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PT Ch04 - Exam Name MULTIPLE CHOICE Choose the one...

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Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The Fed often employs variants of simple open market purchases and sales, and these are called ________. 1) A) open market operations B) the repurchase agreement (or repo) and the reverse repo. C) matched sale or a matched sale - purchase transaction D) the trading agreements of the Federal Reserve Bank of New York. 2) ________ is one in which foreign transactors — of either goods or financial assets—play a negligible role. 2) A) A domestic economy B) A closed economy C) A growing D) An open economy 3) Which of the below statements is FALSE? 3) 4) The ratio of the money supply to the economy's income (as reflected by the gross national product or some similar measure) is known as the ________ in circulation. 4) 5) The Fed provides reserves to banks and also requires banks to hold, as reserves, a portion of the deposits that the public holds at the banks. The banks, playing their key role in the money multiplier, lend the remainder of the deposits (or most of it) to borrowers at an interest rate that exceeds that of demand deposits. For any one bank, the remainder equals deposits less required reserves, which can be expressed as deposits times ________. 5) 6) A bank borrowing from the Fed is said to use the ________, and these loans are backed by the bank's collateral. The rate of interest on these loans is the ________. 6) A) open market operations; discount rate B) Fed window; discount rate C) discount window; LIBOR rate D) discount window; repo rate 1
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