6. Other things beingâ equal, the M1 money supply varies in the same direction as the magnitude of
A.âk, theâ currency/DDO ratio
B.rrâ , the average required reserve ratio
C.âre, theâ banksâ desired excess reserves ratio
D.none of the above
7. Suppose that discounts and advancesâ (Fed loans of reserves toâ banks) increaseâ $200 million, Treasury deposits at the Fed increaseâ $500 million, and the Fed buysâ $700 million of Treasury bills from dealers. The net effect of these 3 transactions is to
A.increase bank reserves byâ $1,000 million
B.increase bank reserves byâ $1,400 million
C.increase bank reserves byâ $400 billion
D.leave bank reserves unchanged
8. Other things being equalâ (assuming the Fed takes noâ action), a sharp increase in interest rates caused by market forces in a strong economic recovery is likely to
A.increaseâ k, the currencyâ ratio, thus reducing the money supply
B.reduce the monetaryâ base, thus increasing the money supply
C.reduce reâ , the desired excess reserveâ ratio, thus increasing the money supply
D.do none of the above
9. The Federal Reserve is able to control most accurately in the short run
A.âB, the monetary base
B.âk, the currency ratio
C.reâ , theâ bankâs desired excess reserve ratio
D.M1, the U.S. money supply
10. The Federal Reserve implementedâ âoperation twistâ inâ 2011-2012 by
A.simultaneously buyingâ long-term and sellingâ short-term Treasury securities
B.heavy purchases of bothâ long-term andâ short-term Treasury securities
C.lowering the federal funds rate target and buyingâ long-term bonds
D.purchasingâ short-term securities and buyingâ mortgage-backed bonds
11. Duringâ 2008-2014, Fed Chairman Ben Bernanke drew a lot of criticism for
A.maintainingâ short-term interest rates at extremely low levels for an extended period
B.bailing out large banks that would otherwise have failed
C.conducting the quantitative easing policy for about six years
D.all of the above
6. Other things beingâ equal, the M1 money supply varies in the same direction as the magnitude of
A.âk, theâ currency/DDO ratio
B.rrâ , the average required reserve ratio
C.âre, theâ banksâ desired excess reserves ratio
D.none of the above
7. Suppose that discounts and advancesâ (Fed loans of reserves toâ banks) increaseâ $200 million, Treasury deposits at the Fed increaseâ $500 million, and the Fed buysâ $700 million of Treasury bills from dealers. The net effect of these 3 transactions is to
A.increase bank reserves byâ $1,000 million
B.increase bank reserves byâ $1,400 million
C.increase bank reserves byâ $400 billion
D.leave bank reserves unchanged
8. Other things being equalâ (assuming the Fed takes noâ action), a sharp increase in interest rates caused by market forces in a strong economic recovery is likely to
A.increaseâ k, the currencyâ ratio, thus reducing the money supply
B.reduce the monetaryâ base, thus increasing the money supply
C.reduce reâ , the desired excess reserveâ ratio, thus increasing the money supply
D.do none of the above
9. The Federal Reserve is able to control most accurately in the short run
A.âB, the monetary base
B.âk, the currency ratio
C.reâ , theâ bankâs desired excess reserve ratio
D.M1, the U.S. money supply
10. The Federal Reserve implementedâ âoperation twistâ inâ 2011-2012 by
A.simultaneously buyingâ long-term and sellingâ short-term Treasury securities
B.heavy purchases of bothâ long-term andâ short-term Treasury securities
C.lowering the federal funds rate target and buyingâ long-term bonds
D.purchasingâ short-term securities and buyingâ mortgage-backed bonds
11. Duringâ 2008-2014, Fed Chairman Ben Bernanke drew a lot of criticism for
A.maintainingâ short-term interest rates at extremely low levels for an extended period
B.bailing out large banks that would otherwise have failed
C.conducting the quantitative easing policy for about six years
D.all of the above
