If the Fed decides to engage in an open market operation to increase the money supply, what will it do?
A. Sell Treasury bonds, bills, or notes on the bond market.
B. Buy Treasury bonds, bills, or notes on the bond market.
C. Increase the required reserve ratio.
D. Increase the fed funds rate.
Answer: B
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If the Central Bank of Macroland puts an additional 1,000 dollars of currency into the economy, the public deposits all currency into the banking system, and banks have a desired reserve/deposit ratio of 0.10, then the banks will eventually make new loans totaling ________ and the money supply will increase by ________.
A. $9,000; $9,000 B. $9,000; $10,000 C. $1,000; $1,000 D. $1,000; $9,000
When the Fed buys or sells government bonds to private banks in exchange for reserves, it is referred to as:
A) the Fed's dual mandate. B) open market operations. C) reserve targeting. D) moral suasion.
Which of the following is not money?
a. currency b. travelers' checks c. demand deposits d. savings bonds e. NOW accounts
Which of the following is true?
a. Changes in personal costs and benefits will exert a predictable impact on the choices of human decision makers. b. Only direct monetary costs matter in making decisions. c. If a good is provided free to an individual, its production will not consume valuable scarce resources. d. Secondary effects are seldom of importance in economics.