QUESTION 1

1. After Monetary policy has two objectives:

   		to ensure that sufficient money and credit are available to meet the needs of the economy and to minimize fluctuationsrecessions and inflationary boomsaround a long-term trend.
   		to reduce the costs of government deficit spending and keep interest rates low.
   		to ensure full employment and low interest rates.
   		none of the options

7.18 points

QUESTION 2

1. FOMC stands for the

   		Federal Ongoing Management Council.
   		Federal Open Market Committee.
   		Federal Operations Membership Committee.
   		Federal Open Management Committee.

7.14 points

QUESTION 3

1. Fed is The Fed engaging in __________ when it lends to commercial banks during emergencies to avoid insolvency

   		Lender of last resort
   		fiscal policy
   		monetary policy
   		open market operations

7.14 points

QUESTION 4

1. Open market operations is the buying and selling of government securities.

   True

   False

7.14 points

QUESTION 5

1. The Fed's main policy tool to regulate the money supply is

   		engaging in open market operations
   		changing the discount rate.
   		None of the options
   		changing the required reserve ratio

7.14 points

QUESTION 6

1. The Federal Open Market Committee (FOMC)

   		is the principal policy-making body of the Federal Reserve
   		All of the options are correct.
   		consists of 12 members.
   		formulates monetary policy and oversees its implementation.

7.14 points

QUESTION 7

1. The __________ is the rate banks are charged to borrow reserves from the Fed

   		required reserve ratio
   		fed fund rate
   		discount rate
   		None of the options

7.14 points

QUESTION 8

1. The discount rate is

   		the interest rate the Fed charges to depository institutions that borrow reserves from the Fed.
   		the interest rate the Fed charges to large businesses that borrow from the Fed.
   		the interest rate the Fed charges to consumers that borrow from the Fed.
   		The interest rate banks charge each other

7.14 points

QUESTION 9

1. The Fed Fund rate is the interest rates bank charge each other to borrow funds.

   True

   False

7.14 points

QUESTION 10

1. The full term of a member of the Board of Governors of the Fed is

   		11 years
   		14 years
   		7 years
   		2 years

7.14 points

QUESTION 11

1. If the Fed wants to increase the supply of money, it _____________.

   		Raise the reserve requirement ratio
   		sell treasury bonds
   		Buy Treasury Bonds
   		Raise the discount rate

7.14 points

QUESTION 12

1. An increase in the money supply will cause investment to __________ and consumption to __________.

   		increase; increase
   		increase; decrease
   		decrease; decrease
   		decrease; increase

7.14 points

QUESTION 13

1. Which of the following is considered a tight monetary policy?

   		none of the options are correct
   		open market purchased of bonds by the Fed
   		Increase the reserve requirement
   		decrease in the discount rate

7.14 points

QUESTION 14

1. The Federal Open Market Committee is responsible for _____________.

   		maintaining competition among the nations banks
   		implementing monetary policy
   		establishing the official price of gold
   		defining the foreign exchange value