The creation of an asset bubble is a concern when the Federal Reserve: Select one: O a. grows the supply of money too slow O b. keeps interest rates artificially low for too long O c. raises interest rates too high O d. increases regulation that reduces bank lending
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- 8Which of the folloving represents a change in today's banking policies that should prevent a recurrence of the bank panics of 1930-1933? O A. banks are more cautious lenders O B. banks keep large amounts of excess reserves on hand O . the FDIC insures bank deposits and therefore depositors do not panic and rush to withdraw money when individual banks have financial problems O D. the President now has the authority to close banks whenever panics occurTable 29-5. Reserves Loans Assets Bank of Pleasantville O $1,000 O $400 O $200 O $250 $2,000 18,000 Liabilities Deposits $20,000 Refer to Table 29-5. If the Fed's reserve requirement (R) is 9 percent, then what quantity of excess reserves does the Bank of Pleasantville now hold?
- 111. People view cell phone and its charger as complements to one another. If the price of cell phone increases, economists would expect: O The demand for charger will not change. O The demand for charger to increase. O The quantity of cell phone demanded to increase O The demand for charger to decrease. 12. Which one is not the role of the Fed? O The Fed also acts as a bank to the American citizens with net wealth is larger than 10 million dollar. O The Fed also acts as a bank to other banks by clearing checks, making electronic payments, and providing the currency that American's need and use every day. O The Fed also helps to supervise and regulate the nation's banks and works to promote a stable financial system for consumers, communities, and businesses The Fed implements monetary policies that promote maximum employment and m stable prices.QUESTION 6 The United States was among the first of the modern industrial nations to establish a central banking system. O True O False QUESTION 7 The federal funds rate is the short-term interest rate that banks charge one another for loans. True False QUESTION 8 The president has influence on Federal Reserve policy because Oa. he can fire the chair. Ob. he can replace board members at any time. Oc. he can veto any Fed policy Od. he appoints the board members and the chair.
- Why would a bank prefer making loans by borrowing funds in the fed funds market? Select one: O A. The fed funds rate is less than the interest rate on reserve balances OB. The fed funds market is less regulated than bank reserves O C. Banks need to maintain reserves above the Fed's required reserve ratio O D. Each of these answers is correct Which of the following is (1) calculated with information provided by the Bureau of Economic Analysis, (2) tracks domestic spending on durable goods, non-durable goods, and services, and (3) factors in recent price changes before comparing to an index base? O a. The Consumer Price Index (CPI) O b. The Producer Price Index (PPI) O c. The Personal Consumption Expenditures Price Index (PCEPI) O d. The International Standards Price Index (ISPI)When the central bank decides to increase the discount rate, the: interest rates decrease. O interest rates are unaffected. interest rates increase. O money supply increases. DELL prt sc F5 F6 F7 F8 F9 F3 F4 #3 2$ & 3. 4 6. R Y H.QUESTION 12 The fed funds rate and the discount rate are interest rates banks charge households to borrow money overnight. O True O False QUESTION 13 What happened to the discount rate in January 2003 and why? Read this article from the Federal Reserve to find the answer. The discount rate moved below the fed funds rate because fewer banks wanted to borrow from the Fed anymore The discouunt rate became equal to the fed funds rate because the bank lending programs were merged into one The discount rate moved above the fed funds rate so any sound financial institution could borrow from the Fed and to eliminate the perception banks were being subsidized O All of the above None of the above QUESTION 14 What is the most important change in the fed funds rate since the Financial Crisis began in 2007? O it is much lower and has been essentially zero percent (0%) most of the time O It has become much more variable (ups and downs) O It no longer increases shortly before a recession (gray shaded…
- D7In contrast to quantitative easing, targeted asset purchases O A. Shift the composition of the balance sheet away from risk-free assets toward risky assets. O B. Decreases the size of the central bank's balance sheet O C. Primarily involves loans extended to commercial banks to improve liquidity in the banking sector O D. Increases the liabilities on the Federal Reserve's balance sheet O F. Is used to reduce the market fed funds rateA8