question

As the supply of funds in the banking system ____, the federal funds rate ____.

answer

A. increases; decline

question

The Fed's rate on short-term loans to depository institutions is referred to as the

answer

A. discount rate.

question

The time between when an economic problem is realized and when the Fed tries to correct it with its policies is the

answer

B. implementation lag.

question

All ____ are required to be members of the Federal Reserve System.

answer

B. national banks

question

If the Fed uses a passive monetary policy during weak economic conditions

answer

B. it reduces money supply substantially.

question

The Fed's monetary policy is commonly intended to alter the supply of funds in the banking system in order to achieve a specific targeted:

answer

C. federal funds rate

question

____ is (are) not a component of the Fed as it exists today.

answer

D. The U.S. Department of Commerce

question

The voting members of the Federal Open Market Committee consist of the Board of Governors plus the

answer

C. Presidents of 5 Fed district banks.

question

The Trading Desk is sometimes directed to ____ a sufficient amount of Treasury securities that will ____ the federal funds rate to a new targeted level set by the FOMC.

answer

E. A and B a. buy; decrease b. sell; increase c. buy; increase d. sell; decrease

question

The ____ is directly responsible for controlling money supply growth

answer

B. FOMC

question

Which of the following is currently a main role of the Federal Reserve's Board of Governors?

answer

D. A and C a. regulating commercial banks b. regulating foreign trade c. controlling monetary policy

question

The time between when the Fed adjusts the money supply and when interest rates change reflects the

answer

C. impact lag.

question

A high budget deficit tends to place ____ pressure on interest rates; the Fed's tightening of the money supply tends to place ____ pressure on interest rates.

answer

A. upward; upward

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

answer

B. stimulate; place upward pressure on

question

The ____ is not an indicator of economic growth.

answer

A. producer price index

question

Which of the following did the Fed not do during the credit crisis?

answer

D. prevent depository institutions from obtaining funding through the discount window

question

If the federal government is willing to pay whatever is necessary to borrow loanable funds, but the private sector is not, this reflects

answer

A. the crowding-out effect.

question

Which of the following is an action that the Fed uses to increase or decrease the money supply?

answer

A. buying or selling Treasury securities in the secondary market

question

Historical evidence has shown that, when the Fed significantly increases money supply, U.S. inflation tends to ____ shortly thereafter which in turn places ____ pressure on U.S. interest rates.

answer

A. increase; upward

question

The ____ indicators tend to occur after a business cycle.

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B. lagging

question

____ serves as the most direct indicator of economic growth in the United States.

answer

A. Gross domestic product (GDP)

question

The ____ the reserve requirement ratio, the ____ the ultimate effect of any initial increase in money supply

answer

D. B and C a.lower; less b.lower; greater c.greater; less

question

To increase the money supply growth, the Fed could

answer

E. none of the above a.sell government securities in the secondary market. b.increase the primary credit lending rate. c.increase the reserve requirement ratio. d.all of the above

question

A ____-money policy can reduce unemployment, and a ____-money policy can reduce inflation

answer

B. loose; tight

question

The ____ consists of seven members, each of whom is appointed by the President of the United States

answer

C. Board of Governors

question

When the Fed uses open market operations by purchasing Treasury securities from various financial institutions in the U.S., there will be

answer

A. an outward shift in the supply schedule of loanable funds

question

The ____ is directly responsible for conducting monetary policy

answer

B. FOMC

question

A criticism of the Fed's actions during the credit crisis is that it:

answer

B. focused too much on financial institutions

question

A credit crunch occurs when

answer

C. creditors restrict the amount of loans they are willing to provide.

question

Which of the following is probably not a goal the Fed is trying to achieve consistently?

answer

B. high interest rates

question

The advisory committee offering views on issues related to credit unions is the

answer

B. Thrift Institutions Advisory Council.

question

The ____ is made up of seven individual members, and each member is appointed by the president of the U.S

answer

A. Board of Governors

question

With regard to monetary policy, which of the following is under direct control of the Federal Reserve's Board of Governors?

answer

A. revise reserve requirements for depository institutions

question

The advisory committee making recommendations to the Fed about economic and banking related issues is the

answer

C. Federal Advisory Council.

question

The ____ consists of seven members, each of whom is appointed by the president of the United States.

answer

C. Board of Governors

question

The interest rate that the Fed targets for its monetary policy is the

answer

B. federal funds rate.

question

In general, there is:

answer

B. an inverse relationship between unemployment and inflation

question

A weak dollar would stimulate ____, discourage ____, and ____ the U.S. economy

answer

B. U.S. exports; U.S. imports; stimulate

question

If the Fed desires to ____ the money supply using open market operations, it would instruct the trading desk to ____ government securities

answer

A. increase; purchase

question

Inflation is commonly the result of a

answer

D. high level of aggregate demand.

question

When the Fed uses open market operations by selling some of its Treasury securities to investors in the U.S., there will be

answer

B. an inward shift in the supply schedule of loanable funds.

question

When the Fed purchases securities, the total funds of commercial banks ____ by the market value of securities purchased by the Fed. This activity initiated by the FOMC's policy directive is referred to as a(n) ____ of money supply growth.

answer

A. increase; loosening

question

The Federal Reserve would be most inclined to use a stimulative monetary policy to cure a recession if oil prices are

answer

A. low and steady.

question

As a result of the Financial Reform Act of 2010, the ____ was assigned the role of regulating financial products and services.

answer

C. Consumer Financial Protection Bureau

question

The ____ is directly responsible for setting reserve requirements

answer

C. Board of Governors

question

A ____ dollar tends to exert inflationary pressure in the U.S.

answer

C. weak

question

Which of the following is not a disadvantage of inflation targeting?

answer

C. The Fed's complete focus on inflation could result in much higher interest rates, which would discourage economic growth.

question

The Fed can ____ the level of spending as a means of stimulating the economy by ____ the money supply

answer

D. increase; increasing

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