Question : 11) The Federal Open Market Committee consists of the seven : 1244817

11) The Federal Open Market Committee consists of the seven members of the ________, the president of the Federal Reserve Bank of New York, and ________.

A) Federal Reserve’s Board of Governors; four members of the Council of Economic Advisors

B) Federal Reserve’s Board of Governors; four presidents from the other 11 Federal Reserve banks

C) Council of Economic Advisors; four presidents from the 11 Federal Reserve banks

D) Council of Economic Advisors; four members of the U.S. Banking Committee

12) The three main monetary policy tools used by the Federal Reserve to manage the money supply are

A) interest rates, tax rates, and government spending.

B) tax rates, government purchases, and government transfer payments.

C) open market operations, discount policy, and reserve requirements.

D) open market operations, the exchange rate of the dollar against foreign currencies, and government purchases.

13) The main tool that the Federal Reserve uses to conduct monetary policy is

A) open market operations.

B) discount policy.

C) setting reserve requirements.

D) acting as the lender of last resort.

E) check clearing.

14) The purchase of Treasury securities by the Federal Reserve will, in general

A) not change the money supply.

B) not change the quantity of reserves held by banks.

C) increase the quantity of reserves held by banks.

D) decrease the quantity of reserves held by banks.

15) The sale of Treasury securities by the Federal Reserve will, in general

A) not change the money supply.

B) not change the quantity of reserves held by banks.

C) increase the quantity of reserves held by banks.

D) decrease the quantity of reserves held by banks.

16) The purchase of $1 million of Treasury securities by the Federal Reserve, if there is no change in the quantity of currency, will cause reserves at banks to

A) increase by $1 million.

B) increase by less than $1 million.

C) decrease by $1 million.

D) decrease by less than $1 million.

17) To increase the money supply, the Federal Reserve could

A) raise the discount rate.

B) decrease income taxes.

C) raise the required reserve ratio.

D) conduct an open market purchase of Treasury securities.

E) lower transfer payments.

18) To decrease the money supply, the Federal Reserve could

A) lower the discount rate.

B) raise income taxes.

C) lower the required reserve ratio.

D) conduct an open market sale of Treasury securities.

E)  raise transfer payments.

19) A decrease in the discount rate ________ bank reserves and ________ the money supply if banks respond appropriately to the change in the rate.

A) increases; increases

B) increases; decreases

C) decreases; increases

D) decreases; decreases

20) If a bank receives a $1 million discount loan from the Federal Reserve, then the bank’s reserves will

A) not change.

B) increase by $1 million.

C) increase by less than $1 million.

D) increase by more than $1 million.