Question :
41) Open market operations when the Fed buys or sells
A) : 1227821
41) Open market operations are when the Fed buys or sells
A) government securities from the government.
B) corporate securities from banks or some other business.
C) government securities from banks or some other business.
D) corporate securities from the government.
E) gold.
Answer: C
Topic: Fed policy tools, open market operations
Skill: Level 1: Definition
Section: Checkpoint 11.3
Status: CT
42) When the Fed engages in open market operations, it is buying or selling
A) capital equipment.
B) U.S. government securities newly issued by the U.S. Treasury.
C) U.S. government securities.
D) loans made to banks to meet the legal reserve requirement ratio.
E) gold.
Answer: C
Topic: Fed policy tools, open market operations
Skill: Level 1: Definition
Section: Checkpoint 11.3
Status: TPS
43) In response to the financial crisis in 2008, the Fed created which of the following policy tools?
A) quantitative easing
B) the required reserve ratio
C) the discount rate
D) the federal funds rate
E) open market operations
Answer: A
Topic: Fed policy tools, crisis measures
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: CD new
44) Which of the following policy tools did the Fed create in 2008 to address the financial crisis?
i)quantitative easing
ii)credit easing
iii)open market operations
A) i and ii
B) i only
C) ii only
D) i and iii
E) ii and iii
Answer: A
Topic: Fed policy tools, crisis measures
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: CD new
45) Quantitative easing by the Fed refers to
A) the creation of bank reserves by engaging in large-scale open market operation at very low interest rates.
B) selling private securities issued by the Fed.
C) decreasing the money supply during a recession to prevent inflation.
D) lowering the federal funds rate while increasing the discount rate.
E) lowering the required reserve ratio to zero percent.
Answer: A
Topic: Quantitative easing
Skill: Level 1: Definition
Section: Checkpoint 11.3
Status: CD new
46) If the Fed engages in quantitative easing, it has likely
A) decreased the federal funds rate to almost zero by buying large sums of securities.
B) increased the discount rate to prevent inflation.
C) decreased the discount rate by selling its own securities.
D) increased the federal funds rate by selling private securities.
E) started paying interest on required reserves.
Answer: A
Topic: Quantitative easing
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: CD new
47) In 2008, the Fed created a new policy tool called
A) quantitative easing, which allowed the Fed to buy private securities as well as government securities..
B) quantitative easing, which required the Fed to pay interest on required reserves.
C) open market operations, which required the Fed to buy securities from only the federal government.
D) federal funds zero-rate, which required the Fed to lower the rate to near zero percent.
E) interest rate reductions, which allowed the Fed to lower interest rates paid to banks.
Answer: A
Topic: Quantitative easing
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: CD new
48) ________ by the Fed means that the Fed ________.
A) Credit easing; bought private securities from financial institutions
B) Credit easing; made loans directly to home buyers
C) Credit easing; tried to lower long-term interest rates
D) Quantitative easing; required private banks to increase their lending to home buyers
E) Quantitative easing; decreased in the required reserve ratio
Answer: A
Topic: Credit easing
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: New
49) The policy tool of “credit easing” refers to the ________.
A) Fed’s purchase of private securities to stimulate banks’ lending
B) Fed’s requirement that the federal government must lend to directly to home buyers
C) federal government’s requirement that the Fed must lend directly to home buyers
D) Fed’s lowering of the federal funds rate to zero
E) Treasury’s issuance of federal debt to finance home buying
Answer: A
Topic: Credit easing
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: Revised
50) The monetary base is the sum of
A) Federal Reserve notes and banks’ reserves at the Fed.
B) coins, Federal Reserve notes, and individuals’ deposits at the Fed.
C) Federal Reserve notes, Treasury deposits at the Fed, banks’ reserves at the Fed, and coins.
D) coins, Federal Reserve notes, and banks’ reserves at the Fed.
E) coins, Federal Reserve notes, and gold at the Fed.
Answer: D
Topic: Monetary base
Skill: Level 1: Definition
Section: Checkpoint 11.3
Status: CT
