C211 Global Economics for Managers Second Attempt Competency 4
quiz solution with correct answers Western Governors University
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Second Attem pt Com petency 4
When there is an excess supply of money,
a. people will try to get rid of money causing interest rates to rise. Investment decreases.
b. people will try to get rid of money causing interest rates to rise. Investment increases.
c. people will try to get rid of money causing interest rates to fall. Investment increases.
d. people will try to get rid of money causing interest rates to fall. Investment decreases.
The Federal Reserve
a. is the central bank of the United States.
b. was created in 1896.
c. is only responsible for controlling the money supply.
d. is part of the executive branch of government.
The discount rate is
a. the interest rate banks receive on reserve deposits with the Fed.
b. one divided by the difference between one and the reserve ratio.
c. the interest rate the Fed charges banks.
d. the interest rate that banks charge on overnight loans to other banks.
Monetary policy affects the economy with a long lag, in part because
a. changes in interest rates primarily influence consumption spending, and households make consumption plans far
in advance.
b. monetary policy works through changes in interest rates, and the Fed does not have the ability to change interest
rates quickly.
c. proposals to change monetary policy must go through both the House and Senate before being sent to the
president.
d. changes in interest rates primarily influence investment spending, and firms make investment plans far in advance.
Which of the following is not a function of money?
a. Unit of account
b. Medium of exchange
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