2.The money multipliers tend to fall during a financial panic due to a rise in:

Question

2.The money multipliers tend to fall during a financial panic due to a rise in:

Question options:

the currency deposit ratio.

lending.

level of money market deposit mutual funds.

Question 3

0 / 1 point

If the Fed buys $100 in securities and the reserve requirement is 10%, according to the simple formula for the money multiplier, the money supply

Question options:

falls by $1000.

rises by $100.

rises by $1000.

Question 4

0 / 1 point

The goal of quantitative easing is to _____.

Question options:

decrease the prices of (increase the yields of) Treasury bonds in order to control inflation

increase the prices of (decrease the yields of) Treasury bonds and increase the money supply directly

decrease the prices of (increase the yields of) Treasury bonds and decrease the money supply directly

Question 5

0 / 1 point

Which of the following is part of the money supply but not high-powered money?

Question options:

currency

checkable deposits

gold

Question 6

0 / 1 point

The ECB conducts open market operations through purchases and sales of

Question options:

repos.

commercial paper.

bonds.

Question 7

0 / 1 point

During a financial panic, the money supply _____, ceteris paribus.

Question options:

falls

stays the same

moves with interest rates

Question 11

0 / 1 point

Which of the following is not a program developed by the Fed during the 2008 financial crisis?

Question options:

PDFC

CPFF

TRAPS

Question 12

0 / 1 point

If the required reserve ratio is 0.1, the level of deposits is $1,000, the level of currency held by the public is $200 and the level of excess reserves is $300, then m1 is

Question options:

0

2

3

Question 14

0 / 1 point

Which of the following are goals of the Federal Reserve?

Question options:

low employment

low, stable inflation

low exchange rates

Question 15

0 / 1 point

When the Fed makes an open market sale of bonds the _____ of reserves shifts to the

Question options:

demand, left.

supply, left.

supply, right.

Question 16

0 / 1 point

If the required reserve ratio is 0.2, the level of deposits is $1,000, the level of currency held by the public is $100, the level of excess reserves is $100, the level of money market funds is $1,000 and the level of time deposits is $2,000, then m2 is ____.

Question options:

3.5

8.5

20.5

Question 17

0 / 1 point

Which tool does the Fed use most commonly to control the money supply?

Question options:

changing the reserve requirement

open market operations

none of the above

Question 19

0 / 1 point

A difference between m1 and m2 is that m2 takes ____ into account.

Question options:

time deposits

excess reserves

coins and notes

Question 20

0 / 1 point

Which of the following is NOT a function of the Federal Reserve?

Question options:

conduct economic research

regulate brokers and insurance companies

evaluate bank mergers

please do all the questions, not just part of it. thanks

the currency deposit ratio.

lending.

level of money market deposit mutual funds.

Question 3

0 / 1 point

Explanation / Answer

Solution for question 2

There is inverse relationship between currency deposit ratio and money multiplier during financial distress. So, when currency deposit ratio rises during financial distress then money multiplier tend to fall.

Hence, Option (A) is correct answer.

Solution for question 3

If the Fed buys $100 in securities and the reserve requirement is 10%, according to the simple formula for the money multiplier, the money supply rise because federal government increase the money supply in the economy.

Total raise in money supply = $100 / 10%

                                             = $1,000

So, money supply rise by $1,000.

Hence, option (C) is correct answer.

Solution for question 4

Federal Reserve change the interest rate through by using monetary policy or Quantitative Easing which helps the economy in growth. The primary goal of Quantitative Easing is increase the moneys supply in economy. So goal of Quantitative Easing is increase the prices of (decrease the yields of) Treasury bonds and increase the money supply directly.

Hence, Option (B) is correct answer.

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