Questions from General Economics

Q: When bond prices go up, interest rates go_______ .

When bond prices go up, interest rates go_______ . a. Up. b. Down. c. Nowhere.

Q: A commercial bank sells a Treasury bond to the Federal Reserve for

A commercial bank sells a Treasury bond to the Federal Reserve for $100,000. The money supply: a. Increases by $100,000. b. Decreases by $100,000. c. Is unaffected by the transaction.

Q: Use commercial bank and Federal Reserve Bank balance sheets to demonstrate the

Use commercial bank and Federal Reserve Bank balance sheets to demonstrate the effect of each of the following transactions on commercial bank reserves: a. Federal Reserve Banks purchase securities f...

Q: A bank currently has $100,000 in checkable deposits and

A bank currently has $100,000 in checkable deposits and $15,000 in actual reserves. If the reserve ratio is 20 percent, the bank has ___________ in money-creating potential. If the reserve ratio is 14...

Q: A bank borrows $100,000 from the Fed, leaving

A bank borrows $100,000 from the Fed, leaving a $100,000 Treasury bond on deposit with the Fed to serve as collateral for the loan. The discount rate that applies to the loan is 4 percent and the Fed...

Q: Which of the following Fed actions will increase bank lending?

Which of the following Fed actions will increase bank lending? Select one or more answers from the choices shown. a. The Fed raises the discount rate from 5 percent to 6 percent. b. The Fed raises th...

Q: If the Federal Reserve wants to increase the federal funds rate using

If the Federal Reserve wants to increase the federal funds rate using open-market operations, it should _____________bonds. a. Buy. b. Sell.

Q: True or False: A liquidity trap occurs when expansionary monetary policy

True or False: A liquidity trap occurs when expansionary monetary policy fails to work because an increase in bank reserves by the Fed does not lead to an increase in bank lending.

Q: True or False: In the United States, monetary policy has

True or False: In the United States, monetary policy has two key advantages over fiscal policy: (1) isolation from political pressure and (2) speed and flexibility.

Q: Which of the following are included or excluded in this year’s GDP

Which of the following are included or excluded in this year’s GDP? Explain your answer in each case. a. Interest received on an AT&T corporate bond. b. Social Security payments received by a retired...