1/ If The Economy Is Experiencing An Inflationary Gdp Gap, ___ Monetary Policy Might Be Used To ____ Aggregate?

Answer
a. expansionary; decrease; decrease
b. expansionary; increase; decrease
c. contractionary; decrease; decrease
d. contractionary; decrease; increase
e. contractionary; increase; increase
Question 2
One of the main purposes of the Fed’s reserve requirements is to
Answer
a. provide cash flow for business firms.
b. provide sources for foreign exchange.
c. provide sources for foreign investments.
d. regulate the lending ability of member banks.
Question 3
Required reserves are
Answer
a. equal to total reserves minus excess reserves.
b. equal to total reserves minus checkable deposits.
c. always less than total reserves.
d. determined by multiplying the level of checkable deposits times the discount rate.
e. always equal to outstanding loans times the reserve requirement ratio.
Question 4
The Federal Reserve System controls the money supply primarily through
Answer
a. open market operations.
b. accounting operations.
c. reserve requirement changes.
d. jawboning.
e. changing the discount rate.
Question 5
Which of the following will be an effect of the Fed selling open market securities?
Answer
a. Business investment will be discouraged.
b. Household savings will be discouraged.
c. Household consumption will be encouraged.
d. None of the choices are correct.

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