Which one of these tasks is a role that the Fed has? Select one: a. Telling bank

Question

Which one of these tasks is a role that the Fed has? Select one: a. Telling banks what interest rates they must charge on mortgages (house loans) b. Issuing new government bonds to increase government borrowing c. Collecting taxes on behalf of the federal government d. Regulating credit unions e. Fixing the exchange rate between the Euro and the dollar Question text Using Internet surveys to collect data about production and unemployment is likely to reduce which one of these lags: Select one: a. The recognition lag b. The chronicle lag c. The legislative lag d. The technology lag e. The impact lag Tim is paying for a fine for his speeding violation in court by using his debit card. Tim is using money as: Select one: a. A unit of standardization b. A medium of penalization c. A unit of account d. A medium of exchange e. A store of value Assume that banks lend out all their excess reserves and individuals deposit all their money. If the Required Reserve Ratio is .20, what does the Fed have to do to decrease the supply of money by $400 billion? Select one: a. Sell $80 billion worth of government bonds b. Sell $100 billion worth of government bonds c. Buy $80 billion worth of government bonds d. Buy $100 billion worth of government bonds e. Buy $200 billion worth of government bonds

Explanation / Answer

Question number 1 option B. Fed cannot suggest what interest rate banks can charge or not. Neither it is assumed to be fixing the exchange rate because a nation has flexible exchange rates. However it conducts open market sale and purchase of Government Bonds so option B is correct.

Question number 2 correct answer is option A. Recognition lag is the leg that exist because the government is not able to find the incoming recession. If government is able to get information about unemployment and production it can analyse the situation and testify whether it is a recession or not.

Question number 3 the correct answer is option E

Tim is not giving away his debit card so it is not a medium of exchange. Because there is a value is stored in the form of debit card it is a store of value.

Question number 4 the correct answer is option A.

If there is a need to reduce money supply by 400 million dollars then the central bank has to sell $400 b / 5 = $80 billion worth of Government Bonds.

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