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Chapter 28 Test Bank
Multiple Choice Questions
1. Which of the following institutions determines the quantity of money in the economy
as its most important task?
A. U.S. Department of the Treasury
B. Federal Open Market Committee
C. Central Bank
D. Federal Reserve Board of Governors
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
2. The ___________________ is the institution designed to control the quantity of
money in the economy and also to oversee the:
A. FOMC; passing of tax and spending bills.
B. Central Bank; safety and stability of the banking system.
C. FFIEC; day-to-day democratic control of policy.
D. FDIC; responsibility for deposit insurance.
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
3. Which of the following institutions oversees the safety and stability of the U.S. banking
system?
A. Office of the Comptroller of the Currency
B. Federal Financial Institutions Examination Council
C. Federal Open Market Committee
D. The Federal Reserve
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
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4. Which of the following is a traditional tool used by the Fed during recessions?
A. quantitative easing
B. higher interest rates
C. open market operations
D. coins and paper currency
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Remember
5. Which of the following terms is used to describe the proportion of deposits that banks
are legally required to deposit with the central bank?
A. discount requirements
B. deposit requirements
C. reserve requirements
D. monetary requirements
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
6. What term is used to describe the interest rate charged by the central bank when it
makes loans to commercial banks?
A. discount rate
B. reserve requirement
C. Fed rate
D. open market rate
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
7. Which of the following is considered to be a relatively weak tool of monetary policy?
A. quantitative easing
B. altering the discount rate
C. reserve requirements
D. reducing the money supply
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Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
8. A central bank that wants to increase the quantity of money in the economy will:
A. raise the discount rate.
B. sell bonds in open market operations.
C. reverse quantitative easing.
D. buy bonds in open market operations.
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
9. A central bank that desires to reduce the quantity of money in the economy can:
A. raise the reserve requirement.
B. buy bonds in open market operations.
C. lower the discount rate.
D. engage in quantitative easing.
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
10. The quantitative easing policies adopted by the Federal Reserve are usually thought
of as:
A. short term loans to fill out reserves.
B. temporary emergency measures.
C. traditional monetary policies.
D. a relatively weak tool.
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
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Chapter 28 Test Bank
Multiple Choice Questions
1. Which of the following institutions determines the quantity of money in the economy
as its most important task?
A. U.S. Department of the Treasury
B. Federal Open Market Committee
C. Central Bank
D. Federal Reserve Board of Governors
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
2. The ___________________ is the institution designed to control the quantity of
money in the economy and also to oversee the:
A. FOMC; passing of tax and spending bills.
B. Central Bank; safety and stability of the banking system.
C. FFIEC; day-to-day democratic control of policy.
D. FDIC; responsibility for deposit insurance.
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
3. Which of the following institutions oversees the safety and stability of the U.S. banking
system?
A. Office of the Comptroller of the Currency
B. Federal Financial Institutions Examination Council
C. Federal Open Market Committee
D. The Federal Reserve
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
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4. Which of the following is a traditional tool used by the Fed during recessions?
A. quantitative easing
B. higher interest rates
C. open market operations
D. coins and paper currency
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Remember
5. Which of the following terms is used to describe the proportion of deposits that banks
are legally required to deposit with the central bank?
A. discount requirements
B. deposit requirements
C. reserve requirements
D. monetary requirements
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
6. What term is used to describe the interest rate charged by the central bank when it
makes loans to commercial banks?
A. discount rate
B. reserve requirement
C. Fed rate
D. open market rate
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
7. Which of the following is considered to be a relatively weak tool of monetary policy?
A. quantitative easing
B. altering the discount rate
C. reserve requirements
D. reducing the money supply
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Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
8. A central bank that wants to increase the quantity of money in the economy will:
A. raise the discount rate.
B. sell bonds in open market operations.
C. reverse quantitative easing.
D. buy bonds in open market operations.
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
9. A central bank that desires to reduce the quantity of money in the economy can:
A. raise the reserve requirement.
B. buy bonds in open market operations.
C. lower the discount rate.
D. engage in quantitative easing.
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
10. The quantitative easing policies adopted by the Federal Reserve are usually thought
of as:
A. short term loans to fill out reserves.
B. temporary emergency measures.
C. traditional monetary policies.
D. a relatively weak tool.
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
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