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Monetary Policy

Number of questions: 29

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1) If the reserve ratio desired by banks is 0.1, then an open market Fed purchase of $10,000 will
  1. increase the money supply by $100,000
  2. increase the money supply by $5,000
  3. decrease the money supply by $100,000
  4. decrease the money supply by $10,000
Answers are locked. Please click here to buy them. 2) the required reserve ratio specifies the ratio of reserves to
  1. vault cash
  2. the total money supply
  3. loans
  4. deposits
Answers are locked. Please click here to buy them. 3) the balanced budget multiplier is less than 1, if
  1. prices are variable
  2. if the government maintains a balanced budget
  3. if G rises and T falls equally
Answers are locked. Please click here to buy them. 4) if a bank that was previously loaned up receives a deposit of $1,000 and the required reserve ratio is 0.2, then the maximum amount by which total deposits in the economy can increase is
  1. $800
  2. $75
  3. $80
  4. $25
Answers are locked. Please click here to buy them. 5) if the banking system gets $1,000 in new reserves from the Fed and the required reserve ratio is 0.2, then the maximum amount by which total deposits in the economy can increase is
  1. $5,000
  2. $4,000
  3. $2,500
  4. $80
Answers are locked. Please click here to buy them. 6) if the required reserve ratio is 0.1 and the reserve ratio that banks desire to maintain is 0.2, then the deposit multiplier is
  1. 6.67
  2. 10
  3. 8.3
  4. 5
Answers are locked. Please click here to buy them. 7) if the government borrows more money
  1. U.S. bond prices rise
  2. U.S. interest rates rise
  3. demand for U.S. government bonds rises
  4. all of the above
Answers are locked. Please click here to buy them. 8) a bank account that can be accessed by writing a check is called a
  1. demand deposit
  2. cash deposit
  3. savings deposit
  4. automatic deposit
Answers are locked. Please click here to buy them. 9) an increase in market interest rates will
  1. reduce prices of all bonds
  2. reduce prices of government bonds
  3. reduce prices of municipal bonds
  4. increase prices of all bonds
Answers are locked. Please click here to buy them. 10) the central bank of the United States is the
  1. FDIC
  2. Federal Reserve System
  3. Bank of America
  4. Bank of the United States
Answers are locked. Please click here to buy them. 11) If the minimum reserve requirement ratio is 0.2, then an open market Fed sale of $10,000 will
  1. increase the money supply by $100,000
  2. decrease the money supply by $100,000
  3. increase the money supply by $10,000
  4. decrease the money supply by $50,000
Answers are locked. Please click here to buy them. 12) suppose the balanced budget multiplier is one, then it will be less than one if
  1. savings are close to zero
  2. if prices are not constant
  3. if G rises and T falls equally
Answers are locked. Please click here to buy them. 13) if the banking system gets $1,200 in new reserves from the Fed and the required reserve ratio is 0.2, then the maximum amount by which total deposits in the economy can increase is
  1. $5,000
  2. $6,000
  3. $2,500
  4. $80
Answers are locked. Please click here to buy them. 14) if the bank that was previously loaned up receives a deposit of $1,200 and the required reserve ratio is 0.2, then the maximum amount of this $1,200 that the bank can lend is
  1. $800
  2. $960
  3. $80
  4. $240
Answers are locked. Please click here to buy them. 15) if the required reserve ratio is 0.1 and the reserve ratio that banks desire to maintain is 0.25, then the deposit multiplier is
  1. 6.67
  2. 10
  3. 4
  4. 5
Answers are locked. Please click here to buy them. 16) if inflation is strong, then the right Fed policy is to
  1. sell government bonds
  2. lower U.S. interest rates
  3. both a and b
Answers are locked. Please click here to buy them. 17) if the wage gap rises,
  1. debt must rise to preserve jobs
  2. profits go up
  3. all of the above
  4. both a and b
Answers are locked. Please click here to buy them. 18) Monetary base includes
  1. cash held by the people
  2. cash held by the federal government
  3. cash held by banks
  4. all of the above
Answers are locked. Please click here to buy them. 19) If the U.S. trade deficit rises, and foreign investment rises as a result then
  1. U.S. bond prices rise
  2. U.S. interest rates fall
  3. demand for U.S. government bonds rises
  4. all of the above
Answers are locked. Please click here to buy them. 20) M 1 includes
  1. cash held by the people
  2. cash held by the federal government
  3. cash held by the government of Dallas
  4. All of the above
Answers are locked. Please click here to buy them. 21) If the banking system gets $1500 in new reserves from the Fed & the required-reserve ratio is 0.25, then the maximum amount by which total loans in the economy can increase is
  1. $6,000
  2. $4,500
  3. $4,800
Answers are locked. Please click here to buy them. 22) If a bank that was previously loaned up receives a deposit of $1000, its own reserve requirement ratio is 0.3 and the required-reserve ratio is 0.25, then the maximum amount of this $1,000 that this bank will lend is
  1. $800
  2. $750
  3. $700
  4. $200
Answers are locked. Please click here to buy them. 23) If the banking system gets $1000 in new reserves from the Fed and the required-reserve ratio is 0.25, then the maximum amount by which total deposits in the economy can increase is
  1. $6000
  2. $5000
  3. 2500
  4. 4000
Answers are locked. Please click here to buy them. 24) If the required reserve ratio is 0.1 and the reserve ratio that banks desire to maintain is 0.2, then the deposit multiplier is
  1. 3
  2. 10
  3. 10/3
  4. 5
Answers are locked. Please click here to buy them. 25) If inflation is strong, then the right Fed policy is to
  1. sell government bonds
  2. raise US interest rates
  3. both a and b
Answers are locked. Please click here to buy them. 26) A bank account that can be accessed by writing a check is called
  1. demand deposit
  2. cash deposit
  3. savings deposit
  4. automatic deposit
Answers are locked. Please click here to buy them. 27) An increase in market interest rates will
  1. reduce prices of all bonds
  2. reduce prices of government bonds
  3. reduce prices of municipal bonds
  4. increase prices of all bonds
Answers are locked. Please click here to buy them. 28) The central bank of the United States is the.
  1. FDIC
  2. Federal Reserve System
  3. c Bank of America .
  4. Bank of the United States
Answers are locked. Please click here to buy them. 29) suppose the balance budget multiplier is one, the it will be greater than one if
  1. saving are close to zero
  2. if prices are constant
  3. none of the above
Answers are locked. Please click here to buy them.

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