Feds reserve requirement ratio can reduce monetary base

Assignment Help Business Economics

Reference no: EM13773778

1. Barter transactions involve the use of money.

True

False

2. The use of money as a medium of exchange represents the mostimportant service that money renders.

True

False

3. Currency includes demand deposits.

True

False

4. The money supply known as M1 includes all assets that are good storesof value.

True

False

5. A primary tool of the Federal Reserve System is open market operations.

True

False

6. Commercial banks and credit unions create money in concert with theFed.

True

False

7. Providing a secure place for savings is not a major function of financialinstitutions.

True

False

8. The Fed's reserve requirement ratio can reduce the monetary base.

True

False

9. If bankers want to retain reserves of 25% against all deposits, if the Fed issues $100 billion in currency, and if private individuals keep all money in banks, then once the banks are fully loaned up, the money supply will consist of $400 billion in demand deposits.

True

False

10. The Long-run Aggregate Supply Curve that is compatible with the classical macroeconomic model is a vertical line at full employment.

True

False

11. When the federal government spends more than it collects, it must issuemore debt or more monetary base.

True

False

12. Keynesians tend to believe that massive tax cuts and new government spending are cures for recession.

True

False

13. There are currently 13 Federal Reserve Districts.

True

False

14. One of the 3 tools of the Federal Reserve is fiscal policy.

True

False

15. Monetary policy of the Federal Reserve affects the monetary base toachieve its goals of rates of inflation and interest.

True

False

16. The buying of securities in the open market by the Federal Reserve will augment the monetary base of the economy.

True

False

17. The selling of securities in the open market by the Federal Reserve will actually decrease the monetary base by reducing the amount the banking system will ultimately be able to lend.

True

False

18. The Federal Funds Market is actually monitored and manipulated by the Federal Reserve, but individuals can actually enter the market and borrow funds if desired.

True

False

19. The short-run Phillips curve is a curve that shows the relationship between the inflation rate and the pure interest rate when the natural rate of unemployment rate and the expected inflation rate remain constant.

True

False

20. When interest rates are rising, the tendency is for holders of M1 to get outof M1 and move into M2 and M3 due to the opportunity costs of holdingM1.

True

False

Reference no: EM13773778

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