What is the most effective method the Fed uses to change the monetary base?

• Open market operations
• Changing the required reserve ration
• Changing the federal funds rate
• Changing the level of discount loans
• Changing the interest rate paid on reserves

When the Fed holds U.S. government securities, it

• Pays interest to the government
• Earns interest from the government
• Declines receiving interest from the government
• Is borrowing from the U.S. Treasury

if the Fed sells $250 million worth of mortgage backed securities purchased during the financial crisis back to the banks, the money supply will

• Decrease by $250 million
• Increase by $250 million
• Decrease by more than $250 million
• Increase by more than $250 million
• Remain unchanged

If the Federal Reserve buys $250 million worth of government securities and the M1 multiplier is 2, bank reserves will

• Fall by $250 million
• Rise by $250 million
• Fall by $500 million
• Rise by $500 million
• Fall by $125 million