Question : 11) When the Fed sells $100 worth of bonds to : 1373765

11) When the Fed sells $100 worth of bonds to First National Bank, reserves in the banking system

A) increase by $100.

B) increase by more than $100.

C) decrease by $100.

D) decrease by more than $100.

12) If a person selling bonds to the Fed cashes the Fed’s check, then reserves ________ and currency in circulation ________, everything else held constant.

A) remain unchanged; declines

B) remain unchanged; increases

C) decline; remains unchanged

D) increase; remains unchanged

13) The effect of an open market purchase on reserves differs depending on how the seller of the bonds keeps the proceeds. If the proceeds are kept in ________, the open market purchase has no effect on reserves; if the proceeds are kept as ________, reserves increase by the amount of the open market purchase.

A) deposits; deposits

B) deposits; currency

C) currency; deposits

D) currency; currency

14) The effect of an open market purchase on reserves differs depending on how the seller of the bonds keeps the proceeds. If the proceeds are kept in currency, the open market purchase ________ reserves; if the proceeds are kept as deposits, the open market purchase ________ reserves.

A) has no effect on; has no effect on

B) has no effect on; increases

C) increases; has no effect on

D) decreases; increases

15) When an individual sells a $100 bond to the Fed, she may either deposit the check she receives or cash it for currency. In both cases

A) reserves increase.

B) high-powered money increases.

C) reserves decrease.

D) high-powered money decreases.

16) If a member of the nonbank public sells a government bond to the Federal Reserve in exchange for currency, the monetary base will ________, but ________.

A) remain unchanged; reserves will fall

B) remain unchanged; reserves will rise

C) rise; currency in circulation will remain unchanged

D) rise; reserves will remain unchanged

17) If a member of the nonbank public purchases a government bond from the Federal Reserve in exchange for currency, the monetary base will ________, but reserves will ________.

A) remain unchanged; rise

B) remain unchanged; fall

C) rise; remain unchanged

D) fall; remain unchanged

18) For which of the following is the change in reserves necessarily different from the change in the monetary base?

A) Open market purchases from a bank

B) Open market purchases from an individual who deposits the check in a bank

C) Open market purchases from an individual who cashes the check

D) Open market sale to a bank

19) When a member of the nonbank public withdraws currency from her bank account,

A) both the monetary base and bank reserves fall.

B) both the monetary base and bank reserves rise.

C) the monetary base falls, but bank reserves remain unchanged.

D) bank reserves fall, but the monetary base remains unchanged.

20) When a member of the nonbank public deposits currency into her bank account,

A) both the monetary base and bank reserves fall.

B) both the monetary base and bank reserves rise.

C) the monetary base falls, but bank reserves remain unchanged.

D) bank reserves rise, but the monetary base remains unchanged.