20. Which group within the Federal ReserveSystem meets to determine monetary pol
ID: 1210483 • Letter: 2
Question
20. Which group within the Federal ReserveSystem meets to determine monetary policy?
A. the Board of Governors.
B. the FOMC.
C. the regional Federal Reserve Bank presidents.
D. the Central Bank Policy Commission.
21. Which of the following statements regarding the Federal Open Market Committee is correct?
A. Only the five voting regional Fed presidents attend the meetings.
B. All regional Fed presidents attend and vote at the meetings.
C. All regional Fed presidents attend the meetings, but only five get to vote.
D. Regional fed presidents may neither attend not vote in the meetings.
22. All Fed purchases and sales of
A. corporate stocks and bonds are conducted at the New York Fed’s trading desk.
B. government bonds are conducted at the New York Fed’s trading desk.
C. real estate and other real assets are conducted bythe FOMC.
D.All of the above are correct.
23.
The Fed has the power to increase or decrease money supply through the Decisions of
A. the Board of Governors.
B. the FOMC.
C. the regional Federal Reserve Bank presidents.
D.the U.S. Treasury.
24. When conducting an open-market purchase, the Fed
A. buys government bonds, and in so doing increases the money supply.
B. buys government bonds, and in so doing decreasesthe money supply.
C. sells government bonds, and in so doing increases the money supply.
D.sells government bonds, and in so doing decreasesthe money supply.
25. If the FOMC(Federal Open Market Committee)decides to decrease money supply, it will
A. sell government bonds.
B. purchase corporate bonds.
C. purchase government bonds.
D.reduce interest rates.
26. In a fractional-reserve banking system, a bank
A. does not make loans.
B. does not accept deposits.
C. keeps only a fraction of its deposits in reserve.
D.None of the above is correct.
27. If a bank has a reserve ratio of 8%, then
A. government regulation requires the bank to use at least 8% of its deposits to make loans.
B. the bank’s ratio of loans to deposits is 8%.
C. the bank keeps 8% of its deposits as reserves and loans out the rest.
D.the bank keeps 8% of its assets as reserves and loans out the rest.
28. If the reserve ratio is 4%, then the money multiplier is
A. 24.
B. 25.
C. 26
D.4.
29. If the reserve ratio is 8%, then an additional $800 of reserves can increase money supply by as much as
A. $6,400.
B. $8,000.
C. $12,500.
D.$10,000.
30. Which tool of monetary policy does the Federal Reserve use most often?
A. term auctions
B. open-market operations
C. changes in reserve requirements
D.changes in the discount rate
Explanation / Answer
20. Which group within the Federal ReserveSystem meets to determine monetary policy? B. the FOMC.
21. Regional fed presidents may neither attend not vote in the meetings.
22. government bonds are conducted at the New York Fed’s trading desk.
23. The Fed has the power to increase or decrease money supply through the Decisions of: the FOMC.
24. When conducting an open-market purchase, the Fed: A. buys government bonds, and in so doing increases the money supply
25. A. sell government bonds.
28. If the reserve ratio is 4%, then the money multiplier is: 25.
30.Which tool of monetary policy does the Federal Reserve use most often? changes in the discount rate
29. D.$10,000.
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