1. Which of the following is not a goal of the Federal Reserve?
a. Low inflation with limited year to year volatility.
b. High and stable GDP growth.
c. Moderate interest rates.
d. Low tax rates.
e. Stable economic growth with low unemployment. -ANS d
2. Which of the following are Federal Res...
Test Bank 3 100% PASSED
1. Which of the following is not a goal of the Federal Reserve?
a. Low inflation with limited year to year volatility.
b. High and stable GDP growth.
c. Moderate interest rates.
d. Low tax rates.
e. Stable economic growth with low unemployment. -ANS d
2. Which of the following are Federal Reserve policy tools?
a. Open market operations.
b. Discount window.
c. Required Reserve Ratio.
d. All of the Above.
e. None of the Above. -ANS d
3. Who is the current chairman of the Fed?
a. Janet Yellen
b. Ben Bernanke
c. Alan Greenspan
d. Murray Rothbard.
e. Joe Biden, as by law the Vice President is automatically the Chairman of the Fed. -ANS a
4. Which of these is a problem making monetary policies ineffective or uncertain?
a. Time lags.
,b. Discretionary policies.
c. Rules.
d. All of the above. Yea
e. Only A and B of the above. -ANS e
5. Which one of the following is the major policy tool of the Fed's?
a. The required reserve ratio.
b. The discount window.
c. Open market operations.
d. The prime rate of interest.
e. Regulations on how much banks can lend. -ANS c
6. What is/are among the purposes of the Federal Reserve System?
a. Develop, supervise, and control the nation's money.
b. Serve as a national check clearing system.
c. Serve as depository for federal government funds.
d. All of the above.
e. None of the above. -ANS d
7. The Federal Reserve Version 2.0 began in:
a. 1913
b. 1920
c. 1925
d. 1935
e. None of the above. -ANS d
, 8. If the bond prices are high, interest rates tend to be:
a. Low.
b. high.
c. about 5%.
d. about 10%.
e. either high or low, since they are not related to one another. -ANS a
9. What is one suggestion that would tend to make monetary policy rules credible?
a. Appoint a "liberal" central banker.
b. Make the central bank less independent from the government.
c. Have them change their rules periodically to prove that they are serious.
d. Place constitutional limits on monetary policy.
e. Add an eighth member to the Board of Governors. -ANS d
10. Favorable characteristics of money would include it being:
a. portable, durable, and recognizable.
b. portable, green, and backed by British goods.
c. portable, convenient, and ethical.
d. portable, commercial, and used for the welfare of the community.
e. promotional of closer community ties, durable, and addicting. -ANS a
11. What kind of goals are monetary policy supposed to achieve?
a. Low inflation with high year to year variability.
b. Promotion of cyclical changes in unemployment in order to manage the economy.
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