THE ECONOMICS OF MONEY BANKING
AND FINANCIAL MARKETS 8TH
CANADIAN EDITION FREDERIC MISHKIN
TEST BANK ALL CHAPTERS 100%
ORIGINAL CERTIFICATION REVIEW SET
2026 ANSWERS GUARANTEED PASS
⫸ To expand the money supply the Fed could lower the required reserve
ratio, lower the discount rate, or purchase government securities.
a. True
b. False Answer: True
⫸ The smaller the required reserve ratio, the larger the simple deposit
multiplier.
a. True
b. False Answer: True
⫸ Although the Fed can destroy money, it is impossible for the Fed to
create money out of thin air.
a. True
b. False Answer: False
,⫸ Members of the Board of Governors of the Federal Reserve are
appointed by the President and approved by the Senate to serve a 14-
year term.
a. True
b. False Answer: True
⫸ To decrease the money supply, the Fed may sell government
securities or lower taxes.
a. True
b. False Answer: False
⫸ The interest rate that the Fed charges when it lends reserves to banks
is called the federal funds rate.
a. True
b. False Answer: False
⫸ To limit political influence on Fed policy, the terms of the Fed Board
of Governors are staggered so that one new appointment is made every
four years to coincide with the presidential elections.
a. True
b. False Answer: False
⫸ The Fed can change the federal funds rate by issuing an order, but it
cannot change the discount rate this way.
a. True
,b. False Answer: False
⫸ . The Fed is one of the largest departments within the U.S. Treasury.
a. True
b. False Answer: False
⫸ Controlling the nation's money supply is the most important duty of
the Federal Reserve.
a. True
b. False Answer: True
⫸ The president of the Federal Reserve District Bank of New York
holds a permanent seat on the Federal Open Market Committee.
a. True
b. False Answer: True
⫸ There is an inverse relationship between the required reserve ratio
and the money supply.
a. True
b. False Answer: True
⫸ The discount rate is sometimes also known as the primary credit rate.
a. True
b. False Answer: True
, ⫸ . In 2007, the Fed began using an additional monetary policy tool
called the term auction facility program.
a. True
b. False Answer: True
⫸ When the Federal Reserve system was being created, some people
thought that there should be as few district banks as possible to enhance
efficiency and for ease of operation.
a. True
b. False Answer: True
⫸ The boundaries of the Federal Reserve districts were determined
based on trade patterns between cities.
a. True
b. False Answer: True
⫸ The Federal Open Market Committee (FOMC) meets on the first
Tuesday of each month.
a. True
b. False Answer: False
⫸ When the Federal Open Market Committee (FOMC) votes on policy,
it does so in the following order: the chair votes first, the vice chair votes
AND FINANCIAL MARKETS 8TH
CANADIAN EDITION FREDERIC MISHKIN
TEST BANK ALL CHAPTERS 100%
ORIGINAL CERTIFICATION REVIEW SET
2026 ANSWERS GUARANTEED PASS
⫸ To expand the money supply the Fed could lower the required reserve
ratio, lower the discount rate, or purchase government securities.
a. True
b. False Answer: True
⫸ The smaller the required reserve ratio, the larger the simple deposit
multiplier.
a. True
b. False Answer: True
⫸ Although the Fed can destroy money, it is impossible for the Fed to
create money out of thin air.
a. True
b. False Answer: False
,⫸ Members of the Board of Governors of the Federal Reserve are
appointed by the President and approved by the Senate to serve a 14-
year term.
a. True
b. False Answer: True
⫸ To decrease the money supply, the Fed may sell government
securities or lower taxes.
a. True
b. False Answer: False
⫸ The interest rate that the Fed charges when it lends reserves to banks
is called the federal funds rate.
a. True
b. False Answer: False
⫸ To limit political influence on Fed policy, the terms of the Fed Board
of Governors are staggered so that one new appointment is made every
four years to coincide with the presidential elections.
a. True
b. False Answer: False
⫸ The Fed can change the federal funds rate by issuing an order, but it
cannot change the discount rate this way.
a. True
,b. False Answer: False
⫸ . The Fed is one of the largest departments within the U.S. Treasury.
a. True
b. False Answer: False
⫸ Controlling the nation's money supply is the most important duty of
the Federal Reserve.
a. True
b. False Answer: True
⫸ The president of the Federal Reserve District Bank of New York
holds a permanent seat on the Federal Open Market Committee.
a. True
b. False Answer: True
⫸ There is an inverse relationship between the required reserve ratio
and the money supply.
a. True
b. False Answer: True
⫸ The discount rate is sometimes also known as the primary credit rate.
a. True
b. False Answer: True
, ⫸ . In 2007, the Fed began using an additional monetary policy tool
called the term auction facility program.
a. True
b. False Answer: True
⫸ When the Federal Reserve system was being created, some people
thought that there should be as few district banks as possible to enhance
efficiency and for ease of operation.
a. True
b. False Answer: True
⫸ The boundaries of the Federal Reserve districts were determined
based on trade patterns between cities.
a. True
b. False Answer: True
⫸ The Federal Open Market Committee (FOMC) meets on the first
Tuesday of each month.
a. True
b. False Answer: False
⫸ When the Federal Open Market Committee (FOMC) votes on policy,
it does so in the following order: the chair votes first, the vice chair votes
