Question 1

Which of the following tools of monetary policy is ﬂexible and able to affect bank reserves quickly and by relatively speciﬁc amounts?

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Question 2

Which of the monetary policy tools can alter both the level of excess reserves and the money multiplier?

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Question 3

The discount rate is the rate of interest at which

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Question 4

The discount rate is the interest

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...

Question 5

A decrease in the reserve ratio increases the

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Question 6

Suppose that, for every 1-percentage-point decline in the discount rate, commercial banks collectively borrow an additional $2 billion from Federal Reserve Banks. Also assume that the reserve ratio is 10 percent. If the Fed lowers the discount rate from 4.0 percent to
3)5 percent, bank reserves will

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Question 7

Which of the following tools of monetary policy is considered the most important on a day-to-day basis?

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Question 8

Projecting that it might temporarily fall short of legally required reserves in the coming days, the Bank of Beano decides to borrow money from the Federal Reserve Bank in its district. The interest rate on the loan is called the

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Question 9

When the reserve requirement is increased,

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...

Question 10

Suppose that, for every 1-percentage-point decline of the discount rate, commercial banks collectively borrow an additional $2 billion from Federal Reserve Banks. Also assume that the reserve ratio is 20 percent. If the Fed increases the discount rate from 4.0 percent to
4)25 percent, bank reserves will

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Question 11

When the Fed lends money to a commercial bank, the bank

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Question 12

Beginning in 2008, the Fed was allowed to

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Question 13

Interest paid on excess reserves held at the Fed

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Question 14

An increase in the legal reserve ratio

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...

Question 15

The interest rate at which the Federal Reserve Banks lend to commercial banks is called the

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Question 16

Big Bucks Bank currently holds $20 million in excess reserves. If the Fed increases the rate of interest it pays on excess reserves held at the Fed, we would expect Big Bucks Bank to

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Question 17

Assume that the commercial banking system has checkable deposits of $10 billion and excess reserves of $1 billion at a time when the reserve requirement is 20 percent. If the reserve requirement is now raised to 30 percent, the banking system then has

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Question 18

When the required reserve ratio is increased, the excess reserves of banks are

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Question 19

A commercial bank can add to its actual reserves by

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Question 20

If the Fed wants to discourage commercial bank lending, it will

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Quiz 16: Interest Rates and Monetary Policy