Finalquiz Logo

Q&A Hero

  • Home
  • Plans
  • Login
  • Register
Finalquiz Logo
  • Home
  • Plans
  • Login
  • Register

Home » Banking » Page 99

Banking

Q: The Fed can implement open market operations A) more rapidly than changes in reserve requirements, but less rapidly than changes in the discount rate. B) more rapidly than changes in the discount rate, but less rapidly than changes in reserve requirements. C) less rapidly than either changes in the discount rate or changes in reserve requirements. D) more rapidly than either changes in the discount rate or changes in reserve requirements.

Q: All of the following statements about secondary credit are true EXCEPT A) they are temporary, short-term loans to satisfy seasonal requirements. B) the secondary credit interest rate is set above the primary credit rate. C) it is intended for banks not eligible for primary credit. D) borrowers of secondary credit are less financially healthy.

Q: Taylor's rule implies that monetary policy should have been easier than the Fed's actual policy in thea. 1950sb. 1960s c. 1970s d. 1980s

Q: In inflation targeting, the range that represents the goal for the inflation rate is known as the a. target band.b. optimal range.c. central tendency. d. ultimate goal.

Q: Open market operations A) lack flexibility because only very small purchases or sales may be carried out in any given month. B) lack flexibility because open market purchases cannot easily be offset by subsequent open market sales. C) are more flexible than other policy tools. D) may be carried out only on the third Friday of each month.

Q: If the Fed follows the Taylor rule and actual inflation is below the inflation target set by the Fed,a. the Fed should reduce the nominal federal funds rate.b. the Fed should reduce the supply of money.c. the Fed should charge a higher tax rate.d. the Fed should spend lesser money.

Q: A system in which the central bank attempts to achieve a certain rate of change in the overall price level within some period is referred to asa. disinflation equilibrium. b. deflation.c. inflation targeting.d. rational expectations trapping.

Q: Which of the following statements is correct? A) The volume of open market operations is determined jointly by the actions of the public, banks, and the Fed. B) The volume of open market operations is determined jointly by the actions of banks and the Fed. C) The volume of open market operations is determined jointly by the actions of the public and the Fed. D) The volume of open market operations is determined solely by the Fed.

Q: Suppose the Fed follows the Taylor rule. Which of the following is likely to happen if the Fed overestimates potentialoutput?a. The inflation rate will rise.b. The federal funds rate will fall.c. The money supply will decrease.d. The income tax rates will increase.

Q: Suppose the federal funds rate is 6 percent. If the output gap increases by 2 percentage points and the weight on output gap is 0.6, by how much should the federal funds rate increase according to the Taylor rule if all other variables remain unchanged?a. It should increase by 0.4 percentage points. b. It should increase by 0.6 percentage points. c. It should increase by 2 percentage points.d. It should increase by 1.2 percentage points.

Q: If the FOMC's directive indicates a change in monetary policy, the account manager at the Fed's Open Market Trading Desk must A) design dynamic open market operations. B) design defensive open market operations. C) seek approval of the change from the Secretary of the Treasury. D) seek approval of the change from a majority of the presidents of the Federal Reserve district banks.

Q: Suppose the economy is thought to be 1 percent below potential (i.e., the output gap is −1 percent), when potential output grows 4 percent per year. Suppose the Fed is following the Taylor rule, with an inflation rate of 4 percent over the past year. The equilibrium real fed funds rate is 3 percent and the weights on the output gap and inflation gap are 0.5 each. The federal funds rate is 8.5 percent. What is the inflation target?a. 0 percent b. 1 percent c. 2 percent d. 3 percent

Q: In a matched sale-purchase transaction, the Fed A) buys securities from a dealer and the dealer agrees to buy them back. B) sells securities to a dealer and the dealer agrees to sell them back. C) buys securities from one dealer and sells the same dollar amount of securities to another dealer. D) sells securities to one dealer and buys the same dollar amount of securities from another dealer.

Q: When the staff of the account manager at the Fed's Open Market Trading Desk analyzes forecasts on Treasury deposits and information on the timing of future Treasury sales of securities, what agency does it interact with? A) The Securities and Exchange Commission B) The Treasury's Office of Government Finance C) The Treasury's Office of Federal Reserve Relations D) The Federal Deposit Insurance Corporation

Q: Suppose the economy is thought to be 5 percent below potential (i.e., the output gap is −5 percent), when potential output grows 3 percent per year. Suppose the Fed is following the Taylor rule, with an inflation rate of 6 percent over the past year. The equilibrium real fed funds rate is 3 percent and the weights on the output gap and inflation gap are 0.5 each. The inflation target is 1 percent. What should the federal funds rate be?a. 4 percent b. 6 percent c. 8 percent d. 9 percent

Q: A matched sale-purchase transaction is also known as a A) reverse repo. B) discount loan. C) put option. D) federal funds loan.

Q: Which of the following statements is correct? A) Dynamic open market operations are carried out to offset fluctuations in the monetary base. B) Defensive open market operations are carried out to change monetary policy. C) The volume of defensive open market operations is much greater than the volume of dynamic open market operations. D) Defensive open market operations are usually carried out through outright purchases or sales.

Q: Suppose the economy is thought to be 1 percent below its potential output (i.e., the output gap is −1 percent). The potential output is growing at 4% a year. Suppose the Fed is following the Taylor rule, with an inflation rate of 4 percent over the past year. The equilibrium real fed funds rate is 3 percent, the weight on the output gap is 0.75 and the weigh on the inflation gap is 0.25. The inflation target is 1 percent. What should the federal funds rate be?a. 7 percentb. 8 percentc. 9 percentd. 10 percent

Q: A Federal Reserve repurchase agreement involves A) an agreement by a bank to repay a discount loan on a specific day. B) an agreement by a dealer to buy back securities she has sold to the Fed. C) an agreement between the Fed and the Treasury for the Fed to purchase a specified amount of Treasury securities. D) an agreement by a commercial bank to make a loan to another bank in the federal funds market.

Q: Defensive open market transactions A) are aimed at achieving changes in monetary policy. B) are used much less frequently than dynamic open market transactions. C) are used to offset disturbances to the supply or demand for reserves. D) make it easy to deduce the Fed's intentions for monetary policy.

Q: Which equation best represents the Taylor rule?a. i=r*+πT+{w1× [(Y−Y*)/Y*] × 100} + [w2× (π −πT)]b. i=r*+π +{w1× [(Y−Y*)/Y*] × 100} + [w2× (π − πT)]c. i=r+πT+{w1× [(Y−Y*)/Y*] × 100} + [w2× (π −πT)]d. i=r+π +{w1× [(Y−Y*)/Y*] × 100} + (w2× π)

Q: Suppose the Fed has set the federal funds rate at 4.5 percent using the Taylor rule. If the inflation rate increases by1 percentage point and the weight on inflation gap is 0.5, all other variables remain unchanged, the federal funds rate shoulda. decrease to 3.5 percent. b. decrease to 4 percent.c. increase to 5.5 percent. d. increase to 5 percent.

Q: If the account manager does NOT use a Federal Reserve reverse repurchase agreement or a matched sale-purchase transaction in carrying out open market operations, he will use A) an outright purchase or sale. B) a limited-duration purchase or sale. C) an indirect purchase or sale. D) a reverse duration purchase or sale.

Q: Dynamic open market operations A) are aimed at achieving changes in monetary policy. B) are used much more frequently than defensive open market transactions. C) are used to offset disturbances to the monetary base. D) make it easy to deduce the Fed's intentions for monetary policy.

Q: Which terms in the equation for Taylor rule can be influenced by the government through monetary policy?a. Inflation gap and interest-rate spreadb. Unemployment gap and interest-rate spreadc. Interest-rate spread and unemployment gap d. Output gap and inflation gap

Q: Suppose the economy is thought to be 1 percent below potential (i.e., the output gap is −1 percent), when potential output grows 4 percent per year. Suppose the Fed is following the Taylor rule, with an inflation rate of 4 percent over the past year. The equilibrium real federal funds rate is 3 percent and the weights on the output gap and inflation gap are 0.5 each. The inflation target is 1 percent. What should the federal funds rate be?a. 4 percentb. 6 percentc. 8 percentd. 12 percent

Q: If the account manager finds that the current level of bank reserves is greater than the desired level indicated in the most recent directive from the FOMC, he will A) order banks to reduce their reserves. B) order banks to raise their interest rates in an attempt to get them to loan out more of their reserves. C) conduct an open market purchase. D) conduct an open market sale.

Q: Taylor originally picked as the weight on the output gap and as the weight on the inflation gap in his rule. a. 1; 1b. 1; 1/2c. 1/2; 1/2d. 1/2; 1

Q: If the potential output of an economy is worth $440 billion and the actual output during a particular year was $435billion, the output gap isa. -­1.14 percentb. 2.2 percentc. -­5 percentd. 1.1 percent

Q: Primary dealers are those A) permitted to trade directly with the Fed. B) who work under the account manager at the Federal Reserve Bank of New York. C) who specialize in selling bonds to small private investors. D) responsible for assuring that interest rates do not decline unless the FOMC has given specific instructions that they decline.

Q: Taylor originally picked____ as the equilibrium real federal funds rate, which was equal to its historical average.a. 1 percentb. 2 percentc. 3 percentd. 4 percent

Q: If a country's potential output is $100 billion and the output gap is 5%, the country's actual output is a. $500 billion.b. $20 billion. c. $95 billion. d. $105 billion

Q: How does the Open Market Trading Desk conduct its operations? A) directly with private securities dealers on the floor of the New York Stock Exchange B) directly with private securities dealers on the floor of the Federal Reserve Bank of New York C) over-the-counter electronically with private securities dealers D) by sending its buy and sell orders to the U.S. Treasury for execution

Q: The rule that is used to set a target for the federal funds rate in response to deviations of real output and inflation from their targets isa. the Taylor rule.b. a nonactivist rule.c. a money-growth rule. d. Mc Cullum's rule.

Q: The Open Market Trading Desk is A) another name for the Federal Open Market Committee. B) an organization of private traders in government securities. C) the area on the floor of the New York Stock Exchange set aside for bond trading. D) a group of private securities traders that the Fed has selected to participate in open market operations.

Q: How does the interest paid on reserves set a floor for the federal funds rate?

Q: The Taylor rule is a. an activist rule.b. a nonactivist rule.c. used to set optimal tax rates.d. used to set the amount of government spending.

Q: What new policy tools for controlling reserve balances did the Fed introduce during the Financial Crisis of 2007-2009?

Q: The policy directive from the FOMC is carried out by A) the presidents of the district banks. B) the presidents of commercial banks that are members of the Federal Reserve System. C) the account manager at the Federal Reserve Bank of New York. D) private dealers in the bond market.

Q: Why have economists abandoned the use of money-growth rules in the United States?a. Because the Fed can no longer control the money supply b. Because the velocity growth rate has been too stablec. Because of instability in money demandd. Because money-growth rules are overly activist

Q: The FOMC states its overall objectives for interest rates in A) the Governors' Order. B) the Policy Directive. C) the Federal Reserve Bulletin. D) the Chairman's Order.

Q: Which of the following interest rates tends to fluctuate the most? A) interest rate on corporate bonds B) interest rate on 10-year Treasury bonds C) mortgage interest rate D) federal funds rate

Q: Under an activist rule,a. the growth rate of money supply is greater than the inflation rate.b. monetary policy is allowed to change over the course of the business cycle. c. the growth rate of money supply is lower than the inflation rate.d. monetary policy is not changed over the course of the business cycle.

Q: If the growth rate of the money supply is 5 percent, the inflation rate is 2 percent, and real output growth is 2 percent, what is the growth rate of the velocity of money?a. −5 percent b. −1 percent c. +1 percent d. +5 percent

Q: As a result of an open market purchase, bank reserves A) rise and interest rates fall. B) fall and interest rates rise. C) and interest rates both rise. D) and interest rates both fall.

Q: Which of the following statements is correct? A) Open market purchases are expansionary and open market sales are contractionary. B) Open market purchases are contractionary and open market sales are expansionary. C) Both open market purchases and open market sales are expansionary. D) Both open market purchases and open market sales are contractionary.

Q: If the growth rate of velocity is -2 percent, the growth rate of money supply is 7 percent, and the inflation rate is 3 percent, what is the growth rate of real output?a. 1 percent b. 2 percent c. 3 percent d. 4 percent

Q: A money-growth rule that responds to the state of the economy is rule. a. a laggingb. a leadingc. a nonactivist d. an activist

Q: If the Fed desired to reduce the federal funds rate, A) it would conduct an open market sale, reducing reserve supply. B) it would conduct an open market purchase, increasing reserve supply. C) it would conduct an open market sale, increasing reserve demand. D) it would conduct an open market purchase, reducing reserve demand.

Q: If velocity of money is 6, the price level is 1.2, and real output is worth $1,100 billion, what is the money supply?a. $65 billionb. $153 billionc. $220 billiond. $5,500 billion

Q: A money-growth rule that does not respond to the state of the economy is a rule. a. laggingb. leadingc. nonactivist d. activist

Q: In order to increase its target for the federal funds rate, the Fed would normally A) conduct open market sales. B) conduct open market purchases. C) increase the discount rate. D) increase reserve requirements.

Q: If the velocity of money is 8.2, the money supply is $223 billion, and real output is $958 billion, what is the price level?a. 0.5 b. 0.8 c. 1.7 d. 1.9

Q: If the growth rate of the money supply is 4 percent, the growth rate of velocity of money is 1 percent, and real output growth is 2 percent, what is the inflation rate?a. −3 percent b. −1 percent c. +1 percent d. +3 percent

Q: In the federal funds market diagram, a decrease in the required reserve ratio A) shifts the demand curve for reserves to the left. B) increases the federal funds rate. C) results in a multiple expansion of deposits, which increases the equilibrium level of reserves held by banks. D) shifts the supply curve for reserves to the right.

Q: The size of the money multiplier depends upon all of the following EXCEPT A) the required reserve ratio. B) the currency-deposit ratio. C) excess reserves relative to deposits. D) the discount rate.

Q: If the velocity of money in an economy is 5, money supply is $350 billion, and the price level is 5, the real output is wortha. $1,750 billion b. $1,200 billion c. $2625 billion d. $5250 billion

Q: In the federal funds market diagram, an open market sale by the Fed A) shifts the reserve supply curve to the right. B) shifts the reserve supply curve to the left. C) decreases the federal funds rate. D) increases the volume of federal funds traded.

Q: If currency outstanding equals $500 million, checkable deposits equal $2 billion, reserves equal $200 million, and the required reserve ratio is 0.10, the money multiplier equalsA) 1.14.B) 3.57.C) 4.35.D) 5

Q: If the money supply is $300 billion, the price level is 1.3, and the real output is 1,300 billion, what is the velocity of money?a. 0.33 b. 3c. 5.63d. 300,000

Q: How can the Fed reduce the implicit tax on banks resulting from reserve requirements? A) lowering the discount rate B) paying interest on reserves C) reducing the federal funds rate D) increasing the federal funds rate

Q: If currency outstanding equals $200 million, checkable deposits equal $1 billion, reserves equal $150 million, and the required reserve ratio is 0.10, the money multiplier equalsA) 0.86.B) 0.14.C) 3.43.D) 4

Q: Total spending divided by the money supply equals a. the reserve requirement.b. the transactions demand for money. c. the money multiplier.d. the velocity of money.

Q: How many times has the Fed has changed reserve requirements since 1993? A) never B) about once a year C) only once D) only twice

Q: From 1991 to 2001, Argentina established commitment by a. following the Taylor rule.b. following a strict money growth rule. c. establishing a currency board.d. using a system of inflation targeting.

Q: If banks hold no excess reserves, checkable deposits total $1.5 billion, currency totals $400 million, and the required reserve ratio is 10%, then the monetary base equals A) $550 million. B) $1.54 billion. C) $1.9 billion D) $15 billion.

Q: The equation that says money times velocity equals total spending is known as a. the national income identity.b. purchasing-power parity. c. a covenant.d. the equation of exchange.

Q: Reserve requirements are changed A) more frequently than the discount rate is changed, but less frequently than open market operations are conducted. B) more frequently than the discount rate is changed and more frequently than open market operations are conducted. C) more frequently than open market operations are conducted, but less frequently than the discount rate is changed. D) less frequently than open market operations are conducted and less frequently than the discount rate is changed.

Q: Which of the following is an useful indicator of the stance of monetary policy?a. The income tax rateb. The federal funds ratec. The exchange rated. The rate of unemployment

Q: All of the following were reasons that the Fed increase the required reserve ration in 1936 EXCEPT: A) concerns over the possibility of future inflation B) to eliminate the high level of excess reserves C) fears that the economy was overheating D) concerns over a speculative bubble

Q: If a dollar of money is used 5 times in transactions in an economy over the course of a year and the supply of money is $120 billion, what is the volume of total spending in the economy?a. $5 billionb. $600 billion c. $240 billion d. $20 billion

Q: People know that the Fed has the incentive to announce that the inflation rate will be 3 percent next year, so people will build 3 percent inflation into their wage negotiations. But then the Fed has the incentive to increase inflation above 3 percent to make the economy grow faster. This type of phenomenon is known asa. inflation targeting. b. time inconsistency. c. McCallum's rule.d. an expectations trap.

Q: Which of the following accurately describes the relationship between excess reserves and checkable deposits following the financial crisis of 2007-2009? A) Excess reserves declined as the excess reserve ratio returned to near zero. B) Excess reserves rose to nearly one-third of checkable deposits. C) Excess reserves approached the same level as checkable deposits. D) Excess reserves exceeded checkable deposits.

Q: The average number of times a dollar of money is used for transactions over the course of a year is referred to as thea. money multiplier. b. velocity of money. c. money growth rate. d. extent of exchange.

Q: When the central bank chooses a policy at one date, which leads people to make decisions based on that policy, which then causes the central bank to choose a different policy at a later date, then there is said to bea. irrational expectations. b. time inconsistency.c. a liquidity trap.d. an expectations trap.

Q: The money multiplier A) equals 1 over the required reserve ratio. B) is an expression that converts the monetary base to the money supply. C) is larger than the simple deposit multiplier. D) is completely controlled by the Fed.

Q: Monetarists think thata. money growth is closely related to inflation in the long run. b. money demand is unstable in the long run.c. the central should focus on short run economic fluctuations. d. the central bank should rely on discretionary policy making.

Q: If the required reserve ratio is 10% and the Fed purchases $20 million worth of securities, what is the simple deposit multiplier and what happens to the amount of deposits in the banking system? Assume that banks do not hold excess reserves and the public does not change its currency holdings.

Q: Which of the following is likely to happen if people expect the inflation rate to be high and the central bank follows atight monetary policy?a. The economy will enter into a recession.b. The level of economic activity will increase.c. The actual inflation rate will rise. d. The federal funds rate will fall.

Q: When banks hold excess reserves, the size of the money multiplier A) is less than the simple deposit multiplier would suggest. B) is greater than the simple deposit multiplier would suggest. C) is equal to the size of the simple deposit multiplier. D) becomes infinite.

1 2 3 … 494 Next »

Subjects

Accounting Anthropology Archaeology Art History Banking Biology & Life Science Business Business Communication Business Development Business Ethics Business Law Chemistry Communication Computer Science Counseling Criminal Law Curriculum & Instruction Design Earth Science Economic Education Engineering Finance History & Theory Humanities Human Resource International Business Investments & Securities Journalism Law Management Marketing Medicine Medicine & Health Science Nursing Philosophy Physic Psychology Real Estate Science Social Science Sociology Special Education Speech Visual Arts
Links
  • Contact Us
  • Privacy
  • Term of Service
  • Copyright Inquiry
  • Sitemap
Business
  • Finance
  • Accounting
  • Marketing
  • Human Resource
  • Marketing
Education
  • Mathematic
  • Engineering
  • Nursing
  • Nursing
  • Tax Law
Social Science
  • Criminal Law
  • Philosophy
  • Psychology
  • Humanities
  • Speech

Copyright 2025 FinalQuiz.com. All Rights Reserved