1. The importance of the bank lending transmission mechanism of monetary policy:

a- should continue to grow in importance.

b- has always been the weakest of all of the mechanisms.

c- has decreased over the past twenty years.

d- has increased over the past twenty years.

2. The bank-lending channel of monetary policy focuses on:

a- the banks' willingness and ability to lend.

b- the interest rate banks charge their largest customer.

c- the deposit insurance premiums banks will end up paying.

d- how central bank policy influences the solvency of banks.

3. Decreases in the real interest rate will result in a(n):

a- increase in net exports because it will lead to a depreciation of the dollar.

b- decrease in net exports because it will lead to an appreciation of the dollar.

c- increase in net exports because it will lead to an appreciation of the dollar.

d- decrease in net exports because it will lead to a depreciation of the dollar.

4. If a borrower's net worth increases:

a- the borrowers are likely to want to take less risk.

b- the likelihood of moral hazard also increases.

c- the supply of loans decreases.

d- the moral hazard risk for the potential lenders decreases.

5. Increases in the real interest rate will result in a(n):

a- decrease in net exports because it will lead to an appreciation of the dollar.

b- increase in net exports because it will lead to a depreciation of the dollar.

c- decrease in net exports because it will lead to a depreciation of the dollar.

d- increase in net exports because it will lead to an appreciation of the dollar.