ecn 211 exam 3 2026 Questions and
Answers
The federal funds rate is the
- percentage of deposits that banks must hold as reserves.
- interest rate at which the Federal Reserve makes short-term loans to banks.
- percentage of face value that the Federal Reserve is willing to pay for Treasury
Securities
- interest rate at which banks lend reserves to each other overnight. - Correct
answer-interest rate at which banks lend reserves to each other overnight.
Which of the following entities actually executes open-market operations?
the Federal Open Market Committee
the New York Federal Reserve Bank
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, the Open Market Committees of the regional Federal Reserve Banks the Board of
Governors - Correct answer-the New York Federal Reserve Bank
Other things the same, if reserve requirements are increased, the reserve ratio
- increases, the money multiplier decreases, and the money supply decreases.
- decreases, the money multiplier decreases, and the money supply increases.
- increases, the money multiplier increases, and the money supply increases.
- decreases, the money multiplier increases, and the money supply increases. -
Correct answer-increases, the money multiplier decreases, and the money supply
decreases. (Since Reserve Requirement is a minimum amount of Reserve that must
be held by the banks
So when reserve requirement increases then the bank will increase the required
reserve ratio to increase more reserves.
Now since money multiplier=1/reserve ratio.
So as reserve ratio increases then money multiplier will decrease and reduces the
money supply.)
If the discount rate is raised then banks borrow
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Answers
The federal funds rate is the
- percentage of deposits that banks must hold as reserves.
- interest rate at which the Federal Reserve makes short-term loans to banks.
- percentage of face value that the Federal Reserve is willing to pay for Treasury
Securities
- interest rate at which banks lend reserves to each other overnight. - Correct
answer-interest rate at which banks lend reserves to each other overnight.
Which of the following entities actually executes open-market operations?
the Federal Open Market Committee
the New York Federal Reserve Bank
©COPYRIGHT 2025, ALL RIGHTS RESERVE 1
, the Open Market Committees of the regional Federal Reserve Banks the Board of
Governors - Correct answer-the New York Federal Reserve Bank
Other things the same, if reserve requirements are increased, the reserve ratio
- increases, the money multiplier decreases, and the money supply decreases.
- decreases, the money multiplier decreases, and the money supply increases.
- increases, the money multiplier increases, and the money supply increases.
- decreases, the money multiplier increases, and the money supply increases. -
Correct answer-increases, the money multiplier decreases, and the money supply
decreases. (Since Reserve Requirement is a minimum amount of Reserve that must
be held by the banks
So when reserve requirement increases then the bank will increase the required
reserve ratio to increase more reserves.
Now since money multiplier=1/reserve ratio.
So as reserve ratio increases then money multiplier will decrease and reduces the
money supply.)
If the discount rate is raised then banks borrow
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