1.

What does the Fed auction at the Term-Auction Facility?

government bonds of a quantity it sets

government bonds with the quantity determined at the auction

2.

If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold

fewer reserves, so the money multiplier will fall.

fewer reserves, so the money multiplier will rise.

3.

When there is a reserve requirement, banks

must hold exactly the required quantity of reserves.

may hold more than, but not less than, the required quantity of reserves.

may hold less than, but not more than, the required quantity of reserves.

must seek the Fed's permission whenever they wish to expand or contract their loans to customers.

more reserves, so the money multiplier will fall.

more reserves, so the money multiplier will rise.

loans of a quantity it sets

loans with the quantity determined at the auction

4.

The federal funds rate is the interest rate

the Federal Reserve charges for loans it makes to the federal government.

the Federal Reserve charges banks for short-term loans.

banks charge each other for short-term loans of reserves.

on newly issued one-year Treasury bonds.

5.

When the Fed buys government bonds,

the money supply increases and the federal funds rate increases.

the money supply increases and the federal funds rate decreases.

the money supply decreases and the federal funds rate increases.

the money supply decreases and the federal funds rate decreases.