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If the U.S. Treasury deposits income tax receipts into its account at the Federal Reserve, then
a. the money multiplier will decrease
b. the money multiplier will increase
c. the monetary base will decrease
d. the monetary base will increase
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Expected inflation can be estimated as
a. the return on a TIPS bond
b. the return on a Treasury bond
c. the return on a TIPS bond minus the return on a Treasury bond
d. the return on a Treasury bond minus the return on a TIPS bond
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A decrease in the expected return on stocks will
a. shift the demand curve for bonds leftwards
b. shift the demand curve for bonds rightwards
c. shift the supply curve for bonds leftwards
d. shift the supply curve for bonds rightwards
-
Which of the following is part of M2?
a. Small time deposits
b. Money market mutual fundsc. Currency held by foreigners
d. All of the above
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- Should the economy’s current fragile recovery gather momentum, it is likely the Federal Reserve will decide to subtract liquidity from the economy. How will it do that? By selling U.S. Treasury bonds By purchasing U.S. Treasury bonds By having the U.S. Treasury purchase goods and services By having the U.S. Treasury lower taxes By having the U.S. Treasury raise taxesThe nominal interest rate is adjusted based on _______ from the real interest rate. A. government controls B. inflation C. income growth D. exchange rate movementsWhich of the following Federal Reserve actions could lead to an appreciation of the U.S. dollar? Select one : (1)An increase in the monetary base (2)A discount rate decrease (3) A required reserve ratio reduction (4)A sale of government bonds (5)A purchase of government bonds
- All else being equal, if a central bank buys government bonds from the market it would: a. mean savings in the economy are likely to increase. b. mean the supply of loanable funds would move to the left. c. increase the money supply. d. increase interest rates.If the Fed buys loans from banks, what is the impact on the Loanable Funds Market? A) Decreases the supply of loanable funds and lowers the interest rate. B) Increases the supply of loanable funds and lowers the interest rate. C) Decreases the supply of loanable funds and raises the interest rate. D) Increases the supply of loanable funds and raises the interest rate.Commercial banks increase their reserves after the Fed increases the interest rate it pays on reserves. Which of the columns above could represent this action?
- If the treasury bonds in country A consistently yield more returns compared to those in country B, we would see __ . (assuming treasury bonds are risk-free) a. Country A goes bankrupt b. The currency in country A appreciates against the currency in country B over time c. The currency in country A depreciates against the currency in country B over time d. The currency exchange rate is unaffected.Suppose that the Fed wants to lower long-term interest rates and buys all the Treasury securities banks hold. Reflect those changes on the balance sheet (commitment to low long term interest rate environment, QE)All other things being equal, which of the following would cause interest rates to rise? a. The economy slides into a recession. b. The federal government's budget deficit declines. c. The rate of inflation decreases. d. The Federal Reserve contracts the money supply.
- For each of the following monetary policy tools:A. The BSP buys securities in the open market.B. The BSP sells foreign exchange currentC. The BSP increases the reserve requirement ratio.D. The BSP applies its moral suasion ability requesting commercial banks to lowerdown interest rates.E. The government decided to deposit funds at the BSP.1. Determine whether the monetary tool imposed by the BSP is an expansionary or acontractionary policy.Which of the following will have the same effect on money supply as raising the reserve requirement? a) The central bank decreases the interest rate. b) The central bank purchases bonds in the market. c) The central bank purchases securities and debentures in the market. d) Lower bond prices.Reserve requirements effectively impose a tax on bank deposits that reduce profits. Why does this tax increase with the interest rate? A. States tend to increase franchise fees on banks as interest rates rise B. Reserve requirements increase as interest rates rise C. Banks earn more money as interest rates increase, so their federal income taxes increase. D. Banks could earn more money if they could lend the funds required to be held as reserves.