Quiz - Chapters 25 and 31 (Practice)

Quiz - Chapters 25 and 31 (Practice) - Maximum number of...

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Unformatted text preview: Maximum number of choices allowed is {0}. Points Awarded 240.00 Points Missed 60.00 Percentage 80.0% 1. The figure above shows the market for bank reserves in Futureland. If the Bank of Futureland undertakes an open market sale of government securities that changes the quantity of reserves by $100 billion, then the federal funds rate will ________. A) rise to 8 percent a year B) remain at 6 percent a year C) fall to 4 percent a year D) None of the above answers is correct. Points Earned: 0.0/10.0 Correct Answer(s): A 2. Which of the following bodies are responsible for the conduct of monetary policy? A) the Federal Reserve System B) Congress C) the President D) Congress and the President, jointly Points Earned: 10.0/10.0 Correct Answer(s): A 3. If the Fed carries out an open market operation and buys U.S. government securities, the federal funds rate ________ and the quantity of reserves ________. A) falls; increases B) rises; increases C) falls; decreases D) rises; decreases Points Earned: 10.0/10.0 Correct Answer(s): A 4. If the Fed buys U.S. government securities from banks, the federal funds rate ________ and banks' reserves at the Fed ________. A) falls; increase B) rises; increase C) falls; decrease D) rises; decrease Points Earned: 10.0/10.0 Correct Answer(s): A 5. If the Fed buys U.S. government securities from banks, the A) federal funds rate rises. B) federal funds rate falls. C) quantity of money decreases. D) demand for money decreases. Points Earned: 0.0/10.0 Correct Answer(s): B 6. Inflation targets are usually specified as A) a range for the inflation rate. B) a specific inflation rate target, for example, 1 percent. C) deviations from the inflation rate. D) the short-term interest rate rate minus 2 percent. Points Earned: 0.0/10.0 Correct Answer(s): A 7. Equilibrium in the market for bank reserves determines the A) federal funds rate. B) inflation rate. C) 30-year Treasury bond rate. D) exchange rate. Points Earned: 10.0/10.0 Correct Answer(s): A 8. The Taylor rule is an example of A) an instrument rule focused on the federal funds rate. B) a targeting rule focused on the monetary base. C) a targeting rule focused on the federal funds rate. D) an instrument rule focused on the monetary base. Points Earned: 0.0/10.0 Correct Answer(s): A 9. The higher the federal funds rate, the ________ the opportunity cost of holding reserves, which ________ the incentive to economize on reserves. A) higher; increases B) higher; decreases C) lower; increases D) lower; decreases Points Earned: 10.0/10.0 Correct Answer(s): A 10. The output gap is the A) percentage deviation of real GDP from potential GDP. B) difference between actual inflation and core inflation....
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This note was uploaded on 09/13/2011 for the course ECON 206 taught by Professor Parkin during the Spring '11 term at Buena Vista.

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Quiz - Chapters 25 and 31 (Practice) - Maximum number of...

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