CH 15

The Federal Reserve Bank could increase the money supply by doing all of the following except A) decreasing taxes. B) buying bonds. C) lowering reserve requirements. D) lowering the discount rates.

A) decreasing taxes.

An increase the money supply will A) have no impact on interest rates charged by banks. B) causes interest rates charged by banks to decrease. C) causes interest rates charged by banks to increase.

B) causes interest rates charged by banks to decrease.

If the money supply grows faster than real GDP, there will likely be A) deflation. B) inflation. C) no change in prices of goods and services. D) a decrease in the prices of goods and services.

B) inflation.

The supply of money A) cannot be manipulated by the government. B) is a fixed value. C) increases as interest rates for non-money assets (e.g., bonds) increase. D) increases as interest rates for money assets (e.g., savings accounts) increase.

B) is a fixed value

An increase in the money supply would likely cause ___________ to ________ . A) short-run aggregate supply; increase B) aggregate demand; decrease C) aggregate demand; increase D) short-run aggregate supply; decrease

C) aggregate demand; increase

In the United States, A) the President initializes changes in monetary policy and the Fed approves the changes. B) Congress must approve monetary policy changes. C) Congress initializes changes in monetary policy and the Fed approves the changes. D) the Federal Reserve sets monetary policy.

D) the Federal Reserve sets monetary policy.

The discount rate is A) the interest rate for deposits. B) the interest rate banks charge customers for loans. C) the interest rate banks charge other other banks for loans. D) the interest rate the federal reserve banks charge banks for loans.

D) the interest rate the federal reserve banks charge banks for loans.

Quantity of money demanded refers to A) total amount of money assets someone wants to possess. B) total amount of money assets someone actually possesses. C) value of assets minus value of liabilities. D) the portion of assets held as money.

D) the portion of assets held as money.

An increase in the supply of money would cause A) aggregate supply to increase. B) aggregate income to decrease. C) aggregate demand to increase. D) real GDP to decrease. E) the price levels to fall.

E) the price levels to fall.

A decrease in the money supply would likely cause ___________ to ________ . A) aggregate demand; increase B) aggregate demand; decrease C) short run aggregate supply; increase D) short run aggregate supply; decrease

B) aggregate demand; decrease