Assignment

Question 1. Which of the following can be associated with original objectives of the Fed?
Coordinate an efficient payments mechanism.
Provide an elastic money supply.
Serve as lender of last resort.
All of the above

Question 2. For what purposes do depository institutions keep deposits in the Federal Reserve banks?
For clearing checks
To satisfy reserve requirements
To earn interest
For clearing checks and to satisfy reserve requirements.

Question 3. Which Fed action does not directly increase total reserves in the banking system?
Lowering the Discount Rate
Lowering reserve requirements
Buying U.S. Government securities on the open market
None of the above

Question 4. The purchase of government securities by the Fed will
decrease the money supply.
increase security prices.
increase interest rates.
decrease credit availability.

Question 5. The Federal Reserve System established
a system for federal chartering of banks.
a system for controlling bank note issuance.
a source of liquidity for the banking system.
the beginning of demand deposit accounts.

Question 6. Which of the following can be associated with the modern objectives of the Fed?
Coordinate an efficient payments mechanism.
Provide an elastic money supply.
Regulate the financial system.
All of the above

Question 7. The Fed's most important duty is to
regulate national banks.
print currency.
establish the nation's monetary policy.
stimulate the economy.

Question 8. Using this data, answer the question below:
Total Reserves $100,000,000
Reserve Requirement 5%
Total Deposits $700,000,000
What is the level of excess reserves?
$ 6,000,000
$ 65,000,000
$ 70,000,000
Not ascertainable

Question 9. Ordinarily the money supply will decrease if
the Fed makes fewer loans at its discount window.
the Fed sells securities on the open market.
the Fed raises reserve requirements.
All of the above

Question 10. The money supply
is not exclusively controlled by the Fed.
is not related to the monetary base.
excludes any interest-bearing deposits.
None of the above

Question 11. Sustained open market buying by the Fed will cause
foreign investors to buy more T-Bills.
planned inventory investment to fall.
depository institutions to lend more freely.
All of the above

Question 12. Consumption spending should increase if
financial wealth decreases.
reserve requirements decrease.
interest rates increase.
credit availability decreases.

Question 13. An expansion in the U.S. money supply
will increase domestic interest rates.
will cause the exchange value of the dollar to increase.
will cause U.S. exports to increase.
will cause U.S. imports to increase.

Question 14. Monetary policy impacts the economy
by affecting real spending directly.
by affecting real spending through the financial sector.
by changing interest rates and the cost of housing.
All of the above

Question 15. M2 includes
currency in circulation.
demand deposits.
Both A and B
None of the above.