AP Econ Ch 15

Which of the following is an asset on the consolidated balance sheet of the Federal Reserve Banks?

Reserves must be deposited in the Federal Reserve Banks by:

The securities held as assets by the Federal Reserve Banks consist mainly of:

Federal Reserve Notes in circulation are

Which of the following will increase commercial bank reserves?

When a commercial bank borrows from a Federal Reserve Bank

The Federal Reserve Banks sell government securities to the public. As a result, the checkable deposits

The Federal Reserve Banks buy government securities from commercial banks. As a result, the checkable deposits:

The commercial banking system borrows from the Federal Reserve Banks. As a result, the checkable deposits:

Which of the following is a tool of monetary policy?

Commercial banks and thrifts usually hold only small amounts of excess reserves because:

In the United States monetary policy is the responsibility of the:

The three main tools of monetary policy are:

The Fed can change the money supply by

Assume the reserve ratio is 25 percent and Federal Reserve Banks buy $4 million of U.S. securities from the public, which deposits this amount into checking accounts. As a result of these transactions, the supply of money is

Assume the legal reserve ratio is 25 percent and the Fourth National Bank borrows $10,000 from the Federal Reserve Bank in its district. As a result

Open-market operations refer to

If the Federal Reserve System buys government securities from commercial banks and the public

The purchase of government securities from the public by the Fed will cause

Assume that a single commercial bank has no excess reserves and that the reserve ratio is 20 percent. If this bank sells a bond for $1,000 to a Federal Reserve Bank, it can expand its loans by a maximum of:

Suppose the Federal Reserve Banks sell $2 billion of government bonds to the public which pays for them by drawing checks. As a result, commercial bank reserves will:

Which of the following statements is correct?

Refer to the above balance sheets. The commercial banks have excess reserves of:

Refer to the above balance sheets. The maximum money-creating potential of the commercial banking system is:

Refer to the above balance sheets. Suppose the Federal Reserve Banks buy $2 in securities from the public, which deposits this amount into checking accounts. As a result of these transactions, the supply of money will:

Refer to the above balance sheets. Suppose the Federal Reserve Banks sell $2 in securities directly to the commercial banks. As a result of this transaction the supply of money:

The Federal Reserve System regulates the money supply primarily by:

Assuming no currency drains, when the Federal Reserve Banks purchase government securities the reserves of commercial banks are:

When the Federal Reserve buys government securities from the public, the money supply:

Which of the following will happen when the Federal Reserve buys bonds from the public in the open market and cash in the hands of the public does not change?

The legal reserve ratio is 20 percent. Suppose that the Fed sells $500 of government securities to commercial banks and buys $500 of securities from individuals, who deposit the cash in checking accounts. As a result of the above transactions, reserves in the banking system will:

The legal reserve ratio is 20 percent. Suppose that the Fed sells $500 of government securities to commercial banks and buys $500 of securities from individuals, who deposit the cash in checking accounts. As a result of the above transactions, the supply of money in the economy will:

Open-market operations change

Refer to the above data. The commercial banking system has excess reserves of:

Refer to the above data. The monetary multiplier for the commercial banking system is:

Refer to the above data. Suppose the Fed sold $10 billion of U.S. securities to the banks. This would:

Refer to the above data. Suppose the Fed bought $20 billion of U.S. securities from the banks. This would:

Refer to the above data. Suppose the Fed wants to increase the money supply by $400 billion to drive down interest rates and stimulate the economy. To accomplish this it could:

Refer to the above data. Suppose the Fed wants to reduce the money supply by $400 billion to drive up interest rates and dampen inflation. To accomplish this it could:

If the Fed were to increase the legal reserve ratio, we would expect:

An increase in the legal reserve ratio:

When the reserve requirement is increased:

Assume that the commercial banking system has checkable deposits of $10 billion and excess reserves of $1 billion at a time when the reserve requirement is 20 percent. If the reserve requirement is now raised to 30 percent, the banking system then has:

When the required reserve ratio is increased, the excess reserves of member banks are

When the required reserve ratio is decreased, the excess reserves of member banks are

A decrease in the reserve ratio increases the:

An increase in the reserve ratio

Refer to the above data. The commercial banking system has excess reserves of

Refer to the above data. The monetary multiplier for the commercial banking system is

Refer to the above data. If the Fed increased the reserve requirement from 20 percent to 25 percent, a deficiency of reserves in the commercial banking system of _____ would occur and the monetary multiplier would fall to ____.

Refer to the above data. If the Fed reduced the reserve requirement from 20 percent to 16 percent, excess reserves in the commercial banking system would increase by _____ and the monetary multiplier would rise to ____.

Refer to the above data. Suppose the Fed wants to increase the money supply by $1000 billion to drive down interest rates and stimulate the economy. To accomplish this it could lower the reserve requirement from 20 percent to:

Refer to the above data. Suppose the Fed wants to reduce the money supply by $200 billion to drive up interest rates and dampen inflation. To accomplish this it could increase the reserve requirement from 20 percent to:

The discount rate is the interest:

A commercial bank can add to its actual reserves by:

The interest rate at which the Federal Reserve Banks lend to commercial banks is called the:

The discount rate is the rate of interest at which:

Projecting that it might temporarily fall short of legally required reserves in the coming days, the Bank of Beano decides to borrow money from its regional Federal Reserve Bank. The interest rate on the loan is called the:

When the Fed lends money to a commercial bank, the bank:

Suppose that, for every 1-percentage point decline in the discount rate, commercial banks collectively borrow an additional $2 billion from Federal Reserve banks. Also assume that reserve ratio is 10 percent. If the Fed lowers the discount rate from 4.0 percent to 3.5 percent, bank reserves will:

Suppose that, for every 1-percentage point decline of the discount rate, commercial banks collectively borrow an additional $2 billion from Federal Reserve banks. Also assume that reserve ratio is 20 percent. If the Fed increases the discount rate from 4.0 percent to 4.25 percent, bank reserves will:

Changes in the discount rate are:

Which of the following best describes the cause-effect chain of an easy money policy?

Upon which of the following industries is a tight money policy likely to be most effective?

Assuming government wishes to either increase or decrease the level of aggregate demand, which of the following pairs are not consistent policy measures?

If the Federal Reserve authorities were attempting to reduce demand-pull inflation, the proper policies would be to:

A contraction of the money supply:

If the Fed were to purchase government securities in the open market, we would anticipate:

The purpose of a tight money policy is to:

Monetary policy is expected to have its greatest impact on:

Which of the following actions by the Fed would cause the money supply to increase?

Assume the economy is operating at less than full employment. An easy money policy will cause interest rates to ________. which will ___________ investment spending.

Which of the following best describes the cause-effect chain of a tight money policy?

If the economy were encountering a severe recession, proper monetary and fiscal policies would call for:

If severe demand-pull inflation was occurring in the economy, proper government policies would involve a government:

If the amount of money demanded exceeds the amount supplied, the:

Refer to the above diagrams. The numbers in parentheses after the AD1, AD2, and AD3, labels indicate the levels of investment spending associated with each curve, respectively. All numbers are in billions of dollars. If the interest rate is 8 percent and the goal of the Fed is full-employment output of Qf, it should:

Refer to the above diagrams. The numbers in parentheses after the AD1, AD2, and AD3 labels indicate the levels of investment spending associated with each curve, respectively. All numbers are in billions of dollars. If the interest rate is 4 percent and the Fed desires to undo demand-pull inflation, it should:

Refer to the above diagrams. The numbers in parentheses after the AD1, AD2, and AD3 labels indicate the levels of investment spending associated with each curve, respectively. All numbers are in billions of dollars. If the interest rate is 6 percent and the goal of the Fed is full-employment output of Qf, it should:

The purpose of an easy money policy is to shift the:

Refer to the above diagrams. The numbers in parentheses after the AD1, AD2, and AD3 labels indicate the levels of investment spending associated with each curve. All figures are in billions. If the money supply is Ms1 and the goal of the monetary authorities is full-employment output Qf, they should:

Refer to the above diagrams. The numbers in parentheses after the AD1, AD2, and AD3 labels indicate the levels of investment spending associated with each curve. All figures are in billions. If aggregate demand is AD3 and the monetary authorities desire to reduce it to AD2, they should:

Refer to the above diagrams. The numbers in parentheses after the AD1, AD2, and AD3 labels indicate the levels of investment spending associated with each curve. All figures are in billions. Which of the following would shift the money supply curve from Ms1 to Ms3?

Refer to the above diagrams. The numbers in parentheses after the AD1, AD2, and AD3 labels indicate the levels of investment spending associated with each curve. All figures are in billions. If the MPC for the economy described by the figures is .8:

An increase in the money supply will:

All else equal, when the Federal Reserve Banks engage in a tight money policy, the prices of government bonds usually:

All else equal, when the Federal Reserve Banks engage in an easy money policy, the interest rates received on government bonds usually:

Refer to the above table. The equilibrium interest rate in this economy is:

Refer to the above table. An interest rate of 2 percent is not sustainable because:

Refer to the above table. The amount of investment that will be forthcoming in this economy is:

Refer to the above table. Suppose the legal reserve requirement is 10 percent and initially there are no excess reserves in the banking system. If the Fed wished to reduce the interest rate by 1 percentage point, it would:

The price of government bonds and the interest rate received by a bond buyer are:

A tight money policy is designed to shift the:

If the economy is operating in the relatively steep (upper) portion of its aggregate supply curve, a reduction in the money supply will:

The sale of government bonds by the Federal Reserve Banks to commercial banks will:

Assume that the price level is flexible both upward and downward and that the Fed's policy is to keep the price level from either rising or falling. If aggregate supply increases in the economy, the Fed:

If the demand for money increases and the Fed wants interest rates to remain unchanged, which of the following would be appropriate policy?

Which of the following has bolstered the case for active monetary policy?

According to studies and recent experience:

One of the strengths of monetary policy relative to fiscal policy is that monetary policy:

The problem of cyclical asymmetry refers to the idea that:

An easy money policy may be less effective than a tight money policy because:

An easy money policy may be frustrated if the:

Some economists contend that the velocity of money often changes in such a way as to frustrate monetary policy. Which of the following statements is consistent with this thinking?

A tight money policy could be offset by:

Monetary policy is thought to be:

Monetary policy:

The impact of monetary policy on investment spending may be weakened:

Since 1980, U.S. monetary policy has been:

The Fed directly sets:

Which of the following will likely accompany an easy money policy?

A Federal funds rate reduction that is caused by monetary policy will:

To reduce the Federal funds rate, the Fed can:

Generally, the prime interest rate:

To increase the Federal funds rate, the Fed can:

Recently, the Fed has communicated changes in its monetary policy by announcing changes in its policy targets for the:

The prime interest rate:

The Federal funds rate is:

In recent years, the Federal Reserve has:

If the Fed wants to lower the Federal funds rate, it should:

Other things equal, which of the following would increase the Federal funds rate?

The benchmark interest rate that banks use as a reference point for a variety of consumer and business loans is the:

The prime interest rate usually:

In 1999 and 2000 the Fed increased the Federal funds rate several times. The Fed's purpose was to:

Between January 2001 and June 2003, the Fed reduced the Federal funds rate from 6 percent to 1 percent. The Fed's purpose was to:

To reduce the Federal funds rate, the Fed would:

To increase the Federal funds rate, the Fed would:

In the last-half of the 1990s, Japan:

Compared with fiscal policy, monetary policy is:

Refer to the above table, in which investment is in billions. Suppose the Fed reduces the interest rate from 6 percent to 5 percent. Given columns (1) and (2), investment will:

Refer to the above table, in which investment is in billions. Suppose the Fed reduces the interest rate from 6 to 5 percent at a time when the investment demand declines from that shown by columns (1) and (2) to that shown by columns (1) and (3). As a result of these two occurrences, investment will:

The result demonstrated in the previous question illustrates:

Inflation targeting consists of the Fed:

Proponents of inflation targeting say it would:

Proponents of inflation targeting say it would

Other things equal, a tight money policy will:

Refer to the above diagram. The shift of the aggregate demand curve from AD1 to AD2 might result from the Fed:

Refer to the above diagram. Which of the following would explain why the policy described in the previous question might shift the aggregate demand curve to AD3 rather than to AD2?

Other things equal, an easy money policy will:

A particular change in money supply will produce a smaller net export effect:

Under some conditions, proper domestic monetary policy may be at odds with the goal of correcting a trade imbalance because:

The net export effect:

An easy money policy in the United States is most likely to:

A tight money policy in the United States is most likely to:

International flows of financial capital in response to interest rate changes in the United States:

All else equal, an easy money policy in the United States:

An easy money policy is appropriate for the alleviation of domestic:

Assume the United States is experiencing a 6 percent annual rate of inflation and is also incurring a trade deficit. All else equal, the use of appropriate monetary policy to reduce inflation would:

Suppose the United States is experiencing an 8 percent rate of unemployment with stable prices and a trade deficit. All else equal, the use of appropriate monetary policy to reduce unemployment would:

Which of the following is correct?

Which of the following is correct?

Other things equal, an increase in productivity will:

Other things equal, an increase in input prices will:

Other things equal, a tight money policy during a period of demand-pull inflation will:

Other things equal, a reduction in income taxes would:

Other things equal, a depreciation of the U.S. dollar would: