question

The U.S Treasury is primarily responsible for:

answer

debt management

question

Examples of automatic stabilizers are:

answer

unemployment insurance

question

Automatic stabilizers include all of the following EXCEPT:

answer

social security

question

Almost all Treasury disbursements are made by:

answer

checks drawn against deposits at Federal Reserve

question

When the US Treasury makes a payment to an individual or business, it usually takes the form of a:

answer

check drawn on a Federal Reserve Bank

question

The budget-making process is carried out by:

answer

Congress and the President

question

Budgetary deficits always have the effect of:

answer

creating governmental competition for private investment funds

question

U.S. debt management, which is an important function of the Treasury, is generally designed to:

answer

encourage orderly economic growth and stability

question

A high level of inflation:

answer

discourages investment by increasing the uncertainty about future returns

question

The federal government pays for the services it provides primarily through:

answer

taxation

question

Federal Reserve open market operations, setting reserve requirement, and lending to depository institutions are:

answer

all designed to have their effect by influencing the reserves of depository institutions

question

Open market operations differ from discounting operations in that they are:

answer

initiated by the Federal Reserve banks initiate borrowing at the Fed's discount window

question

Various programs of the federal government help stabilize disposable income, and in turn, economic activity in general. In so doing:

answer

some programs act on a continuing basis and are described as automatic stabilizers

question

Continuing federal programs that stabilize economic activity are called

answer

automatic stabilizer

question

Debt management of the federal government includes:

answer

determining which types of refunding to implement, the types of securities to sell, and deciding which interest rate patterns to use

question

Debt management includes all of the following except:

answer

the required reserves ratio determined by the Fed

question

Under required reserves of 20%, the maximum to which the money supply could be expanded by the banking system is:

answer

four times a new primary deposit

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One factor that decreases the volume of bank reserves is a decrease in:

answer

Federal Reserve float

question

One factor that decreases the volume of bank reserves is a(n):

answer

increase in the public's demand for currency to be held outside the banking system

question

Bank reserves are increased when the Treasury:

answer

decreases its holding of cash

question

Which one of the following transactions or operations is entirely at the initiative of the Federal Reserve?

answer

open market operations

question

The monetary base:

answer

consists of bank reserves, plus currency held by the public

question

Changes in the growth rates for money supply and money velocity affect the growth rate in:

answer

real economic activity and the rate of inflation

question

If a check is written for the full amount of a derivative deposit created by a bank loan and then is sent to a bank in another city for deposit:

answer

the lending bank would lose all of its excess reserves

question

Total reserves in the banking system consist of:

answer

vault cash held at commercial banks and other depository institutions and reserve deposits held at Federal Reserve banks

question

When a customer demands additional currency by cashing a check for $500, all of the following occur except:

answer

Federal Reserves notes decrease

question

In our financial system, the money multiplier:

answer

can fluctuate over time

question

The U.S. banking system has the ability to alter the size of the money supply because of the use of:

answer

a fractional reserve system

question

Which of the following statements is most correct?

answer

Derivative deposits occur when reserves created from primary deposits are made available through bank loans to borrowers who leave them on deposit in order to write checks against the funds.

question

Which of the following statements is most correct?

answer

The money multiplier is influenced by the public's switching between checkable and noncheckable deposits at their banks.

question

Which of the following statements is false?

answer

-The multiplying capacity of primary deposits is hindered by cash leakages from the banking system. -The monetary base is defined as bank reserves plus currency held by the public. -In contrast to the other transactions that affect reserves in the banking system, open market operations are entirely at the initiative of the Federal Reserve.

question

Which of the following statements is false?

answer

The ability to alter the money supply and credit is based on the fact that our banking system does not utilize a fractional reserve system.

question

The money supply (M1) is equal to the monetary base:

answer

multiplied by the money multiplier.

question

Total bank reserves do not include which of the following?

answer

deficit reserves

question

The government entity responsible for fiscal policy is:

answer

the Congress and the President

question

Government financing of large budgetary deficits:

answer

may crowd out private borrowers

question

Deposits that add new reserves to the bank where they are deposited and to the banking system are called:

answer

primary deposits

question

Transactions that affect bank reserves can be initiated by the:

answer

nonbank public, Federal Reserve System, U.S. Treasury

question

Banking system reserves plus currency held by the public is referred to as the:

answer

monetary base

question

A country's economic policy actions are directed toward all of the following goals EXCEPT:

answer

balance in the federal budget

question

A country's economic policy actions are directed toward all of the following goals EXCEPT:

answer

economic growth, high employment, and price stability

question

Groups of policy makers that are actively involved in achieving U.S. economic policy objectives include all of the following EXCEPT:

answer

the Federal Reserve System, the President, Congress

question

The percentage of deposits that must be held as reserves is called

answer

required reserve ratio

question

During the 2007 - 2009 financial crisis, some of the very largest financial institutions were deemed as being "too big to fail" because their failure would cause cascading negative repercussions throughout the U.S. and many foreign economies. As a result, the Federal Reserve

answer

moved to increase liquidity in the monetary system and reduced its target federal funds rate to below .25 percent and worked with the U.S. Treasury to help facilitate the merging of financially weak institutions with institutions that were financially stronger.

question

During the 2007 - 2009 financial crisis, ___________ and __________, who were major participants in the secondary mortgage markets, were on the verge of financial insolvency and possible collapse in mid-2008.

answer

Fannie Mae and Freddie Mac

question

In fall 2008, the U.S. Congress and President George W. Bush responded to the financial crisis with the passage of the _____________ in early October of that year.

answer

Economic Stabilization Act

question

A primary focus of the Economic Stabilization Act of 2008, which became known as the ___________________________, was to allow the U.S. Treasury purchase up to $700 billion of troubled or toxic assets held by financial institutions.

answer

Troubled Asset Relief Program (TARP)

question

In an effort to stimulate economic activity, Congress and the president passed the $787 billion___________________________ in February, 2009 with the funds to be used to provide tax relief, appropriations, and direct spending.

answer

American Recovery and Reinvestment Act of 2009

question

As the decade of the 2000s came to a close, the unemployment rate remained at the 10 percent level and continued at high level resulting in the Fed engaging in :

answer

Quantitative Easing

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