5-2 (37-41) Question 37. 37. The Federal Reserve (Points : 5) is responsible for

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5-2 (37-41)

Question 37. 37. The Federal Reserve (Points : 5) is responsible for conducting the nation’s monetary policy, and it plays a role in regulating banks. is responsible for conducing the nation’s monetary policy, but it plays no role in regulating banks. is not responsible for conducting the nation’s monetary policy, and it plays a role in regulating banks. is not responsible for conducing the nation’s monetary policy, and it plays no role in regulating banks.

Question 38. 38. The Fed can increase the money supply by conducting open-market (Points : 5) sales or by raising the discount rate. sales or by lowering the discount rate. purchases or by raising the discount rate. purchases or by lowering the discount rate.

Question 39. 39. The legal tender requirement means that (Points : 5) people are more likely to accept the dollar as a medium of exchange. the government must hold enough gold to redeem all currency. people may not make trades with anything else. All of the above are correct.

Question 40. 40. Money is the most liquid asset available because (Points : 5) it is a store of value. it is a medium of exchange. it is a unit of account. it has intrinsic value.

Explanation / Answer

40) it is a medium of exchange.: Through this function, money is the most liquid asset available which do not require the double coincidence of wants which used to be the case in the barter system.

39) The legal tender requirement means : All of the above are correct.

38) The Fed can increase the money supply by conducting open-market : purchases or by lowering the discount rate. at lower rates there will be more demand for money and higher investment will generate more money in the economy.

37) The Federal Reserve (Points : 5) is responsible for conducting the nation’s monetary policy, and it plays a role in regulating banks. By deciding discount rates and other rates, the fed take monetary decisions and also regulate the banks with its policies.

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