The three most volatile and unpredictable sources of the monetary base are: Trea

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The three most volatile and unpredictable sources of the monetary base are: Treasury deposits, Discount Loans, and Float Gold, Other Assets, and Float Gold, Foreign deposits, and Discount Loans Treasury currency holdings, Gold, Foreign deposits Suppose the Fed suddenly and unexpectedly increases the discount rate by one full percentage point, and banks decrease borrowing from the Fed. Which of the following is most likely to occur? B increases and money supply increases rr increases and money supply decreases monetary base decreases and money supply decreases none of the above will likely occur Given the size of the variables underlying the money supply multiplier, which variable currently is likely to introduce the least variability in the size of the multiplier? B k rr er Which of the following is an important determinant of the currency ratio, k? development of substitutes for demand and other checkable deposits the size of the U.S. underground economy the level of income and wealth all of the above The long-term movements in the money supply multiplier are dominated by movements in: the currency to deposit ratio the excess reserve ratio the required reserve ratio the time deposit ratio A sharp increase in Treasury bill yields should cause: a decrease in the desired excess reserve ratio (er) a decrease in the money supply multiplier a decrease in the monetary base none of the above Which of the following tends to increase a banks' desired excess reserve ratio? higher interest rates increased uncertainty about future economic conditions expectations of easier Federal Reserve policies all of the above Suppose the Fed purchases euros with dollars to prevent the dollar from appreciating excessively. The impact of the transaction is to: increase reserves and the monetary base reduce reserves and the monetary base increase reserves but leave the monetary base unchanged reduce reserves but leave the monetary base unchanged Suppose the Fed buys short-term US Treasury securities in the open market. Then: the monetary aggregates rise, Treasury security prices rise, and yields on short-term securities fall the monetary aggregates rise, Treasury security prices fall, and yields on short-term securities rise the monetary aggregates fall, Treasury security prices fall, and yields on short-term securities rise the monetary aggregates fall, Treasury security prices rise, and yields on short-term securities fall If the Federal Reserve would like to cause the dollar to depreciate it would purchase_,cuasing the monetary base to_, and interest rates to_. foreign assets, increase, fall domestic assets, increase, fall domestic assets, decrease, rise foreign assets, increase, rise If the Fed wants to offset the effect on the monetary base of the purchase of foreign assets, the fed will sterilize the foreign exchange transaction by an open market purchase of bonds an open market sale of bonds decrease the reserve requirement ratio decrease the discount rate The great portion of Federal Reserve open market operations: are in long-term bonds are dynamic in nature are defensive in nature are triggered by developments in inflation and unemployment If, in a given week, Treasury deposits at the Fed fall by $1200 million and float falls by $600 million and all other factors affecting reserves and the base remain constant, then if the Fed wishes to keep reserves and the monetary base constant, it must: buy $600 million of securities buy $1800 million of securities sell $600 million of securities sell $1800 million of securities Countries with central banks that are independent of the executive branch: tend to have lower rates of inflation relative to countries with dependent central banks tend to have higher rates of inflation relative to countries with dependent central banks are prohibited from setting target rates of inflation Both b) and c) are correct The use of open market operations to steer the thrust of monetary policy in a specific direction is termed: defensive open market operations dynamic open market operations countercyclical monetary policy real bills doctrine The predominant portion of the Fed's open market operations are conducted as: outright purchases of government securities repurchase and reverse repurchase agreements foreign exchange transactions gold and SDR certificate transactions The volume of discounts and advances tends to move procyclicaily because: market interest rates adjust more quickly to business cycle conditions than the discount rate does market interest rates adjust more slowly to business cycle conditions than the discount rate does the speed of adjustment of market rates and the discount rate plays no role in the procyclical behavior of discounts and advances none of the above reasons-discounts and advances tend to move counter cyclically due to Fed policy actions

Explanation / Answer

A,D,B,C,C,D,A,B,C,A,C,B,D,C,C,A

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