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Economics of Money, Banking and Financial Markets, The (9th Edition)

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The Economics of Money, Banking, and Financial Markets, 9e (Mishkin) Chapter 15 Tools for Monetary Policy 15.1 The Market for Reserve and the Federal Funds Rate 1) The Fed uses three policy tools to manipulate the money supply: ________, which affect reserves and the monetary base; changes in ________, which affect the monetary base; and changes in ________, which affect the money multiplier. A) open market operations; borrowed reserves; margin requirements B) open market operations; borrowed reserves; reserve requirements C) borrowed reserves; open market operations; margin requirements D) borrowed reserves; open market operations; reserve requirements Ques Status: Previous Edition 2) The Fed uses three policy tools to manipulate the money supply: open market operations, which affect the ________; changes in borrowed reserves, which affect the ________; and changes in reserve requirements, which affect the ________. A) money multiplier; monetary base; monetary base B) monetary base; money multiplier; monetary base C) monetary base; monetary base; money multiplier D) money multiplier; money multiplier; monetary base Ques Status: Previous Edition 3) The interest rate charged on overnight loans of reserves between banks is the A) prime rate. B) discount rate. C) federal funds rate. D) Treasury bill rate. Ques Status: Previous Edition 4) The primary indicator of the Fed's stance on monetary policy is A) the discount rate. B) the federal funds rate. C) the growth rate of the monetary base. D) the growth rate of M2. Ques Status: Previous Edition 5) The quantity of reserves demanded equals A) required reserves plus borrowed reserves. B) excess reserves plus borrowed reserves. C) required reserves plus excess reserves. D) total reserves minus excess reserves. Ques Status: Previous Edition 6) Everything else held constant, when the federal funds rate is ________ the interest rate paid on reserves, the quantity of reserves demanded rises when the federal funds rate ________. A) above, rises B) above, falls 1
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C) below, rises D) below, falls Ques Status: Revised 7) The opportunity cost of holding excess reserves is the federal funds rate ________. A) minus the discount rate B) plus the discount rate C) plus the interest rate paid on excess reserves D) minus the interest rate paid on excess reserves Ques Status: Revised 8) In the market for reserves, when the federal funds rate is above the interest rate paid on excess reserves, the demand curve for reserves is ________. A) vertical B) horizontal C) positively sloped D) negatively sloped Ques Status: New 9) When the federal funds rate equals the interest rate paid on excess reserves ________. A) the supply curve of reserves is vertical B) the supply curve of reserves is horizontal C) the demand curve for reserves is vertical D) the demand curve for reserves is horizontal Ques Status: New 10) Which of the following is NOT an argument for the Federal Reserve paying interest on excess reserve holdings? A) Paying interest reduces the effective tax on deposits.
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new chap15 - The Economics of Money Banking and Financial...

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