Question 1 of 50 1 0 1 0 Points The first official statement of goals for macroeconomic performance in the United States came with the passage of the A Federal Reserve Act of 1913 B Employment Act of 1946 C Great Depression Act of 1933 D Full Employment and Balanced Growth Act of 1978 Answer Key B Question 2 of 50 1 0 1 0 Points A liquidity trap is said to exist when a change in monetary policy has no effect on A the money supply B the natural level of employment C aggregate supply D interest rates Answer Key D Question 3 of 50 1 0 1 0 Points The shortest time lag for monetary policy is the implementation lag A True B False Answer Key True Question 4 of 50 1 0 1 0 Points When the Fed purchases government bonds it reserves and the money supply and the fed finds rate A decreases increases increases B increases decreases decreases C decreases decreases decreases D increases increases decreases Answer Key D Question 5 of 50 1 0 1 0 Points The Federal Reserve System is made up of twelve regional banks owned by A commercial banks in the respective districts that have chosen to be members of the Fed B Wall Street investors C the Board of Governors appointed by the President D the U S Treasury Answer Key A Question 6 of 50 1 0 1 0 Points When the Fed sells government bonds in the open market the money supply will increase A True B False Answer Key False Question 7 of 50 1 0 1 0 Points A primary function of a central bank is to A regulate dividend payments by corporations B control the bond market C set monetary policy D publish statistics on banking and related financial matters Answer Key C Question 8 of 50 1 0 1 0 Points The Federal Reserve does all of the following except A make loans to individuals B influence the supply of money C influence the value of money D regulate the banking system Answer Key A Question 9 of 50 1 0 1 0 Points Which of the following statements about the structure of the Fed is an advantage from the perspective of conducting monetary policy A The Fed works closely with Congress in formulating monetary policy B The policy is decided solely by the Board of Governors C The FOMC gets input from Federal Reserve banks throughout the country D Each of the Federal reserve banks is able to act independently of the Board of Governors Answer Key C Question 10 of 50 1 0 1 0 Points When the Fed lowers the target rate of interest for federal funds it A buys government bonds B lowers the discount rate C sells government bonds D lowers the required reserve ratio Answer Key A Question 11 of 50 1 0 1 0 Points The Fed is structured as an agency of the executive branch with the Chairman of the Fed answering directly to the President A True B False Answer Key False Question 12 of 50 0 0 1 0 Points The time between recognizing the existence of a problem and adopting a course of action to deal with the problem is called the A impact lag B recognition lag C implementation lag D theory lag Answer Key C Question 13 of 50 0 0 1 0 Points At the end of 2008 the federal funds rate in the United States was close to zero Which of the following is a major concern associated with such a low rate A That traditional monetary policy will have no impact on the economy B Such a low rate spurs excessive consumption and investment spending which may lead to inflation C Such a low rate spurs excessive consumption and investment spending which may lead to deflation D Economic agents might be unwilling to borrow in anticipation of even lower interest rates Answer Key A Question 14 of 50 1 0 1 0 Points What is meant by the term credit easing A It is a strategy which involves the extension of central bank lending to influence more broadly the proper functioning of credit markets and to improve liquidity B It is a strategy which involves keeping interest rates very low by providing substantial reserves for as long as is necessary to avoid deflation and encourage spending C It is a strategy which involves lowering the required reserve ratio and lowering the federal funds rate to encourage banks to increase loan creation D It is a strategy which involves allowing interest rates to rise slowly by providing substantial reserves for as long as is necessary to avoid inflation Answer Key A Question 15 of 50 0 0 1 0 Points The seven members of the Board of Governors serve 14 year terms to A provide steady employment B reduce political influence C prevent illegal appointments D inhibit independent decisions Answer Key B Question 16 of 50 0 0 1 0 Points For a given level of reserves an increase in the reserve requirement ratio will A decrease legal reserves and decrease the money supply B increase legal reserves and decrease excess reserves C increase legal reserves and increase excess reserves D increase excess reserves and increase the money supply Answer Key B Question 17 of 50 1 0 1 0 Points If the Fed increases the discount rate it is pursuing A a contractionary policy because it will be more costly for banks to borrow funds and this puts upward pressure on interest rates in the economy B a contractionary policy because it reduces banks profit margins by raising the cost of borrowing and lowering the return on lending C an expansionary policy because it raises the cost of holding excess reserves in the banking system D an expansionary policy because it increases bank profits by putting upward pressure on the interest rates that banks can charge on its loans Answer Key A Question 18 of 50 1 0 1 0 Points The rate is the interest rate at which the Fed lends to commercial banks A federal funds rate deposits B federal funds rate reserves C discount rate deposits D discount rate reserves Answer Key D Question 19 of 50 1 0 1 0 Points If the Fed purchases federal government bonds on the open market bank reserves will leading to a n in the money supply A decrease decrease B increase decrease C increase increase D decrease increase Answer Key C Question 20 of 50 0 0 1 0 Points When you hear talk of the government printing money they are referring to the possibility of A Treasury printing currency without Fed authorization B Fed purchases of newly issued government debt C Fed literally printing new bills D None of the above Answer Key B Question 21 of 50 1 0 1 0 Points The Federal Reserve System was created in order to provide a constant money supply for the economy A True B False Answer Key False Question 22 of 50 1 0 1 0 Points When the Fed buys bonds in the open market …