Question 1

A.

A decrease in reserve requirements could lead to an

Select one:

increase in bank lending and an increase in the money supply.

increase in bank lending.

increase in the money supply.

increase in the discount rate.

increase in bank lending and an increase in the discount rate.

B.

The Fed funds rate is the rate that

Select one:

banks charge securities dealers to finance their inventory.

banks charge to lend foreign exchange to customers.

banks charge for loans to corporate customers.

the Federal Reserve charges on emergency loans to commercial banks.

banks charge each other on loans of excess reserves.

C.

The major liability of the Federal Reserve is

Select one:

U.S. Treasury securities.

depository institution reserves.

currency outside banks.

gold and foreign exchange.

vault cash of commercial banks.