If the economy is inflationary the fed would most

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Chapter 25 / Exercise 34
Exploring Economics
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124.If the economy is inflationary, the Fed would mostlikely:a.increase bank reserves by raising the discount rate.b.increase bank reserves by buying government securitiesc.decrease bank reserves by lowering the discount rate.d.decrease bank reserves by selling government securities.
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Chapter 25 / Exercise 34
Exploring Economics
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e.decrease bank reserves by lowering the legal reserve requirement.ANS:D
PTS:1DIF:ChallengingNAT:BUSPROG: AnalyticTOP:How Monetary Policy Creates MoneyKEY:Bloom’s: Analysis125.If the economy is inflationary, the Fed would mostlikely:
PTS:1DIF:ChallengingNAT:BUSPROG: AnalyticTOP:How Monetary Policy Creates MoneyKEY:Bloom’s: Analysis126.The discount rate is the interest rate:
PTS:1DIF:EasyNAT:BUSPROG: AnalyticTOP:How Monetary Policy Creates MoneyKEY:Bloom’s: Comprehension127.If the Federal Reserve wants to increase the availability of money and credit, it can:
PTS:1DIF:ModerateNAT:BUSPROG: AnalyticTOP:How Monetary Policy Creates MoneyKEY:Bloom’s: Comprehension128.When the Fed lowers the discount rate, it makes it:a.cheaper for banks to borrow from each other.b.cheaper for banks to obtain additional reserves by borrowing from the Fed.c.more difficult for banks to accept deposits.d.more difficult for banks to extend loans.ANS:B
PTS:1DIF:EasyNAT:BUSPROG: AnalyticTOP:How Monetary Policy Creates MoneyKEY:Bloom’s: Comprehension129.If there is a recession, the Fed would mostlikely:
PTS:1DIF:ChallengingNAT:BUSPROG: AnalyticTOP:How Monetary Policy Creates MoneyKEY:Bloom’s: Analysis

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