Quiz_ Practice Exam 6

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University of Nebraska Medical Center *

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311A

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Economics

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Jun 4, 2024

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pdf

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10

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Practice Exam 6 This is a preview of the published version of the quiz Started: May 7 at 7:57pm Quiz Instructions Question 1 0.5 pts Vault cash is equal to $2 million, deposits by depository institutions at the central bank are $1 million, the monetary base is $15 million, and bank deposits are $30 million. Bank reserves are equal to $2 million. $5 million. $3 million. $10 million. Question 2 0.5 pts Assume that the currency-deposit ratio is 0.5. The Federal Reserve carries out open-market operations, purchasing $1 million worth of bonds from banks. This action increased the money supply by $2 million. What is the reserve-deposit ratio? 0.25 0.35 0.40 0.50 Question 3 0.5 pts 5/7/24, 7:57 PM Quiz: Practice Exam 6 https://canvas.unl.edu/courses/167808/quizzes/379654/take?preview=1 1/10 Idk why formatting different. Bear with the change
Question 4 0.5 pts Question 5 0.5 pts Suppose that in Mysore, the reserve-deposit ratio is res = 0.5 - 2 i , where i is the nominal interest rate. The currency-deposit ratio is 0.2 and the monetary base equals 100. The real quantity of money demanded is given by the money demand function L(Y, i) = 0.5 Y - 10 i , where Y is real output. Currently, the real interest rate is 5% and the economy expects an inflation rate of 5%. The money supply equals 400. 200. 300. 240. The Fed can reduce the money supply by reducing the currency-deposit ratio. the discount rate. the monetary base. reserve requirements. The primary purpose of the discount window is to fulfill the bank's lender of last resort role. influence the nation's money supply. influence the amount of loans that banks provide to the public. 5/7/24, 7:57 PM Quiz: Practice Exam 6 https://canvas.unl.edu/courses/167808/quizzes/379654/take?preview=1 2/10
Question 6 0.5 pts Question 7 0.5 pts Question 8 0.5 pts control banks' excess reserves. Who determines the open-market operations of the Federal Reserve System? FOMC Board of Governors FDIC FHLBB Which of the following is an instrument of monetary policy? The discount rate The mortgage interest rate The interest rate on three-month Treasury bills The budget deficit A liquidity trap occurs when there are runs on banks that are solvent but illiquid. the demand for loans increases in a country on the gold standard, so that the monetary supply is not able to increase and interest rates rise dramatically. the Fed increases the money supply, causing the expected inflation rate to rise more than the real interest rate declines, so that the nominal interest rate increases. 5/7/24, 7:57 PM Quiz: Practice Exam 6 https://canvas.unl.edu/courses/167808/quizzes/379654/take?preview=1 3/10
Question 9 0.5 pts Question 10 0.5 pts Question 11 0.5 pts any additions to the monetary base are held as cash by people or reserves at banks. In the financial crisis in 2008, the Federal government created the ________, to purchase financial assets that were thought to be temporarily undervalued, preventing further financial panic. Troubled Asset Relief Program Federal Home Loan Board Federal Deposit Insurance Corporation Bank Insurance Fund In response to an unanticipated tightening of monetary policy, output ________ at first, then ________ after about four months. remains roughly unchanged; falls significantly remains roughly unchanged; rises significantly rises; returns most of the way to its original value falls; returns most of the way to its original value The problem with the strategy of achieving credibility through reputation is that reputations are rarely credible. rules always have a lower cost than reputations in maintaining credibility. serious costs may be incurred during the period in which reputation is established. 5/7/24, 7:57 PM Quiz: Practice Exam 6 https://canvas.unl.edu/courses/167808/quizzes/379654/take?preview=1 4/10
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