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The Fed’s monetary target shifted in the late 1980s and 1990s when the Fed’s focus shifted from the interest rate to the money supply

The Fed’s monetary target shifted in the late 1980s and 1990s when the

a.Fed’s focus shifted from the interest rate to the money supply to counter persistent
high inflation

b.Fed used its discretion to make the money supply conform to a targeted interest rate

c.Fed realized that higher interest rates could not stimulate investment, aggregate
demand, and real GDP

d.Fed became less concerned about inflation and worried more about recession

e.Fed abandoned its no-new-taxes pledge

52.              Ancillary tools available to the Fed besides the big three policy options include

a.the discount rate and moral suasion

b.margin requirements and moral suasion

c.margin requirements and reserve requirements

d.the federal funds rate and the discount rate

e.open market operations and bracket creep

53.              The maximum percentage of a stock’s value that can be used as collateral to borrow from
                            a bank is known as the

a.discount rate

b.federal funds rate

c.reserve requirement

d.margin requirement

e.ancillary suasion

54.              “Speculators may do no harm as bubbles on a steady stream of enterprise. But the
                            position is serious when enterprise becomes the bubble on a whirlpool of speculation.”
                            This is an apt quote by

a.J. M. Keynes about the stock market crash

b.Alan Greenspan about the Asian markets

c.Paul Volcker about runaway inflation

d.Franklin Roosevelt about railroad stock speculators

e.Bill Clinton about his balanced budget

55.              When the Chairman of the Board of Governors explains in a television interview that the
                            Fed hopes banks show more restraint in providing consumer credit because inflation is a
                            problem, he is attempting to use

a.indirect theory instead of direct policy

b.reason over passion in money matters

c.selective media information

d.moral suasion

e.the paradox of thrift

56.              When a recession occurs, we would expect the government to run a budget deficit by
                            raising the level of its spending or by cutting taxes, or perhaps both. The Fed would be
                            expected to

a.reduce the legal reserve requirement, increase the discount rate, and buy securities on
the open market

b.reduce the legal reserve requirement, reduce the discount rate, and sell securities on
the open market

c.reduce the legal reserve requirement, reduce the discount rate, and buy securities on
the open market

d.increase the legal reserve requirement, reduce the discount rate, and sell securities on
the open market

e.increase the legal reserve requirement, increase the discount rate, and sell securities
on the open market

57.              When the economy is at full employment and inflation develops, the government creates a
                            surplus budget by cutting its own spending and raising taxes. The Fed would

a.reduce the legal reserve requirement, increase the discount rate, and buy securities on
the open market

b.reduce the legal reserve requirement, reduce the discount rate, and sell securities on
the open market

c.reduce the legal reserve requirement, reduce the discount rate, and buy securities on
the open market

d.increase the legal reserve requirement, reduce the discount rate, and sell securities on
the open market

e.increase the legal reserve requirement, increase the discount rate, and sell securities
on the open market

58.              Which of the following statements concerning the First Bank of the United States is not
                            true?

a.Its goal was to prevent state-chartered banks from overissuing bank notes.

b.Its charter lasted 20 years.

c.It was the first version of a central bank in the United States.

d.It served as the government’s fiscal agent.

e.It was the first bank chartered in the United States.

59.              Which of the following statements concerning the First Bank of the United States is not true?

a.Its creation was proposed by Alexander Hamilton.

b.States’ rights advocates opposed its creation.

c.It could present state bank notes to the state banks for payment in specie.

d.It was the first central bank in the world.

e.It was able to control the money supply.

60.              Which one of the following statements concerning the Second Bank of the United States

is not true?

a.It was created five years after the demise of the First Bank of the United States.

b.It had the right to issue its own notes.

c.It pressed for sounder specie backing of bank notes.

d.Its notes became the most widely accepted currency in the nation.

e.It faced strong regional resistance in the North.

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