ch08 - Financial Markets and Institutions 6e(Mishkin/Eakins...

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Unformatted text preview: Financial Markets and Institutions, 6e (Mishkin/Eakins) Chapter 8 1 Conduct of Monetary Policy: Tools, Goals, Strategy, and Tactics 8.1 Mul tiple Cho ice 1) Assets on the Fed's balance sheet include A) government securities and currency in circulation. B) discount loans and reserves. C) government securities and discount loans. D) currency in circulation and reserves. Answer: C Question Status: Previous Edition 2) The monetary base consists of A) currency in circulation and reserves. B) government securities held by the Fed and discount loans. C) government securities held by the Fed and currency in circulation. D) discount loans and reserves. Answer: A Question Status: Previous Edition 3) An open market purchase of securities by the Fed will A) increase assets of the nonbank public and increase assets of the banking system. B) decrease assets of the nonbank public and increase assets of the Fed. C) decrease assets of the banking system and increase assets of the Fed. D) have no effect on assets of the nonbank public but increase assets of the Fed. E) increase assets of the banking system and decrease assets of the Fed. Answer: D Question Status: Previous Edition 4) An open market sale of securities by the Fed will A) decrease liabilities of the Fed and not affect assets of the banking system. B) decrease assets of the nonbank public and decrease assets of the Fed. C) increase liabilities of the banking system and increase assets of the Fed. D) have no effect on assets of the nonbank public but increase liabilities of the Fed. E) decrease assets of the banking system and increase assets of the Fed. Answer: A Question Status: Previous Edition 5) If the Federal Reserve wants to expand reserves in the banking system, it will A) purchase government securities. B) raise the discount rate. C) sell government securities. D) raise reserve requirements. Answer: A Question Status: Previous Edition 6) If the Federal Reserve wants to lower the monetary base and the money supply, it will A) increase bank reserves. B) lower the discount rate. C) sell government securities. D) lower reserve requirements. Answer: C Question Status: Previous Edition 7) A discount loan by the Fed to a bank causes a(n) _________ in reserves in the banking system and a(n) _________ in the monetary base. A) increase; decrease B) decrease; decrease C) decrease; increase D) increase; increase Answer: D Question Status: Previous Edition 8) When a...
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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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ch08 - Financial Markets and Institutions 6e(Mishkin/Eakins...

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