Economics Principles & Practices

Chapter 15: The Fed and Monetary Policy

Self-Check Quizzes

1
The president of the United States appoints the _____-member Federal Reserve Board of Governors to ______-year terms.
A)5, 4
B)8, 15
C)7, 14
D)10, 12
2
Reserves are used to ___________.
A)clear checks and control the size of the money supply
B)increase the money supply and lower inflation
C)decrease the money supply and raise inflation
D)increase Gross Domestic Product and lower inflation
3
A portion of the deposits in the form of coins and currency that banks and other depository institutions are required to hold are called ________ reserves.
A)monetary
B)excess
C)fractional
D)legal
4
The ___________ is the interest the Fed charges on loans to financial institutions.
A)margin requirement
B)discount requirement
C)prime rate
D)discount rate
5
In the short run, monetary policy affects __________.
A)Gross Domestic Product
B)interest rates and available credit
C)inflation
D)productive resources
6
In the long run, changes in the supply of money affect the ____________.
A)aggregate money supply
B)Gross National Product
C)civilian unemployment rate
D)general level of prices
7
Repeated short-run attempts to keep interest rates low result in a _________ of the money supply, making inflation _________.
A)long-term expansion, worse
B)short-term expansion, lessen
C)long-term contraction, lessen
D)short-term contraction, worse
8
___________ includes traveler's checks, coins, currency, demand deposits, and other checkable deposits.
A)M1
B)M2
C)M3
D)M4
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