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The Financial Sector / Monetary Policy Practice

Authored by Anonymous Anonymous

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9th - 12th Grade

Used 12+ times

The Financial Sector / Monetary Policy Practice
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8 questions

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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

When the interest rate rises, bond prices

decrease

increase

are unchanged because the interest rate on a bond is fixed

are adjusted by the US Treasury

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The RRR is 25%. This means the money multiplier will be

5

10

20

4

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following actions by the Fed will result in a decrease in the money supply?

an increase in the RRR

a tax increase

a decrease in the discount rate

buying government securities on the open market

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The RRR is 10%. You deposit $1000 cash in your bank. What is the initial increase in demand deposits from this transaction?

$1000

$900

$9000

$10000

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The reserve requirement is 10%. You deposit $1000 cash into your bank. What is the maximum increase in demand deposits in the banking system that eventually results from this transaction?

$1000

$9000

$10000

$100

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The reserve requirement is 10%. You deposit $1000 cash in your bank account. What is the maximum increase in the money supply that could result from this transaction?

$900

$1000

$9000

$10000

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The reserve requirement is 20%. The Fed buys $1 million in bonds on the open market. What is the initial increase in excess reserves?

$800,000

$1 million

$5 million

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