Week 9 Quiz

  • Question 1

    2 out of 2 points

    When the Central Bank decides to increase the discount rate, the:

    Selected Answer:
    Correct

    interest rates increase.

    Answers:

    money supply increases.

    interest rates decrease.

    interest rates are unaffected.

    Correct

    interest rates increase.

  • Question 2

    2 out of 2 points

    Which of the following is considered to be a relatively weak tool of monetary policy?

    Selected Answer:
    Correct

    altering the discount rate

    Answers:

    quantitative easing

    Correct

    altering the discount rate

    reserve requirements

    reducing the money supply

  • Question 3

    2 out of 2 points

    Which of the following is a traditional tool used by the Fed during recessions?

    Selected Answer:
    Correct

    open market operations

    Answers:

    quantitative easing

    higher interest rates

    Correct

    open market operations

    coins and paper currency

  • Question 4

    2 out of 2 points

    Which of the following institutions determines the quantity of money in the economy as its most important task?

    Selected Answer:
    Correct

    Central Bank

    Answers:

    U.S. Department of the Treasury

    Federal Open Market Committee

    Correct

    Central Bank

    Federal Reserve Board of Governors

  • Question 5

    2 out of 2 points

    When the Central Bank decides it will sell bonds using open market operations:

    Selected Answer:
    Correct

    the money supply decreases.

    Answers:

    interest rates decrease.

    the money supply increases.

    Correct

    the money supply decreases.

    the money supply is unaffected.

  • Question 6

    2 out of 2 points

    Which of the following institutions oversees the safety and stability of the U.S. banking system?

    Selected Answer:
    Correct

    The Federal Reserve

    Answers:

    Office of the Comptroller of the Currency

    Federal Financial Institutions Examination Council

    Federal Open Market Committee

    Correct

    The Federal Reserve

  • Question 7

    2 out of 2 points

    What term is used to describe the interest rate charged by the Central Bank when it makes loans to commercial banks?

    Selected Answer:
    Correct

    discount rate

    Answers:
    Correct

    discount rate

    reserve requirement

    Fed rate

    open market rate

  • Question 8

    2 out of 2 points

    A Central Bank that wants to increase the quantity of money in the economy will:

    Selected Answer:
    Correct

    buy bonds in open market operations.

    Answers:

    raise the discount rate.

    sell bonds in open market operations.

    reverse quantitative easing.

    Correct

    buy bonds in open market operations.

  • Question 9

    2 out of 2 points

    Regardless of the outcome in the long run, ______________________ always has the effect of stimulating the economy in the short run.

    Selected Answer:
    Correct

    expansionary monetary policy

    Answers:
    Correct

    expansionary monetary policy

    contractionary monetary policy

    reverse quantitative easing policy

    tight monetary policy

  • Question 10

    2 out of 2 points

    When the Federal Reserve announces that it is implementing a new interest rate policy, the ____________________ will be affected.

    Selected Answer:
    Correct

    federal funds rate

    Answers:

    real interest rate

    consumer lending rate

    nominal interest rate

    Correct

    federal funds rate

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