MB Review
A financially healthy bank borrowing overnight from the Federal Reserve is known as a. primary credit. b. secondary credit. c. discount window borrowing. d. seasonal credit.
a
A rational market is one in which all participants use all of the available information to make predictions about the future and market participants learn from and adjust to their mistakes. a. True b. False
a
According to Nobel Prize-winning economist Joseph Stiglitz, US monetary policy was largely understood before the Great Recession to be based on several generally accepted ideas, including the idea that there is no such thing as an asset bubble. Which of these did history show according to Stiglitz? a. There was a stock market bubble in the United States in the 1920s, there was a Japanese asset bubble in the 1980s, and most recently, there was the dot-com asset bubble in the United States in the late 1990s. b. The only true asset bubble, by any meaningful definition, was the Tulipmania that gripped Holland in the seventeenth century. c. There was a brief period of Tulipmania in Holland and an eighteenth-century Mississippi Bubble in France, but no more recent examples d. The only true asset bubble, by any meaningful definition, was the stock market bubble of the 1920s.
a
Actual bank reserves are equal to a. required reserves + excess reserves. b. vault cash + required reserves. c. deposits at the Fed + required reserves. d. deposits at the Fed + excess reserves.
a
As a country's financial markets become more highly developed, we can expect monetary policy to be a. more effective. b. less effective. c. no more or less effective than before. d. completely ineffective.
a
Christopher buys a US Treasury security from the Federal Reserve in the secondary market. He pays cash. What is the result of this transaction? a. The monetary base will decrease, and bank reserves will stay the same. b. The monetary base will increase, and the Federal Reserve will have a new asset. c. Both the monetary base and bank reserves will increase. d. Both the monetary base and bank reserves will decrease.
a
Eight times a year, the Bank of Canada announces the key policy rates for the nation. These key rates refer to what? a. Overnight interest rate b. Rate of growth of the money supply c. Rate of economic growth d. Rate of inflation
a
Government deficits can complicate monetary policy because government borrowing can lead to a. "crowding out," which leads to higher interest rates. b. "crowding in," which leads to higher interest rates. c. "crowding out," which leads to lower interest rates. d. "crowding in," which leads to lower interest rates.
a
Imagine you live in a country with huge public debt and an uncertain future. Monetization of this public debt is most likely to lead to which of these outcomes? a. Inflation b. Stagflation c. High interest rates d. Reduced money supply
a
In the conduct of monetary policy, the Federal Reserve has greater control over open market operations than it does over the results of quantitative easing. a. True b. False
a
One emergency lending procedure put into place in 2008 was the creation of the Term Securities Lending Facility. This entity was set up to a. lend up to $200 billion of Treasury securities to primary securities dealers for a fee. b. lend up to $50 billion of Treasury securities to primary securities dealers for a fee. c. lend funding to any commercial bank that needed it. d. lend funding to the Money Market Investor Funding Facility
a
Some would argue that it is better to "clean up" the economic fallout after an asset bubble breaks than to interfere with markets beforehand. The economist Joseph Stiglitz argues that this is ill-advised because
a
The Consumer Financial Protection Bureau (CFPB), launched in 2011, is housed under the Federal Reserve. a. True b. False
a
The Financial Services Act of 2012 made it clear that the Bank of England is now the main regulator of British financial markets. a. True b. False
a
The board of governors of the Federal Reserve has three primary responsibilities, which are a. the operations of the Fed, commercial bank regulation, and monetary policy. b. maintenance of the gold standard, the operations of the Fed, and monetary policy. c. oversight of the printing of money, commercial bank regulation, and the operations of the Fed. d. monetary policy, fiscal policy, and the operations of the Fed.
a
The entity responsible for making the monetary policy decisions in the European Central Bank is the a. governing council. b. general council. c. executive board. d. president of the ECB.
a
The money supply multiplier is equal to (1 + k)/(k + rr + re). a. True b. False
a
The primary responsibility of all central banks is monetary policy. a. True b. False
a
The purchase of direct debt and mortgage-backed securities by the Federal Reserve in November 2008 is referred to as a. quantitative easing. b. a repurchase agreement. c. qualitative easing. d. liquidity easing.
a
The two major goals of Canadian monetary policy are __________ and __________. a. flexible exchange rates; inflation control b. flexible exchange rates; economic growth c. inflation control; economic growth d. economic growth; low unemployment
a
To get around the problems of information lag and impact lag, Alan Greenspan led the Fed in using which of these methods for a period of nearly 20 years, and with what results? a. Greenspan used implicit inflation targeting to stop inflation before it began; inflation stayed relatively low and recessions were modest. b. Greenspan used explicit inflation targeting and met many inflation goals; inflation stayed relatively low and recessions were modest. c. Greenspan used explicit inflation targeting but met few inflation goals; inflation was relatively high. d. Greenspan used implicit inflation targeting to stop inflation before it began; inflation was relatively high, nonetheless.
a
When a bank repays a loan at the discount window to the Federal Reserve, which of the following will happen? a. It will decrease bank reserves and decrease the monetary base. b. It will decrease bank reserves but have no effect on the monetary base. c. It will increase the monetary base by decreasing bank reserves. d. It will decrease bank reserves and immediately raise interest rates.
a
When the Federal Reserve makes a loan at the discount window to a bank, which of the following will happen? a. It will increase bank reserves and increase the monetary base. b. It will increase bank reserves and decrease the monetary base. c. It will increase bank reserves and immediately lower the interest rate. d. It will increase bank reserves but have no effect on the monetary base.
a
When the Federal Reserve was created in 1913, what were its two primary purposes? a. To maintain the gold standard and be a "lender of last resort" to commercial banks b. To regulate the financial sector and be a "lender of last resort" to commercial banks c. To regulate the financial sector of the US economy and maintain the gold standard d. To print money (real bills) and lend only to banks committed to investment in "real" economic activity
a
Which of the following is an accurate description of how the primary function of central banks has shifted over time? a. An initial function of financing government spending; current primary goal of price stability. b. An initial function of stabilizing the economy; current primary goal of preventing asset bubbles. c. An initial goal of controlling inflation; current primary goal of achieving economic growth. d. An initial function as "lender of last resort;" current primary goal of regulating financial markets.
a
Which of these is most often used in practice to maintain a relatively stable price level? a. Inflation targeting b. Price level targeting c. Price level targeting and high employment goals d. A combination of price level targeting and inflation targeting
a
Which of these statements is the most accurate description of a liquidity trap? a. Borrowers are unwilling to borrow, and lenders are unwilling to lend due to pessimism about the future. b. Borrowers are willing to borrow, and expansionary policy is used to stimulate the economy as needed. c. Lenders are willing to lend, but borrowers borrow too much due to increased optimism about the future. d. Lenders are willing to lend, but high interest rates keep borrowing slightly lower than needed.
a
At its inception and during its early days, the power of the Federal Reserve bank lay mostly a. in the commercial banks that became members of the Federal Reserve system. b. with the 12 independent regional Federal Reserve banks. c. with the board of governors housed in the Treasury Department. d. in the New York Federal Reserve Bank.
b
Consider the following data about the economy: currency outstanding (C) = $1 trillion, total deposits (D) = $750 billion, total reserves (R) = $76 billion, and the required reserve ratio (RR ratio) = 10%. What is the level of required reserves for this economy? a. $100 billion b. $75 billion c. $76 billion d. $50 billion
b
Currently, the power of the Federal Reserve rests with a. 24 member banks. b. the chair of the Federal Reserve and a board of six governors. c. the chair of the Fed and the board of the New York Federal Reserve Bank. d. an elected board of governors of the Federal Reserve.
b
During the Great Recession and immediate post-recession years between 2008 and 2014, what happened to the price level in the United States? a. The price level fell and stayed very low. b. The price level fell sharply but then rebounded somewhat. c. The price level remained stable. d. The price level increased slightly.
b
Having to deal with the political process slows the conduct of monetary policy. a. True b. False
b
In the early days of the Fed, the discount rate, the rate at which the regional Federal Reserve banks would lend to commercial banks, was determined by the a. secretary of the treasury. b. regional Federal Reserve banks. c. Federal Reserve bank of New York. d. board of governors.
b
Irving Fisher's equation of exchange is expressed as a. MS × PL = V × T. b. V = (PL × T)/MS. c. MS/V = PL × T. d. MS × T = PL × V.
b
Monetary policy has the best chance of influencing the level of __________ unemployment. a. seasonal b. cyclical c. structural d. frictional
b
Suppose the US Treasury engages in a foreign exchange intervention to lower the value of the dollar relative to the euro. The Fed sells dollars and buys euros in the foreign market. How will this affect the monetary base? a. The monetary base will decline. b. The monetary base will increase. c. The composition of the monetary base will change with no impact on the overall size of the monetary base. d. There will be no impact on the monetary base.
b
The Bank of England has two primary responsibilities, which are __________ and __________. a. economic growth; employment stability b. monetary stability; financial stability c. economic growth; financial stability d. employment stability; monetary stability
b
The Bank of Japan's ability to respond to the global financial crisis that began in 2007 was limited by a. high interest rates in Japan. b. a bloated balance sheet, which was a result of its response to a financial crisis in Japan in the late 1990s. c. the control exerted on the Bank of Japan by the central government. d. lack of coordination between the Bank of Japan and the US Federal Reserve Bank.
b
The Federal Reserve district banks are primarily responsible for a. the check-clearing system, supervising and examining banks in their districts, and interacting with the state governments within their districts. b. the check-clearing system, supervising and examining banks in their districts, and keeping track of the economy in their districts. c. supervising and examining banks in their districts, keeping track of the economy in their districts, and tracking the flow of money in and out of their districts. d. interacting with the state governments within their districts, tracking the flow of money in and out of their districts, and tracking the flow of commerce in and out of their districts.
b
The Federal Reserve is part of the US Treasury. a. True b. False
b
The Federal Reserve notices an increase in the public's desire to hold cash and fears that it may cause an increase in interest rates. To keep interest rates steady, the Federal Reserve would likely execute which of these plans? a. A matched-sale purchase agreement to provide a short-term boost to the money supply b. A repurchase agreement to provide a short-term boost to the money supply c. A reverse repurchase agreement to provide a short-term reduction in the money supply d. A repurchase agreement to provide a short-term reduction in the money supply
b
The central bank of Substantia uses a price level target to conduct monetary policy. In the current year, a shock has lowered the inflation rate from 1.5% to 1.0%. Following the shock, firms and households can expect an inflation rate of a. 1.5%. b. 2.0%. c. 1.0%. d. 2.5%.
b
The position of chair of the Federal Reserve is filled in what way? a. The chair of the Fed is elected by a congressional committee of economic experts. b. The chair of the Fed is appointed by the president of the United States and confirmed by the US Senate. c. The chair of the Fed is elected by a vote of the members of Congress. d. The chair of the Fed is appointed by the president of the United States and confirmed by the House of Representatives and the Senate.
b
Through which of these methods can the Fed impact the money supply? a. Bank deposits, bank reserves, and interest rates b. Bank reserves, open market operations, and interest rates c. Interest rates, bank reserves, and bank regulations d. Bank regulations, open market operations, and interest rates
b
When the Federal Reserve began its policy of quantitative easing in November 2008, there was __________ in the monetary base. a. a decline b. a dramatic increase c. no change d. a slight increase
b
When the Federal Reserve was created in response to the Panic of 1907, it operated under a doctrine meant to correct the previous problems that led to the panic. Which of these statements best names and describes that doctrine? a. The real bills doctrine meant that central banks should lend money to commercial banks when the commercial banks had paper bills as collateral. b. The real bills doctrine meant that central banks should lend money to commercial banks with collateral only if those banks, in turn, would support "real" but not speculative economic activity. c. The gold standard doctrine meant that commercial banks would have little incentive to engage in speculative activities. d. The gold standard doctrine meant that central banks would only lend money to commercial banks if the commercial banks had gold as collateral.
b
When there is a decrease in the required reserve ratio (rr) what will be the change, if any, in the money supply multiplier? a. It will be unchanged. b. It will be increased or strengthened. c. It will be decreased or weakened. d. It will be doubled.
b
Which of these is currently true for the chair of the Federal Reserve? a. The chair position requires a background in economics or finance; the four-year term is renewable. b. The chair position has no formal qualifications; the four-year term is renewable. c. The chair position requires a background in banking or finance; the two-year term is nonrenewable. d. The chair position is a term of just two years and is nonrenewable.
b
A potential problem of a more politically controlled central bank is that a. politicians may want to pursue monetary policies that are bad in the short run but good in the long run. b. conducting both monetary policy and fiscal policy as part of the political process may produce inconsistent results. c. politicians may want to pursue monetary policies that are good in the short run but bad in the long run. d. politicians may take too long to decide on the direction of monetary policy.
c
Banks that have some financial difficulty and borrow from the Federal Reserve in what is known as secondary credit will pay an interest rate equal to the a. federal funds rate. b. federal funds rate plus a penalty. c. discount rate plus a penalty. d. discount rate.
c
Check My Work Which of these statements is true of the board of governors of the Fed? a. The board of governors is elected once every eight years by the citizens of the United States. b. The board of governors consists of six members; the term length is four years. c. The board of governors consists of six members plus the chair; the term length for members is fourteen years. d. The board of governors is appointed by the chair and serves a four-year term.
c
Consider the following data about the economy: currency outstanding (C) = $1 trillion, total deposits (D) = $750 billion, total reserves (R) = $76 billion, and the required reserve ratio (RR ratio) = 10%. What is the currency ratio in this economy? a. 0.50 b. 0.10 c. 1.33 d. 0.75
c
Consider the following data about the economy: currency outstanding (C) = $1 trillion, total deposits (D) = $750 billion, total reserves (R) = $76 billion, and the required reserve ratio (RR ratio) = 10%. What is the money multiplier for this economy? a. 2.06 b. 3.15 c. 1.63 d. 1.00
c
Consider the following data about the economy: currency outstanding (C) = $2 trillion, total deposits (D) = $1 trillion, total reserves (R) = $60 billion, and the required reserve ratio (RR ratio) = 5%. If the Federal Reserve increases the monetary base by $1 billion, the money supply will a. increase by $1.00 billion. b. decrease by $1.46 billion. c. increase by $1.46 billion. d. decrease by $1.00 billion.
c
Consider the following data about the economy: currency outstanding (C) = $2 trillion, total deposits (D) = $1 trillion, total reserves (R) = $60 billion, and the required reserve ratio (RR ratio) = 5%. What is the money multiplier for this economy? a. 1.26 b. 1.00 c. 1.46 d. 2.46
c
During the Great Recession and immediate post-recession years between 2008 and 2014, what happened to the price level in the United States? a. The price level remained stable. b. The price level increased slightly. c. The price level fell sharply but then rebounded somewhat. d. The price level fell and stayed very low.
c
Federal Reserve notes are considered to be a. liabilities of the US Treasury. b. assets of the Federal Reserve. c. liabilities of the Federal Reserve. d. assets of the US Treasury.
c
If the goal of monetary policy is to keep interest rates stable, the Federal Reserve's response to increases in the demand for money will be to a. decrease the supply of money. b. hold the supply of money constant. c. increase the supply of money. d. decrease the demand for money.
c
In 1968, Congress passed a key piece of legislation to protect consumers called the __________ Act. a. Fair Credit Billing b. Fair Credit Reporting c. Truth in Lending d. Truth in Savings
c
In order to overcome the stigma that might come from borrowing from the Federal Reserve following the 2007 financial crisis, the Federal Reserve first created a. quantitative easing. b. the Federal Open Market Committee (FOMC). c. the term auction facility (TAF). d. the discount window.
c
In the 2017 UN working paper entitled "On the Role of Central Banks in Enhancing Green Finance," the UN stated that central banks would have what kind of role in addressing environmental concerns? a. Central banks would need to enforce regulations at commercial banks regarding environmental goals. b. Central banks would need to develop sustainability targets as their new primary goal. c. Central banks would need to develop sustainability targets and create new policy tools to meet those targets. d. Central banks would need to develop sustainability targets and governments would create new policy tools to meet those targets.
c
In the early stages of the 2007 financial crisis, the Fed introduced term auction lending a. to decrease the amount of liquidity in the financial system. b. to increase market interest rates. c. to increase the amount of liquidity in the financial system. d. to stabilize inflation rates.
c
Initially, quantitative easing was not much help in creating economic growth because a. the Federal government began to cut spending, which counteracted the expansionary monetary policy. b. the expansion of the monetary base was inflationary. c. banks did not lend out the excess reserves that were created by quantitative easing. d. the Federal Reserve also increased the required reserve ratio so additional reserves were not available for lending.
c
Irving Fisher's equation of exchange led to the conclusion that the __________ is a function of the level of __________ income in the economy. a. supply of money; nominal b. demand for money; real c. demand for money; nominal d. supply of money; real
c
Joe has a $1,000 debt with no interest. He is a plumber and earns $50 per hour. The real burden of Joe's debt is a. not enough information to tell. b. $50 per hour. c. 20 hours of work. d. $1,000.
c
One thing on which both the political right and the political left in the United States agree regarding the Federal Reserve is that its a. primary focus should be on price stability. b. chairperson should be an elected position. c. independence should be limited. d. regulatory authority should be strengthened.
c
The economy is experiencing a decrease in excess reserves relative to the level of bank deposits. What effect will this have on the money supply multiplier? a. The money supply multiplier will decrease; it will be weakened. b. The money supply multiplier will be twice as strong. c. The money supply multiplier will increase; it will be strengthened. d. The money supply multiplier will be unchanged.
c
The increasing average debt burden of American households beginning in the mid-1990s coincided with which of these other facts? a. An increase in real wage growth, but a relaxation or elimination of many financial market regulations b. An increase in the cost of living, counteracted only in part by an increase in real wage growth c. A decrease in real wage growth, combined with the elimination of many financial market regulations d. An increase in the cost of living, counteracted only in part by an increase in financial market oversight
c
The securities that the Federal Reserve holds on its balance sheet include a. US Treasury securities, municipal bonds, and federal agency debt. b. privately issued stocks, US Treasury securities, and federal agency debt. c. US Treasury securities, federal agency debt, and privately issued mortgage-backed securities. d. municipal bonds, privately issued stocks, and US Treasury securities.
c
The sum of Federal Reserve notes in circulation, plus US coins, plus bank reserves is collectively referred to by which of these designations? a. The money base b. M2 c. The monetary base d. M1
c
The three governing bodies of the European Central Bank (ECB) are the a. governing council, general council, and executive committee. b. open market committee, executive board, and governing council. c. governing council, general council, and executive board. d. executive board, general council, and monetary authority.
c
To achieve its goal of monetary stability, the Bank of England sets a target a. growth rate of the money supply of 2% per year. b. economic growth rate of 2% per year. c. inflation rate of 2% per year. d. interest rate of 2%.
c
Trevor goes to the ATM machine and withdraws $500 in cash. How will this affect the monetary base? a. The monetary base will increase by less than the size of the withdrawal as the increase in the currency in circulation will not be completely offset by a decrease in bank reserves. b. The monetary base will increase with the increase in currency in circulation. c. The monetary base will remain unchanged with the increase in the currency in circulation being exactly offset by a decrease in bank reserves. d. The monetary base will decline as bank reserves fall.
c
Until the implementation of the Financial Services Act of 2012, the United Kingdom had a three-part framework for regulation of its financial system, consisting of the Bank of England, the Treasury Department, and which other entity? a. The Financial Policy Committee (FPC) b. The House of Commons c. The Financial Services Authority (FSA) d. The House of Lords
c
When the Federal Reserve buys US Treasury securities on the open market, it is attempting to a. raise interest rates. b. slow economic growth. c. lower interest rates. d. reduce inflation.
c
When the currency ratio increases, the impact of changes in the monetary base on the money supply is a. unchanged. b. reversed. c. weakened. d. strengthened.
c
When the economy is caught in a liquidity trap, expansionary monetary policy will a. result in inflation. b. result in a significant expansion of economic activity. c. have little impact on the economy. d. result in a significant contraction in economic activity.
c
When there is a high degree of trust in a country's banking system, the amount of cash held out of banks relative to deposits in banks would tend to be what? a. The amount of cash held out of banks would likely be unaffected. b. The amount of cash held out of banks would be relatively high. c. The amount of cash held out of banks would be relatively low. d. The amount of cash held out of banks would be close to zero.
c
Actual bank reserves are equal to a. deposits at the Fed + excess reserves. b. vault cash + required reserves. c. deposits at the Fed + required reserves. d. required reserves + excess reserves.
d
Claire sells a US Treasury security to the Federal Reserve on the secondary market. She receives a check as payment and then cashes the check at her bank, keeping the cash. Which of the following best describes the result? a. The monetary base will decrease, but bank reserves will stay the same. b. The monetary base will increase, and the Fed will have a new liability. c. Both the monetary base and bank reserves will increase. d. The monetary base will increase but bank reserves will stay the same.
d
Economist Joseph Stiglitz has argued that, at the time of the Great Recession, the conduct of monetary policy in the United States focused on six generally accepted principles, including which of these as one of the more important? a. Asset bubbles are a rare occurrence in market economies b. Inflation is always and everywhere a monetary phenomenon c. Of the twin evils of unemployment and inflation, inflation is the more important on which to focus d. Price stability is a necessary and almost sufficient condition for economic stability
d
Following the Great Depression, the power of the Fed shifted to the a. board of governors of the Federal Reserve. b. New York Federal Reserve Bank. c. secretary of the treasury. d. Federal Open Market Committee.
d
If GDP is $20 trillion and the money supply is $4 trillion, what is the velocity of money? a. 80 b. 2 c. 16 d. 5
d
If the US Treasury engages in a foreign exchange intervention to increase the value of the dollar relative to the yuan renminbi by having the Federal Reserve buy dollars and sell yuan renminbi in the foreign market, how will this affect the monetary base? a. The composition of the monetary base will change with no impact on the overall size of the monetary base. b. There will be no impact on the monetary base. c. The monetary base will increase. d. The monetary base will decline.
d
Of the policy tools available to the European Central Bank, the most frequently used are the a. discount rates. b. minimum reserve requirements. c. standing lending facilities. d. open market operations (OMOs).
d
Open market operations in which the European Central Bank specifies an interest rate at which it will lend and then participating banks submit bids on the amount of money they wish to borrow at that rate are known as __________ tenders. a. fixed-rate reverse b. variable-rate standard c. variable-rate reverse d. fixed-rate standard
d
Prior to the 1980s, the Federal Reserve could use targets for M1 and M2 to conduct monetary policy because a. M1 and M2 were easy to measure and report. b. inflation was well under control. c. business cycles were fairly predictable. d. there was a fairly good link between M1, M2, and inflation.
d
Responding to asset bubbles makes it plain that monetary policy must be made in a world full of a. media scrutiny and political interference. b. political pressure and uncertainty. c. instant media scrutiny and the cyclical appearance of asset bubbles. d. uncertainty and unpredictable market behaviors.
d
Suppose the current real federal funds rate in the economy is 3.0%, the current inflation rate is 1.5%, the Federal Reserve's target inflation rate is 2.0%, and the output gap is -2.0%. According to the Taylor Rule, the Federal Reserve's target federal funds rate should be a. 2.5%. b. 2.75%. c. 3.75%. d. 3.25%
d
The biggest change in the Federal Reserve's balance sheet between March 2007 and May 2013 was the __________ on the __________ side of the balance sheet. a. decrease in repurchase agreements; asset b. increase in currency outstanding; liability c. increase in gold; asset d. jump in depository institution deposits; liability
d
The responsibilities of the European Central Bank include a. management of economic growth in Eurozone countries, monetary policy, and foreign exchange operations. b. management of gold reserves, monetary policy, and foreign exchange operations. c. holding and management of official foreign reserves of Euro area countries, monetary policy, and management of economic growth in Eurozone countries. d. monetary policy, foreign exchange operations, and maintenance of the payments system.
d
When a central bank wants to pursue an expansionary monetary policy, it can do which of these things? a. Increase the required reserve ratio b. Loan money to banks only if they promise to loan it to consumers c. Raise interest rates d. Pump excess reserves into the banking system
d
When not responding to global financial meltdowns, the main goal of the monetary policy of the Bank of Japan is a. to pursue economic growth. b. to eliminate debt to other nations. c. to ensure employment stability. d. to pursue price stability.
d
When the Federal Reserve increases the required reserve ratio, the impact will be to a. decrease the size of the spending multiplier. b. increase the size of the money multiplier. c. increase the size of the spending multiplier. d. decrease the size of the money multiplier.
d
When there is a high degree of trust in a country's banking system, the amount of cash held out of banks relative to deposits in banks would tend to be what? a. The amount of cash held out of banks would be relatively high. b. The amount of cash held out of banks would likely be unaffected. c. The amount of cash held out of banks would be close to zero. d. The amount of cash held out of banks would be relatively low.
d
Which of these are among the primary responsibilities of the Federal Reserve? a. Repaying the federal government debt and enforcing financial market regulations b. Conducting monetary policy and printing US currency c. Repaying the federal government debt and setting market interest rates d. Conducting monetary policy and acting as the fiscal agent of the US Treasury
d
Which of these categories is the largest asset on the Federal Reserve's balance sheet—by far? a. Gold, silver, and bitcoin b. Gold c. Repurchase agreements d. Securities
d
Which of these entities and/or groups can directly affect the monetary base? a. Commercial banks and the cash-holding public b. The Federal Reserve and commercial banks c. Commercial banks, the Fed, and members of Congress d. The Federal Reserve, commercial banks, and the cash-holding public
d
Which of these is the most often used and the most flexible monetary tool used by the Federal Reserve? a. Dynamic transactions b. Discount window lending c. Quantitative easing d. Open market operations
d
Why is it easier for the Fed to manage the level of bank reserves using the term auction facility (TAF) as opposed to using discount window lending? a. Banks do not need to overcome the stigma of requesting a loan when using the TAF. b. Banks that use seasonal credit are more likely to use the term auction facility. c. Banks receive TAF proceeds after a lengthy verification process. d. Banks receive TAF proceeds on a 3-day delay, rather than on the day they are requested.
d
