Page |1
Eco4223 Exam 2: Updated Exam With
100% Verified Questions And Correct
Solutions From Actual Past Exam|
Excellent Scores
During a recession, the supply of bonds______, and the supply curve shifts to
the___________, everything else held constant.
a. increases; right
b. decreases; left
c. increases; left
d. decreases; right - correct-answer-decreases; left
An open market operation is
a. equivalent to printing money
b. a purchase of real government assets by the Fed
c. a purchase or sale of bonds by the central bank
d. buying or selling dollars in the foreign exchange market - correct-answer-a
purchase or sale of bonds by the central bank
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In the simple deposit expansion model, if the Fed purchases $100 worth of bonds
from a bank that previously had no excess reserves, this bank can now increase its
loans by
a. $100 times the required reserve ratio
b. $10
c. $100
d. $100 times the reciprocal of the required reserve ratio. - correct-answer-$100
times the reciprocal of the required reserve ratio
Suppose that from a new checkable deposit, First National Bank holds two million
dollars in vault cash, eight million dollars on deposit with the Federal Reserve, and
one million dollars in required reserves. Given this information, we can say First
National Bank has __________ million dollars in excess reserves.
a. eleven
b. ten
c. three
d. nine - correct-answer-nine
If 1-year interest rates for the next three years are expected to be 8, 7, and 6
percent, then according to expectations theory the interest rate on a 3 year bond
will be
a. 6
Eco4223 Exam 2: Updated Exam With
100% Verified Questions And Correct
Solutions From Actual Past Exam|
Excellent Scores
During a recession, the supply of bonds______, and the supply curve shifts to
the___________, everything else held constant.
a. increases; right
b. decreases; left
c. increases; left
d. decreases; right - correct-answer-decreases; left
An open market operation is
a. equivalent to printing money
b. a purchase of real government assets by the Fed
c. a purchase or sale of bonds by the central bank
d. buying or selling dollars in the foreign exchange market - correct-answer-a
purchase or sale of bonds by the central bank
, Page |2
In the simple deposit expansion model, if the Fed purchases $100 worth of bonds
from a bank that previously had no excess reserves, this bank can now increase its
loans by
a. $100 times the required reserve ratio
b. $10
c. $100
d. $100 times the reciprocal of the required reserve ratio. - correct-answer-$100
times the reciprocal of the required reserve ratio
Suppose that from a new checkable deposit, First National Bank holds two million
dollars in vault cash, eight million dollars on deposit with the Federal Reserve, and
one million dollars in required reserves. Given this information, we can say First
National Bank has __________ million dollars in excess reserves.
a. eleven
b. ten
c. three
d. nine - correct-answer-nine
If 1-year interest rates for the next three years are expected to be 8, 7, and 6
percent, then according to expectations theory the interest rate on a 3 year bond
will be
a. 6
