Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
207. Open-market operations involve:
208. ________ involve(s) the Fed buying and selling U.S. government securities to increase or
decrease the money supply.
209. The ___________ rate represents the interest rate charged by the Fed when loaning funds
to member banks.
210. The ___________ plays a role in making certain that checks clear and sellers get paid.
211. Which of the following is included in the M-2 definition of the money supply but not the
M-1 definition?
212. Which of the following is not included in the M-1 or M-2 definitions of the money supply?
213. Which of the following statements best summarizes the difference between M-1 and M-
2?
214. An increase in the rate of inflation would likely result from a(n):
215. A significant decrease in the money supply tends to:
216. When the Fed increases the reserve requirement, banks:
217. When the Fed increases the discount rate, banks:
218. Which of the following represents one way the Fed increases the amount of money in
circulation?
219. When the Fed buys U.S. government securities, the:
220. Bob read a newspaper story that indicated a dramatic increase in money market accounts
and certificates of deposit during the last three months. The story reported that all other major
components of the U.S. money supply remained unchanged. Based on this information, Bob can
conclude that for the past quarter:
221. Louis owns an import business. After traveling to France on numerous occasions, he
developed a taste for fine French wines. A radio report that he heard this morning indicated that
the dollar has fallen sharply against the euro. Based on this information, Louis expects that:
222. Chipper's Golf Resort plans to use famous Kauri wood from New Zealand for parts of the
interior of the magnificent club house at its new golf resort near Portland, OR. According to the
importer, each ten-foot slab will cost Chipper's approximately $5,000. Looking at the exchange
rates, Chipper's finance director noted that $500 U.S dollars = $738 NZ dollars. The importer will
order directly from his source in New Zealand. Chipper's finance director has determined that:
223. President Dude, the leader of the island nation of Jaylo, refuses to raise taxes, but wants
to expand many government services and increase the size of the Jaylo armed forces. He plans to
pay for all of the desired expenditures by printing more money. If President Dude carries out his
plan by rapidly increasing the supply of money, Jaylo will likely experience:
224. The Megabux National Bank currently has deposits of $200 million. If the Fed establishes
a reserve requirement of 12 percent, Megabux National must hold reserves of _______ against its
deposits.
225. The Fed bought several billion dollars worth of U.S. government securities. The purpose
of this action is to:
226. The Fed plans to raise the discount rate to 6%. This indicates that:
227. News reports indicate that the Fed plans to announce its third increase in the discount
rate in the past five months. Additional reports suggest that the Fed may also increase the
reserve requirement in the near future. Apparently the Fed perceives the number one problem
facing the economy is:
228. When Mr. Smith in Quince Orchard, MD, uses a check to buy a tractor from Mr. Brown in
Austin, TX, __________ different banks are involved in the transaction.
229. Early settlers of the New World relied heavily on barter because:
230. ________ persuaded Congress to establish the first central bank in the United States.
231. Historically, there was ________ a central bank in the U.S.
232. By the time of the Civil War, the U.S. banking system operated:
233. The banking panic of 1907 and the resulting cash shortage led to the formation of the:
234. Under the Federal Reserve Act of 1913:
235. As a response to the bank failures of the _______, a system of federal deposit insurance
was established to strengthen the banking system.
236. Which of the following historical events motivated Congress to establish the Federal
Reserve System?
237. The Federal Reserve fulfills its role as a "lender of last resort" when it loans funds to:
238. One of the most important aspects of the banking legislation passed during the 1930s
was that it established:
239. Which of the following statements most accurately represents the history of U.S.
banking?
