1) An expansionary monetary policy action by the FED is which of the following?
ID: 1120556 • Letter: 1
Question
1)
An expansionary monetary policy action by the FED is which of the following?
Select one:
a. the sales of government bonds
b. increasing the required reserve ratio
c. increasing the discount rate
d. buying government bonds
2)
If all incomes rise by 20 percent, which of the following are true?
Select one:
a. Poverty would fall but inequality would also fall
b. Poverty would rise but inequality would fall
c. Both poverty and inequality would rise
d. Poverty would fall and inequality would stay the same
3)
The administrative lag in monetary policy is _________ the administrative lag in fiscal policy.
Select one:
a. longer than
b. the same as
c. shorter than
d. sometimes more and sometimes less than
4)
To determine the potential increase in the money supply by the banking system for a given amount of excess reserves, which of the following must be known?
Select one:
a. checking deposits of the banking system
b. coin and currency held by the nonbanking public
c. the required reserve ratio
d. the discount rate
5)
In a commercial bank's T-account (that is, its balance sheet), reserves and loans are recorded as:
Select one:
a. government bonds
b. profits.
c. assets.
d. liabilities.
6)
An economy starts with $10,000 in currency. All of this currency is deposited in a single commercial bank. The required reserve ratio is 20 percent. The bank's required dollar reserves are
Select one:
a. $8,000.
b. $2,000
c. $10,000.
d. $0.
Explanation / Answer
1) option (d) as the money supply will be released to public with buying of bonds.
2) Option (d) because poverty illfall with the rise in income for all but the inequality remain.
3) Option (c) shorter because once money supply is controlled, it gets implemented easil than the fiscal policy.
4) Option (a) checking deposits
5) Option (c) for them all are considered as assets
6) Option (b) $2000 as reserve ratio is 20%
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