.
lseyer436
Quiz por lseyer436, atualizado more than 1 year ago
lseyer436
Criado por lseyer436 quase 9 anos atrás
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Resumo de Recurso

Questão 1

Questão
Only the Federal Reserve can create money.
Responda
  • True
  • False

Questão 2

Questão
If the Fed increases the supply of money, unemployment increases also.
Responda
  • True
  • False

Questão 3

Questão
The Fed can increase the money supply by buying securities.
Responda
  • True
  • False

Questão 4

Questão
The main reason the Fed changes the discount rate is to signal investors of future short-term interest rates.
Responda
  • True
  • False

Questão 5

Questão
National Banks have the option to be members of the Federal Reserve System.
Responda
  • True
  • False

Questão 6

Questão
Money is defined as currency and coins only.
Responda
  • True
  • False

Questão 7

Questão
Even though the Fed is independent of Congress, it still hesitates to make politically unpopular monetary policy decisions.
Responda
  • True
  • False

Questão 8

Questão
If the Fed were to sell securities, total reserves in the banking system would decrease.
Responda
  • True
  • False

Questão 9

Questão
When the Fed decreases the supply of money, the supple curve shifts left.
Responda
  • True
  • False

Questão 10

Questão
The President of the United States and the Senate choose the members of the Board of Governors.
Responda
  • True
  • False

Questão 11

Questão
Of its three functions, it is as a unit of account that distinguishes money from other assets.
Responda
  • True
  • False

Questão 12

Questão
Currency held by depository institutions (banks) is added to currency circulation in the hands of the public to get total currency in circulation.
Responda
  • True
  • False

Questão 13

Questão
A sale of government bonds by the Fed, all else the same, increase the monetary base.
Responda
  • True
  • False

Questão 14

Questão
Monetary policy is set by the Board of Governors.
Responda
  • True
  • False

Questão 15

Questão
If the Fed targets a monetary aggregate it is likely to lose control over the interest rate because of fluctuations in the money demand function.
Responda
  • True
  • False

Questão 16

Questão
Which of these terms does not refer to the same bank?
Responda
  • the Fed
  • central bank
  • member bank
  • The Federal Reserve Bank

Questão 17

Questão
__________ is the governing body of the Federal Reserve System.
Responda
  • The President
  • Congress
  • The Senate
  • The Board of Governors

Questão 18

Questão
When interest rates have increase, __________?
Responda
  • investments decrease
  • unemployment decreases
  • economic activity increases
  • firms borrow more money

Questão 19

Questão
__________ influences the economy through changes in interest rates.
Responda
  • The discount rate
  • Monetary policy
  • The money multiplier
  • Congress

Questão 20

Questão
What is the most important tool for controlling the money supply?
Responda
  • discount rate
  • open market operations
  • reserve requirements
  • investment spending

Questão 21

Questão
How many years is the Board of Governors appointed?
Responda
  • 2
  • 12
  • 14
  • life

Questão 22

Questão
Who demands the loanable funds?
Responda
  • individuals
  • businesses
  • government
  • all the above

Questão 23

Questão
If the fed buys $350 million in government securities and the reserve requirement is 5%, what is the change that would result in the money supply?
Responda
  • $7,000 million
  • $700 billion
  • $1,750 billion
  • $175 billion

Questão 24

Questão
If there is an increase in business development, the demand curve will __________?
Responda
  • shift left
  • shift right
  • not be effected
  • increase up

Questão 25

Questão
Which of the following is not one of the four primary responsibilities of the Fed?
Responda
  • Supervising and regulating commercial banks
  • Maximizing the profit to satisfy the investors
  • Holding the US treasury checking account
  • Implementing monetary policy

Questão 26

Questão
The Fed lacks complete control over the money supply because it cannot perfectly predict..
Responda
  • the amount of discount borrowing by banks
  • shifts from deposit to currency
  • the level of excess reserves held by banks
  • all of the above

Questão 27

Questão
For a given level of monetary base, a decrease in the required reserve ratio on checkable deposits will mean..
Responda
  • decrease in the money supply
  • an increase in the money supply
  • a decrease in checkable deposits
  • an increase in discount borrowing

Questão 28

Questão
The money multiplier is..
Responda
  • negatively related to high-powered money
  • negatively related to the required reserve ratio
  • positively related to holdings of excess reserve
  • positively related to the discount borrowing from the Fed

Questão 29

Questão
According to the Loanable Funds Theory of Interest Rates, which of the following statement is true?
Responda
  • an increase in interest rates results in greater savings
  • there is little relationship between the level of interest rates and the amount of new money created
  • the demand for loanable funds is a function of the demand for funds by individuals, business, and government
  • all of the above are true

Questão 30

Questão
Explain what happens when the money supply increases.
Responda
  • When the money supply increases, interest rates tend to fall. This causes firms to borrow more money to invest in new equipment and buildings.
  • Since industries are expanding, there would be an increase in jobs, which in turn would increase consumer spending.
  • All of the above.

Questão 31

Questão
What will happen to the supply curve if the Fed sells securities?
Responda
  • Interest rates will rise.
  • This would cause the supply curve to shift left because there is a decrease in the amount of loanable funds.
  • All of the above.

Questão 32

Questão
The Federal Reserve can influence __________.
Responda
  • the money supply
  • interest rates
  • politicians
  • and and b

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