ADMS 3531 Chapter Notes - Chapter 10: Nominal Interest Rate, Interest, Fisher Hypothesis
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6. Other things being​ equal, the M1 money supply varies in the same direction as the magnitude of
A.​k, the​ currency/DDO ratio
B.rr​ , the average required reserve ratio
C.​re, the​ banks’ desired excess reserves ratio
D.none of the above
7. Suppose that discounts and advances​ (Fed loans of reserves to​ banks) increase​ $200 million, Treasury deposits at the Fed increase​ $500 million, and the Fed buys​ $700 million of Treasury bills from dealers. The net effect of these 3 transactions is to
A.increase bank reserves by​ $1,000 million
B.increase bank reserves by​ $1,400 million
C.increase bank reserves by​ $400 billion
D.leave bank reserves unchanged
8. Other things being equal​ (assuming the Fed takes no​ action), a sharp increase in interest rates caused by market forces in a strong economic recovery is likely to
A.increase​ k, the currency​ ratio, thus reducing the money supply
B.reduce the monetary​ base, thus increasing the money supply
C.reduce re​ , the desired excess reserve​ ratio, thus increasing the money supply
D.do none of the above
9. The Federal Reserve is able to control most accurately in the short run
A.​B, the monetary base
B.​k, the currency ratio
C.re​ , the​ bank’s desired excess reserve ratio
D.M1, the U.S. money supply
10. The Federal Reserve implemented​ “operation twist” in​ 2011-2012 by
A.simultaneously buying​ long-term and selling​ short-term Treasury securities
B.heavy purchases of both​ long-term and​ short-term Treasury securities
C.lowering the federal funds rate target and buying​ long-term bonds
D.purchasing​ short-term securities and buying​ mortgage-backed bonds
11. During​ 2008-2014, Fed Chairman Ben Bernanke drew a lot of criticism for
A.maintaining​ short-term interest rates at extremely low levels for an extended period
B.bailing out large banks that would otherwise have failed
C.conducting the quantitative easing policy for about six years
D.all of the above
interest-rate risk. currency risk. security risk. |
savings deposits pay no interest. time deposits have specified maturities. savings deposits have specified maturities. |
the interest rate on car loans and the interest rate on home mortgages. the average interest rate earned on assets and the average interest rate paid on liabilities. bid and asked prices on a bond. |
a liability to both you and First National. an asset to First National and a liability to you. an asset to you and a liability to First National. |
proprietary trading. underwriting. factoring. |
dealing with problems of moral hazard. insuring firms against loss from fire. insuring firms against loss from employee theft. |
when an investment bank researches a firm's value. how an investment bank underwrites large issues. the review of a prospectus by the SEC. |
required reserves less total reserves. total reserves plus required reserves. required reserves divided by total reserves. |
imposed capital requirements on investment banks. imposed capital requirements on both commercial and investment banks. imposed asset requirements on all banks. |
excess reserves. secondary reserves. bank capital. |