Exam Name MULTIPLE CHOICE Choose the one alternative that best completes the statement or answers the question 1 The purpose of the commitment by the Fed to keep the federal funds rate at zero for a long period of time is to 1 A increase the long term interest rates B increase the short term interest rates C lower the long term interest rates D lower the short term interest rates 2 In the market for reserves when the federal funds rate is above the interest rate paid on excess reserves the demand curve for reserves is 2 A horizontal B positively sloped C negatively sloped D vertical 3 The quantity of reserves supplied equals 3 A total reserves minus required reserves B nonborrowed reserves plus borrowed reserves C required reserves plus borrowed reserves D nonborrowed reserves minus borrowed reserves 4 When the federal funds rate equals the discount rate 4 A the demand curve for reserves is vertical B the supply curve of reserves is horizontal C the demand curve for reserves is horizontal D the supply curve of reserves is vertical A lowers the federal funds rate B raises the federal funds rate C has no effect on the federal funds rate D has an indeterminate effect on the federal funds rate A lowers the federal funds rate B raises the federal funds rate C has no effect on the federal funds rate D has an indeterminate effect on the federal funds rate 5 Everything else held constant in the market for reserves when the federal funds rate is 3 increasing the interest rate paid on excess reserves from 1 to 2 5 6 Everything else held constant in the market for reserves when the federal funds rate is 1 increasing the interest rate paid on excess reserves from 1 to 2 6 7 Everything else held constant in the market for reserves increases in the discount rate affect the federal funds rate 7 A when the funds rate equals the discount rate B when the demand for federal funds intersects the vertical section of the reserve supply curve C when the demand for federal funds equals zero D when the funds rate is below the discount rate 8 In the market for reserves if the federal funds rate is between the discount rate and the interest rate paid on excess reserves a in the reserve requirement increases the demand for reserves the federal funds interest rate everything else held constant 8 A rise lowering B decline raising C rise raising D decline lowering 9 When bad storms slow the check clearing process float tends to causing the Fed to initiate open market 9 A decrease defensive sales B increase defensive sales C decrease dynamic purchases D increase dynamic purchases 10 Suppose FOMC revises its target federal funds rate downward If the Federal Reserve wishes for the federal funds rate to be at their target level then the appropriate action for the Federal Reserve to take is a open market everything else held constant 10 A dynamic sale B defensive purchase C defensive sale D dynamic purchase 1 C 2 C 3 B 4 B 5 C 6 B 7 A 8 C 9 B 10 D
View Full Document
Unlocking...