Reading check5 - Question 1 The federal funds market is the...

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Question 1 The federal funds market is the market for a. loans from the federal government b. loans for the federal reserve c. non financial corporations (e.g. GM, IBM) borrowing and lending. d. interbank overnight lending/borrowing* Question 2 The portion of the money supply controlled by a central bank is a. currency. b. deposits. c. reserves. d. the monetary base* Question 3 If the Federal Reserve purchases $1 million in government securities in the open market, with a 25 percent required reserve ratio on deposits, the maximum increase in deposits would be: a. $ 4 million* b. $-4 million c. $ 40 million d. $ 25 million Question 4 Interpret using IS-LM model, a Federal Reserve sale of government securities in the open market will a. raise the level of income and lower the interest rate. b. raise the level of income and raise the interest rate. c. lower the level of income and the interest rate. d.
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This note was uploaded on 06/16/2011 for the course ECON 420 taught by Professor Na during the Summer '11 term at University of North Carolina School of the Arts.

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Reading check5 - Question 1 The federal funds market is the...

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