ECON 2120 CLEMSON EXAM 3 QUIZZES
WITH RIGHT VERIFIED ANSWERS .
Which of the following is not a duty performed by the federal reserve system? - Correct
Answer -manage the federal budget deficit
Suppose the federal reserve's objective was to maintain price stability. In the Real Business
Cycle Model, where prices are fully flexible, how would the Federal Reserve respond to a
positive technology shock? - Correct Answer -they would buy bonds
The federal reserve can influence the economy by shifting: - Correct Answer -the dynamic
AD curve
the federal reserve is the - Correct Answer -federal governments bank
US Central Bank
banker's bank in the US
Why are debit cards not listed as money? - Correct Answer -debit cards draw on checkable
deposits, which are already counted as money.
The monetary base(MB) refers to: - Correct Answer -currency plus (total reserves)
M2 includes: - Correct Answer -currency, checkable deposits, savings deposits, money
market mutual funds, and small-time deposits
The federal reserve's major tools to control the money supply are: - Correct Answer -Open
market operations,
discount rate lending and the term auction facility,
required reserve ratio and payment of interest on reserves
1
, The tool the federal reserve uses most frequently to influence the money supply is - Correct
Answer -open market operations
All else held equal, when the federal reserve makes an open market purches, the money
supply: - Correct Answer -increases
if businesses react to a pessimistic outlook and decrease spending, the Fed can counteract this
by: - Correct Answer -increasing money supply, which may lower real interest rates and
encourage borrowing
The fed's job in manipulating monetary policy is made harder by the fact that: - Correct
Answer -the fed has to operate in real time and information on recessions usually becomes
available with a lag.
The federal reserve's dual mandate refers to the Fed's main objectives - Correct Answer -to
maintain price stability
to maintain the economic growth that is consistent with full-employment
During the 1970's, the Fed often reacted to negative oil shocks by increasing the money
supply and focusing on: - Correct Answer -increasing long-run growth in the economy
Why is monetary policy not fully effective in combating a negative supply shock? - Correct
Answer -when countering a negative supply shock, Fed action will raise inflation.
The group that formulates and implements monetary policy is... - Correct Answer -the federal
open market committee (FOMC)
An open market operation occurs when: - Correct Answer -the Fed buys or sells government
bonds
When the fed wants to increase interest rates, it: - Correct Answer -sells bonds in the open
market
2
WITH RIGHT VERIFIED ANSWERS .
Which of the following is not a duty performed by the federal reserve system? - Correct
Answer -manage the federal budget deficit
Suppose the federal reserve's objective was to maintain price stability. In the Real Business
Cycle Model, where prices are fully flexible, how would the Federal Reserve respond to a
positive technology shock? - Correct Answer -they would buy bonds
The federal reserve can influence the economy by shifting: - Correct Answer -the dynamic
AD curve
the federal reserve is the - Correct Answer -federal governments bank
US Central Bank
banker's bank in the US
Why are debit cards not listed as money? - Correct Answer -debit cards draw on checkable
deposits, which are already counted as money.
The monetary base(MB) refers to: - Correct Answer -currency plus (total reserves)
M2 includes: - Correct Answer -currency, checkable deposits, savings deposits, money
market mutual funds, and small-time deposits
The federal reserve's major tools to control the money supply are: - Correct Answer -Open
market operations,
discount rate lending and the term auction facility,
required reserve ratio and payment of interest on reserves
1
, The tool the federal reserve uses most frequently to influence the money supply is - Correct
Answer -open market operations
All else held equal, when the federal reserve makes an open market purches, the money
supply: - Correct Answer -increases
if businesses react to a pessimistic outlook and decrease spending, the Fed can counteract this
by: - Correct Answer -increasing money supply, which may lower real interest rates and
encourage borrowing
The fed's job in manipulating monetary policy is made harder by the fact that: - Correct
Answer -the fed has to operate in real time and information on recessions usually becomes
available with a lag.
The federal reserve's dual mandate refers to the Fed's main objectives - Correct Answer -to
maintain price stability
to maintain the economic growth that is consistent with full-employment
During the 1970's, the Fed often reacted to negative oil shocks by increasing the money
supply and focusing on: - Correct Answer -increasing long-run growth in the economy
Why is monetary policy not fully effective in combating a negative supply shock? - Correct
Answer -when countering a negative supply shock, Fed action will raise inflation.
The group that formulates and implements monetary policy is... - Correct Answer -the federal
open market committee (FOMC)
An open market operation occurs when: - Correct Answer -the Fed buys or sells government
bonds
When the fed wants to increase interest rates, it: - Correct Answer -sells bonds in the open
market
2
