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Wk. 5 - Practice: Fiscal and Monetary Policy Quiz The discount rate is the interest _____.The interest rate that the Fed charges on loans made directly to banks is called _____.Economic investment refers to _____. If the Board of Governors of the Federal Reserve System increases the reserve requirement, this change will _____.The lending ability of commercial banks increases when the _____.Which of the monetary policy tools can alter both the level of excess reserves and the money multiplier?The reserve requirementFinancial markets pay close attention to changes in the federal funds rate because these changes _____.affect other interest rates in the economy
Which of the following is a tool of monetary policy often used by the Fed for altering the reserves of commercial banks?Open-market operationsIf the Fed sells government securities to the general public in the open market, the _____.Fed gives the securities to the public; the public pays for the securities by writing checks that when cleared will decrease commercial bank reserves at the FedTraditionally, the Fed often communicated its intentions to restrict or expand monetary policy by announcing a change in its target for the _____.federal funds rate