Questions with Complete
Solutions
Which statement is true when the Fed has either an easy money policy or a tight money policy? -
Correct Answers: The Fed uses open market operations to influence the money supply.
Which of the following is a broad goal of the Fed's monetary policy? - Correct Answers: To promote
maximum sustainable employment
The amount that the Fed charges a bank for borrowing money from the Fed to meet its reserves
requirement at the end of the day is known which of the following? - Correct Answers: Discount rate
Which of the following is NOT a reason why gold is often used as money? - Correct Answers: It is easier
to trade than paper.
Which of these situations is typical of a system with a decentralized banking system (such as the one the
United States used during the 19th century)? - Correct Answers: Currency printed by an unknown bank
has an uncertain value.
Which statement below about the Federal Reserve is false? - Correct Answers: The president is the head
of the Federal Reserve.
The term for when many bank account holders demand their money at the same time is a __________. -
Correct Answers: run
Which of the following is an example of medium of exchange? - Correct Answers: A person trades an egg
farmer four seashells for one dozen eggs.
Which of the following steps comes first in the federal funds market? - Correct Answers: The Fed sets a
reserve requirement for banks.