The Federal Reserve System performs many functions, but its most important one is:
A. controlling the money supply.
B. supervision of commercial banks.
C. issuing currency.
D. lending money to banks and thrifts.
Answer: A
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Suppose there are only two goods: guns and roses. In Los Angeles, the absolute price of roses is 50 dollars per dozen. If the relative price of roses in terms of guns is 1 guns per dozen roses, then the absolute price of guns is
a. 5 dollars per gun. b. 2 cents per gun. c. 50 dollars per gun. d. 50 cents per gun.
The economic view that retains the assumption of rational expectations but drops the assumption of completely flexible prices and wages is called
A. new Keynesian economics. B. real business-cycle economics C. supply-side economics. D. monetarism.
An investor owns bond #1 that has a rate of return of 10 percent, but a similar bond #2 has an 11 percent return and equal risk. By selling bond #1 and buying bond #2 to earn a higher return, the investor is engaging in:
A. Pooling B. Arbitrage C. Diversification D. Time preference
The third round of quantitative easing, announced in September 2012, was focused on purchases of:
A) short-term Treasury bills B) long-term Treasury notes C) long-term Treasury notes and sales of short-term Treasury bills D) mortgage-backed securities