Macro Unit 4: Financial Sector ( money market, loanable funds)

In the money supply, what represents the cash held by the public and money deposited in checking accounts?

• M1
• liquidity
• M2
• store of value

The interest rate the Fed charges commercial banks for loans

• Fed Fund Rate
• Reserve Requirement Rate
• Discount Rate
• I.O.U Rate

Buying bonds

• increases money supply
• decreases money supply

What is the multiplier if the reserve requirement is 25%?

• 4
• 5
• 40
• .4

Stimulus checks, lower interest rates, decrease in the reserve requirement and lower taxes are all examples of

• Monetary Policy
• Fiscal Policy
• Contractionary Policy
• Expansionary Policy

If policy makers are concerned about inflation, which fiscal and monetary policies would be MOST effective? 

• lowering taxes and buying bonds
• lowering taxes and raising the reserve requirement
• increasing taxes and lowering the discount rate
• increasing taxes and selling bonds

If the Federal Reserve raises interest rates to combat rapid inflation, what might be a negative outcome?

• Unemployment rates would rise
• taxes will rise 
• The government would put a freeze on prices
• international trade would stop 

How much must the bank keep on hand if the Required Reserve is 10%  and there is a deposit of $100.

• 100
• 110
• 90
• 10

Which monetary policy decision is meant to increase the money supply?

• Congress passes a rule to reduce personal income taxes.
• The Federal Reserve buys treasury bonds on the open market.
• Congress passes a bill to reduce regulations on monopolies.
• The Federal government borrows money from a foreign bank to cover a budget deficit.

How many districts make up the regional component of the Federal Reserve?

• 12
• 7
• 9
• 13