Cecchetti3e_MCQuiz_Ch18_FINAL copy

Cecchetti3e_MCQuiz_Ch18_FINAL copy - Chapter 18 Monetary...

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Chapter 18 Monetary Policy: Stabilizing the Domestic Economy Multiple Choice Questions 1. The primary policy instrument of the Federal Open Market Committee (FOMC) is: A. The required reserve rate B. The discount rate C. The target federal funds rate D. The exchange rate Ans: C Difficulty: Easy Topic: The Federal Reserve’s Conventional Policy Toolbox 2. Which of the following statements is most correct? A. The FOMC sets the federal funds rate B. The discount rate is the primary policy tool of the FOMC C. The FOMC sets the target federal funds rate D. The difference between the target and actual federal funds rate is the dealer's spread Ans: C Difficulty: Easy Topic: The Federal Reserve’s Conventional Policy Toolbox 3. The market for reserves derives from the fact that: A. Reserves pay a relatively high return B. Desired reserves don't always equal actual reserves C. The Fed refuses to lend to banks D. Banks do not want excess reserves Ans: B Difficulty: Medium Topic: The Federal Reserve’s Conventional Policy Toolbox 4. Federal funds loans are: A. Secured loans between banks and the Fed B. Unsecured loans C. Collateralized loans between banks D. Guaranteed by the FDIC Ans: B Difficulty: Easy Topic: The Federal Reserve’s Conventional Policy Toolbox
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5. If the Fed entered the federal funds market as a borrower or a lender to make sure the market
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This document was uploaded on 10/26/2011 for the course FIN 320 at DePaul.

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Cecchetti3e_MCQuiz_Ch18_FINAL copy - Chapter 18 Monetary...

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