Macroeconomic-Exam4b

Description:	bradley r. schiller
Category:	Business
Created by:	leepao07 on 2009-07-31

Question	Answer
the interest rate one bank charges anotehr bank when lending reserves	federal funds rate
equal to total reserves minus require reserves	excess reserves
the interest rate the fed chaRges a bank when leding reserves	discount rate
represent a leakage from the flow of money because they cannot be used to make loans	required reserves
the choice of where to palce idle funds	portfolio decision
the reciprocal of the required reserve ratio	money multiplier
the use of money and credit controls to influence the macroeconomy	monetary policy
the purchase and sale of gvt securities by the fed in order to change bank reserves	open market operations
the annual interest payment divided by the bond's purchase price	yield
controooled by the fed through the use of the reserve requirement, the discount rate, and open market operations	money supply
referts to the fed lending reserves to private banks	discounting
a cetificate acknowledge a debt and tersm for payment	bonds
the federal reserve banks hod deposits of banks and other business firms	false
the board of gevernors is responsible for setting monetary policy	true
the fed is not one bank but is actually twelve regional banks with central control located in Washington DC	true
the 14 year terms for the board of governors give the fed a measure of political independence	true
monetary policy is the use of money and government spending to influence macroeconomic activity	false
if the fed wishes to create teh conditions under which the money supply will decrese, it can decrease the reserve requirement	false
when the fed buys bonds from the public, it increase the flow of reserves into the banking system	true
the FOMC implements monetary policy by adusting resrve requriements and discount rates	false
open-market operation are the principal mechanism for altering the reserves of the banking system	true
in order to decrease the lending capacity of the banking system, the fed buys securities	false
refer to question #1	b)regional federal reserve bank system
which of the following is not a service performed by the federal reserve banks? a)making loans to individuals b)holding reserves of private banks c)providing currency to private banks d)clearing checks between private banks	a)making loans to individuals
the formulation of general federal reserve policy is the responsibility of the: a)federal open msarket committee b)federal advisory council c)board of governors d)regional federal reserve banks	c)board of governors
refer to question #4	d)they are appointed by each new president when the presidential cabinet is appointed
which of followin is responsible fr buyin and sellin govt securities to influence reserves in the banking system? a)the board of governors b)the twelve regional federal reserve banks c)the federal open market commmittee d)teh executive branch of govt	c)the federal open market committee
which of the following is NOT one of the tools of monetary policy used by the fed? a)expulsion from fed membership b)changing the reserve requirement c)changing the discount rate d)performing open-market operation	a)expulsion from fed memberships
when the fed wishes to increase the the excess reserves of the member banks, it: a)raises the discount rate b)buys secrities c)raises the reserves requirement d)sells securities	b)buys securities
reserves requiremnt is: a)a powerful tool tat can cause abrupt changes in money supply b)the most often used tool on the part of the fed c)a tool that has little impact ont he money supply d)effective in changin excess reserves but not the money muliplier	a)a powerful tool that can cause abrupt changes in teh money supply
which of the following can be used by a bank to increase reserves? a)seling securities b)borrowing from the discount window c)borrowing the fed funds market s)all of the above	d)all of the above
the federal funds markt is a market in which: a)banks lend excess reserves to other banks b)government securiteis are bough and sold c)reserves are discounted outside the fed's control d)the fed lends to member banks	a)banks lend excess reserves to toehr banks
discounting refers to the fed's practice of: a)selling securities at the federal funds rate b)lending reserves to private banks c)lending at the prime rate d)purchasing securities at the lowest federal funds rate	b)lending reserves to private banks
the most frequently used tool on the part of the fed is: a)the serve requirement b)the discount rate c)open-market operation d)the fed funds rate	c)open-market operations
suppose that the fed desires to sell more bonds than pple r willing to purchase. the most likely result of this situation would be a: a)decrease in the price of bonds b)switch to another type of monetary policy lever by the fed c)switch to fiscal policy	a)decrease in the price of bonds
when the fed buys bonds from the public, it: a)decreases the flow of reserves to the banking system b)increases the flow of reserves to the bankign system c)decrases the money supply d)decreases the discount rate	b)increase the flow of reserve to the banking system
if the fed buys bonds from the public, which of the following changes are likely to occur? a)the public's holdings of bonds would decrease b)MI would increase c)excess reserves would increase c)all of the above would occur	d)all of the above would occur
the fed can increase teh federal funds rate by: a)selling bonds b)buying bonds c)simply announcing a lower rate since the fed has direct control of this interest rate d)changing the money multiplier	a)selling bonds
the recent years the fed has shifted away from: a)money-supply targets to interest rate targets b)interest rate targets to money-supply targets c)using fiscal policy d)using monetary policy	a)money-supply targets to interest rate targets
an increase in the discount rate: a)reduces the cost of reserve borrowed from the fed b)signals the fed's desire to restrain money growth c)signals the fed's desire to support credit creation d)signals the fed's eagerness to lend additional reserves	b)signals the fed's desire to restrain money growth
assumin a reserve reqiremnt of 5%, if the fed sells $10 billion of bonds in the open market, the lending capacity of the banking system will eventually: a)increase by $5 billion b)decrease by $5 billion c)increase by$200 billion d)decrease by $200 billion	d)decrease by $200 billion
refer to question #20	d)all of the above
Federal Reserve Banks perform what kinds of services?	1. clearing checks between private banks 2. holding bank reserves 3. providing currency 4. providing loans
Fed's control money supply exercised by use of what three policy instruments?	1. reserve requirememts 2. discount rates 3. open market operations
required reserves formula	required reserve ratio times total deposits
excess reserves formula	total reserves minus required reserves
available lending capacity of banking system formula	excess reserves times money multiplier
a change in the reserve requirement causes a change in what:	1. excess reserves 2. the money multiplier 3. the lending capacity of the banking system
to increase the money supply the fed can do what?	1. lower reserve requirememts 2. reduce the discount rate 3. buy bonds
unused lending capacity formula	excess reserves times money multiplier
to reduce the money supply, the Fed can do what?	1. raise reserve requirements 2. increase the discount rate 3. sell bonds