22: The rate at which commercial banks can borrow from the Federal Reserve is kn

Question

22: The rate at which commercial banks can borrow from the Federal Reserve is known as the a. Federal funds rate b. prime rate c. discount rate d. market rate 25. The principal method by which the Fed influences the money supply is a. b. c. Through the printing of money Through the printing of U.S. Savings bonds Through taxation d. through open market operations 24: when an individual buys a bond sold by the Fed, a. b. c. d. The money supply increases The money supply decreases The money supply stays the same The money supply could either rise or fall; it depends on whether she spends the money or not 2 An open market purchase by the Fed from a bank a. Increases bank reserves b. Decreases bank reserves Increases the bank's demand deposits immediately c. d. Reduces the bank's lending power 26. A change in the discount rate tends to cause a. The reserve requirement to change in the same direction b. The reserve requirement to change in the opposite direction c. The money supply to change in the opposite direction d. The money supply to change in the same direction 27. A decrease in required reserves would a. b. c. d. Increase the money multiplier and spur monetary growth Decrease the money multiplier and spur monetary growth Increase the money multiplier and reduce monetary growth Decrease the money multiplier and reduce monetary growth

Explanation / Answer

13. Ans: discount rate

14. Ans: through open market operation

15. Ans: The money supply decreases

16. Ans: Increases bank reserves

17. Ans: The money supply to change in opposit direction

18. Ans: Increase the money multiplier and spur monetary growth

Explanation:

Money multiplier = 1 / RR. So, when RR decreases, money multiplier increases.

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