Question 1 (1 Point) Which of the Following Is True Concerning the Consumer Price Index

Question 1 (1 point)
Which of the following is true concerning the consumer price index (CPI)?
Question 1 options:
It reports price changes in a representative "basket" of household purchases.
It includes both goods and services, but the "core rate" excludes food and energy prices.
An increase in the CPI indicates a rise in price inflation in the U.S. economy.
All of the above.
Save
Question 2 (1 point)
When money is held primarily to preserve wealth, it is performing its function as a
Question 2 options:
standard of value.
measure of value.
store of value.
structure of value.
Save
Question 3 (1 point)
According to the expectations theory, which yield curve configuration reflects investor expectations that there will be a fall in future interest rates relative to current interest rates?
Question 3 options:
Normal
Inverted
Humped
Flat
Save
Question 4 (1 point)
Historically, an inverted yield curve for U.S. Treasury securities has often signaled
Question 4 options:
an economic expansion.
an economic recession.
a period of increased productivity.
a period of economic stability.
Save
Question 5 (1 point)
If investor expectations are the dominant factor in causing the yield curve to become inverted,
Question 5 options:
interest rates are expected to decline over time.
interest rates are expected to increase over time.
interest rates are expected to remain the same over time.
interest rates are not expected to affect the shape of the yield curve.
Save
Question 10 (1 point)
The total amount of loanable funds available to U.S. borrowers is influenced by changes in:
I. The rate of savings
II. The availability of bank credit
III. The velocity of circulation
Question 10 options:
I and II only
I and III only
II and III only
I, II, and III
Question 11 (1 point)
The Federal Reserve System includes:
I. Regional (district) banks
II. Branch banks of various regional banks
III. Check processing centers throughout the U.S.
Question 11 options:
I and II only
I and III only
II and III only
I, II, and III
Save
Question 12 (1 point)
The goals of the Federal Reserve include:
I. Promoting a healthy level of U.S. economic employment and productivity
II. Managing the money supply so as to preclude high rates of price inflation
III. Insuring an adequate amount of government debt is issued to cover federal deficit spending
Question 12 options:
I and II only
I and III only
II and III only
I, II, and III
Save
Question 13 (1 point)
Most members of the Federal Reserve Board of Governors
Question 13 options:
serve their full term of office.
leave before serving their full term of office.
are appointed for a second full term of office.
serve a lifetime appointment to office.
Save
Question 14 (1 point)
Which of the following are voting members of the Federal Open Market Committee?
I. The chairman and vice-chairman of the Federal Reserve Board of Governors
II. The president of the New York Federal Reserve District Bank
III. The remaining eleven presidents of the district banks
Question 14 options:
I and II only
I and III only
II and III only
I, II, and III
Save
Question 15 (1 point)
Why is the president of the New York Federal Reserve District Bank accorded permanent membership on the FOMC?
Question 15 options:
The position is purely symbolic, since the NY District Bank is located on Wall Street.
The NY District Bank is the FOMC's agent in monetary policy transactions.
The president of the NY District Bank always sits on the U.S. President's cabinet.
The SEC requires the NY District Bank president to attend all FOMC meetings.
Save
Question 16 (1 point)
Members of the seven-member Board of Governors of the Federal Reserve System are appointed for ______, while the Chairman of the Board of Governors is appointed for ______.
Question 16 options:
a fourteen year term of office; a four year term of office with reappointment possible
an indefinite term of office; a one-time four year term of office
a fourteen year term of office; a one-time four year term of office
an indefinite term of office; a four year term of office with reappointment possible
Save
Question 17 (1 point)
Which of the following financial institutions is required to conform to the reserve requirements mandated by the Federal Reserve System?
I. National banks
II. State banks
III. Credit unions
Question 17 options:
I and II only
I and III only
II and III only
I, II, and III
Save
Question 18 (1 point)
Which of the following is true concerning meetings of the Federal Open Market Committee?
Question 18 options:
Meetings occur only as needed, but usually on a quarterly basis.
Members are permitted to voice their opinions, but not to vote on issues.
Press releases of matters discussed in FOMC meetings are never made publicly available.
None of the above.
Save
Question 20 (1 point)
Federal law requires that:
I. The Federal Reserve Chairman reports to Congress twice each year
II. The Fed meets annually-established target ranges for growth in the money supply
III. The FOMC contracts the money supply in times of housing or stock market pricing bubbles
Question 20 options:
I only
I and II only
I and III only
I, II, and III
Save
Question 21 (1 point)
Long-time political and economic observers are generally of the opinion that the debate over the independence of the Fed is more form than substance. According to this view, Congress finds it ______to use the Fed as a scapegoat for what ails the economy.
Question 21 options:
constitutional
unnecessary
convenient
democratic
Save
Question 22 (1 point)
Which of the following methods of carrying out monetary policy is considered by the Fed to be its most powerful and precise tool?
Question 22 options:
Setting legal reserve requirement
Establishing the discount rate of borrowing
Open market operations
None of the above
Save
Question 23 (1 point)
Which of the following is included in the money aggregate known as "M-1"?
Question 23 options:
Currency in circulation, but not in bank vaults.
Checkable deposits, subject to withdrawal by writing a check or by electronic funds transfer.
Traveler's checks.
All of the above.
Save
Question 24 (1 point)
Determining monetary policy goals is difficult because:
I. Policy makers must recognize that monetary policy should be changed
II. The most appropriate action must be determined and implemented
III. Policy initiatives must be timed to achieve the desired influence upon the economy
Question 24 options:
I and II only
I and III only
II and III only
I, II, and III
Save
Question 25 (1 point)
Starting from equilibrium and holding all other factors constant, an increase in the money supply or a decrease in the demand for money will lead to ______interest rates.
Question 25 options:
falling
surging
rising
no change in
Question 26 (1 point)
Which of the following statements is true concerning changes in the availability of money and credit?
Question 26 options:
Changes in the supply of money and credit should not be expected to have any influence upon the level of employment in the U.S. economy.
Changes in the supply of money and credit affect key economic variables such as the level of price inflation and GDP.
Both of the above are true.
None of the above is true.
Save
Question 27 (1 point)
The Fed currently uses _____ as its operating target and_____ as its intermediate target.
Question 27 options:
GDP; inflation rate
discount rate; money supply
Fed funds rate; interest rates
inflation rate; money supply
Save
Question 28 (1 point)
The Fed appears to be better at influencing
Question 28 options:
short-term interest rates.
mid-term interest rates.
long-term interest rates.
all interest rates equally.
Save
Question 29 (1 point)
The FOMC statement to the NY Fed trading desk that guides open market operations is known as
Question 29 options:
the monetary order.
the operating imperative.
the policy directive.
the economic outlook.
Save
Question 30 (1 point)
Which of the following actions is the Fed likely to pursue relative to the business cycle?
I. During a recession, the Fed will increase the money supply to encourage overall economic growth
II. During an expansion, the Fed will decrease the money supply in an effort to prevent higher inflation
III. During a recession, the Fed will decrease the money supply in an effort to lower the level of unemployment
Question 30 options:
I and II only
I and III only
II and III only
I, II, and III
Question 31 (1 point)
If economic conditions become less favorable
Question 31 options:
expected cash flows on various projects will increase.
more proposed projects will have expected returns greater than the hurdle rate.
there would be additional acceptable business projects.
there would be a decreased demand by business for loanable funds.
Save
Question 32 (1 point)
If the Federal Reserve increases the money supply there is ______pressure on interest rates (assume that inflationary expectations are not affected).
Question 32 options:
upward
downward
neither upward nor downward
Save
Question 33 (1 point)
If the aggregate demand for loanable funds increases without a corresponding ______in aggregate supply, there will be a ______of loanable funds.
Question 33 options:
increase; surplus
increase; shortage
decrease; surplus
decrease; shortage
Save
Question 34 (1 point)
The form of money consisting of currency held by the public and checkable deposits at depository institutions is called
Question 34 options:
M1.
M2.
M3.
MMDA.

35. Which of the following is not a major component of the Federal Reserve System?
Question 35 options:
member banks
Federal Open Market Committee
Securities and Exchange Commission
Board of Governors
Question 36 (1 point)
Total funds of commercial banks will initially ______by the dollar amount of securities ______by the Fed.
Question 36 options:
increase; purchased
increase; sold
decrease; purchased
1 and 2
Save
Question 37 (1 point)
The ______is directly responsible for controlling money supply growth.
Question 37 options:
Federal Advisory Council
Federal Open Market Committee
U.S. Treasury
U.S. Comptroller of the Currency
Save
Question 38 (1 point)
The Federal Reserve System operates to promote sustainable economic growth commensurate with
Question 38 options:
no reduction in long-term bank loans.
no increase in the overall cost of borrowing.
price stability.
all of the above.
Save
Question 39 (1 point)
Rational expectations occur when investors
Question 39 options:
are more concerned with changes in nominal interest rates than in real interest rates.
factor in all expected inflation rates when making investment decisions.
are fooled by high nominal rates instead of concentrating on real interest rates.
none of the above.
Save
Question 40 (1 point)
If the Fed wants to stimulate economic activity, it will work to lower:
I. Interest rates
II. The federal budget deficit
III. Federal tax rates
Question 40 options:
I only
I and II only
I and III only
I, II, and III
Question 41 (1 point)
Which of the following actions is the Fed most likely to pursue during an overheated economic expansion?
Question 41 options:
The Fed will work to reduce price inflation by contracting the availability of loanable funds.
The Fed will work to improve economic output by expanding the availability of loanable funds.
The Fed will work to improve employment by expanding the availability of loanable funds.
The Fed will work to improve output and employment by contracting the availability of loanable funds.
Save
Question 42 (1 point)
Money illusion occurs when investors
Question 42 options:
are more concerned with changes in nominal interest rates than in real interest rates.
factor in all expected inflation rates when making investment decisions.
are not fooled by high nominal rates, but concentrate on real interest rates.
none of the above.
Save
Question 43 (1 point)
If research showed that anticipation about future interest rates was the only important factor for all investors in choosing short-term or long-term securities, this would support the central argument made by the:
Question 43 options:
Liquidity premium theory
Pure expectations theory
Segmented markets theory
None of the above
Save
Question 44 (1 point)
According to the pure expectations theory, the yield curve will be ______when investors expect future interest rates to be lower than current interest rates.
Question 44 options:
normal.
inverted.
humped.
flat.
45 If research showed that all investors attempt to purchase securities that perfectly match their time in which they will have available funds, this would specifically support the argument made by the
Question 45 options:
liquidity premium theory.
real interest rate theory.
pure expectations theory.
segmented markets theory (preferred habitat).
Question 46 (1 point)
An upward-sloping yield curve indicates that Treasury securities with ______maturities offer ______annualized yields.
Question 46 options:
longer; lower
longer; higher
shorter; lower
shorter; higher
2 and 3
Save
Question 47 (1 point)
The time from which a problem is recognized and a policy is developed and implemented to resolve the problem is known as the ______lag.
Question 47 options:
recognition
policy
impact
None of the above are correct.
Save
Question 48 (1 point)
The time between a monetary policy action being taken and when such action has a significant influence upon prices, employment, and economic output is called:
Question 48 options:
Recognition Lag
Policy Lag
Impact Lag
Legal Lag
Save
Question 49 (1 point)
The time between when the Fed adjusts the money supply and when interest rates change reflects the
Question 49 options:
recognition lag.
implementation lag.
impact lag.
open-market lag.
Save
Question 50 (1 point)
The statement sent by the FOMC to the New York Federal Reserve Bank's trading desk is known as the
Question 50 options:
monetary order.
operational imperative.
policy directive.
economic outlook.