Answer the following statements true (T) or false (F)
1) The Fed increases interest rates mainly by selling government securities.
2) Ben Bernanke is the current (2013) chair of the Board of Governors.
3) A change in the reserve ratio will affect both the amount of the banking system's excess
reserves and the multiple by which the system can lend on the basis of excess reserves.
4) The federal funds rate target is the most frequently used monetary policy tool.
1) T
2) T
3) T
4) F
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Free trade is ________, because it ________ the size of the pie available to the economy.
A. efficient; decreases B. inefficient; decreases C. inefficient; increases D. efficient; increases
The maturation date of a bond is the date at which:
A. the principal will be repaid. B. dividend payments will be made. C. taxes on the bond are due. D. coupon payments will be made.
As the Fed lowers the federal funds rate,
A) the price level falls. B) real GDP decreases. C) aggregate demand increases. D) aggregate supply increases. E) aggregate income decreases.
In the spring of 1994, Northwest Airlines took the independent action of reducing fares on its flights. Other competing airlines quickly matched the fare cuts. These actions might be interpreted as:
A) a noncooperative game. B) a cooperative game. C) a constant sum game. D) a competitive game.