Monetary Quiz

Topics: Monetary policy, Federal Reserve System, Central bank Pages: 4 (1291 words) Published: October 24, 2011
14-1. The use of money and credit controls to achieve macroeconomic goals is:Fiscal policy.Monetary policy.Supply-side policy.Eclectic policy.| 14-2. Which of the following is responsible for buying and selling of government securities to influence reserves in the banking system?Twelve Federal Reserve banksThe Executive Branch of governmentThe Federal Open Market CommitteeThe Board of Governors of the Federal Reserve| 14-3. Which of the following represents the money multiplier?Required reserve ratio × total depositsTotal reserves - required reserves(Total reserves - required reserves) × multiplier1 ÷ (required reserve ratio)| 14-4. Suppose the banks in the Federal Reserve System have $200 billion in transactions accounts, the required reserve ratio is 0.15, and there are no excess reserves in the system. If the required reserve ratio is changed to 0.10, then the amount of excess reserves would be:Negative $10 billion.Negative $20 billion.Positive $10 billion.Positive $20 billion.| 14-5. Suppose all of the banks in the Federal Reserve System have $100 billion in transactions accounts, the required reserve ratio is 0.25, and there are no excess reserves in the system. If the required reserve ratio is changed to 0.20, then the total lending capacity of the system is increased by:$25 billion.$20 billion.$10 billion.$750 million.| 14-6. Changing the reserve requirement is:A powerful tool which can cause abrupt changes in the money supply.The most often used tool on the part of the Fed.A tool which has little impact on the money supply.Effective in changing excess reserves but not the money supply.| 14-7. The federal funds rate is the interest rate charged when:One bank lends to another bank.The Fed lends to banks.The Fed lends to individuals.Individual banks lend to the Fed.| 14-8. The rate of interest charged by Federal Reserve banks for lending reserves to member banks is the:Federal...
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