Tb17 - Chapter 17 Tools of Monetary Policy T Multiple Choice 1 The Fed uses three policy tools to manipulate the money supply which affect reserves

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Chapter 17 Tools of Monetary Policy T Multiple Choice 1) The Fed uses three policy tools to manipulate the money supply: _____, which affect reserves and the monetary base; changes in _____, which affect reserves and the monetary base by influencing the quantity of discount loans; and changes in _____, which affect the money multiplier. (a) open market operations; the discount rate; margin requirements (b) open market operations; the discount rate; reserve requirements (c) the discount rate; open market operations; margin requirements (d) the discount rate; open market operations; reserve requirements Answer: B Question Status: Previous Edition 2) The Fed uses three policy tools to manipulate the money supply: open market operations, which affect the _____; changes in the discount rate, which affect the _____ by influencing the quantity of discount loans; 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 Answer: C Question 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. (e) rediscount rate. Answer: C Question Status: New
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Tools of Monetary Policy 587 4) The federal funds rate is the (a) interest rate on overnight loans of reserves between banks. (b) interest rate on government debt. (c) interest rate the government pays when borrowing from banks. (d) all of the above. (e) both (a) and (c) of the above. Answer: A Question Status: New 5) 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. (e) the Treasury bill rate. Answer: B Question Status: New 6) The federal funds rate is important because it is (a) the primary indicator of the Fed’s stance on monetary policy. (b) the interest rate paid on federal debt. (c) the interest rate charged on government loans. (d) all of the above. (e) both (a) and (c) of the above. Answer: A Question Status: New 7) The quantity of reserves demanded equals (a) required reserves plus discount loans. (b) excess reserves plus discount loans. (c) required reserves plus excess reserves. (d) total reserves minus excess reserves. (e) total reserves minus borrowed reserves. Answer: C Question Status: New 8) The quantity of reserves demanded rises when the (a) discount rate rises. (b) discount rate falls. (c) federal funds rate rises. (d) federal funds rate falls. (e) discount rate equals the federal funds rate.
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This note was uploaded on 10/17/2011 for the course ECON 317 taught by Professor Guidry during the Spring '11 term at Nicholls State.

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Tb17 - Chapter 17 Tools of Monetary Policy T Multiple Choice 1 The Fed uses three policy tools to manipulate the money supply which affect reserves

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