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Policy directives issued by the Fed to moderate swings in the business cycle are acountercyclical fiscal policy channeled through the Treasury Department

 Policy directives issued by the Fed to moderate swings in the business cycle are

a.countercyclical fiscal policy

b.channeled through the Treasury Department

c.countercyclical monetary policy

d.first approved by the appropriations committees of the U.S. House of Representatives
and the Senate

e.federal funds activity

122.              Countercyclical monetary policy is policy directives issued by

a.the Fed to moderate swings in the business cycle

b.the Fed to intensify swings in the business cycle

c.the Treasury designed to increase government spending during recessions

d.Congress to moderate swings in the business cycle

e.the President to intensify swings in the business cycle

123.              The minimum amount of reserves the Fed requires a bank to hold

a.is the excess reserve requirement

b.is the legal reserve requirement

c.is the deposit requirement

d.depends on the interest rate

e.depends on the money supply

124.              The legal reserve requirement is the

a.actual amount of reserves that banks must hold

b.excess amount of reserves that a bank must hold

c.minimum amount of reserves the Fed requires a bank to hold

d.total amount of reserves that banks hold at all times

e.maximum amount of reserves that banks can hold to remain liquid

125.              If you were a professor of economics explaining to your class the three primary tools of
                            monetary policy used by the Fed, you would write on the chalk board

a.changes in the legal reserve requirement, changes in the discount rate, and changes in
tax rates

b.changes in the legal reserve requirement, changes in tax rates, and open market
operations

c.changes in tax rates, changes in the discount rate, and open market operations

d.changes in the legal reserve requirement, open market operations, and moral suasion

e.changes in the legal reserve requirement, changes in the discount rate, and open
market operations

126.              If you were a professor of economics and asked the class what would happen when the
                            Fed raises the legal reserve requirement, you would hope to hear that the banks

a.must reduce the amount of loans they make

b.can increase the amount of loans they make

c.must reduce the interest rate they charge on the loans they make

d.can raise the interest rate on loans they make

e.must reduce the federal funds rate they charge to other banks

127.              When the Fed decreases the legal reserve requirement, then the banks

a.must reduce the amount of loans they make

b.can increase the amount of loans they make

c.must reduce the interest rate they charge on loans they make

d.can increase the interest rate they charge on loans they make

e.must reduce the federal funds rate they charge to other banks

128.              Lowering the legal reserve requirement might not result in an increase in the money
                            supply if

a.tax rates are also lowered at the same time

b.tax rates are increased at the same time

c.borrowers are unwilling to borrow the new funds the banks have available for loans

d.borrowers are willing to borrow the new funds the banks have available for loans

e.borrowers expand their borrowing because of the lower interest rates that banks offer

129.              When the Fed reduces the discount rate, it is more likely that the economy experiences
                            _________ and the fall in the rate will _____________

a.inflation; decrease the use of open market operations

b.inflation; decrease the federal funds rate as well

c.recession; increase the federal funds rate as well

d.recession; decrease the cost to banks of borrowing from the Fed

e.inflation; decrease the cost to banks of borrowing from the Fed

130.              When the Fed increases the discount rate, it is more likely that the economy experiences
                            _________ and the increase in the rate will _____________

a.recession; increase the federal funds rate as well

b.recession; increase the cost to banks of borrowing from the Fed

c.recession; decrease the cost to banks of borrowing from the Fed

d.inflation; decrease the cost to banks of borrowing from the Fed

e.inflation; increase the cost to banks of borrowing from the Fed

Feb 11 2020 View more View Less

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