This quiz works best with JavaScript enabled. Home > Monetary > Policy > Monetary Policy – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary Policy Quiz 1 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Federal Reserve Board of Governors members serve ..... terms to help insulate them from political influence. A) 7 years. B) 14 years. C) 25 years. D) Lifetime. Show Answer Correct Answer: B) 14 years. 2. Which is untrue with regards to LIBOR A) Libor has no impact on costs and availability of mortgages. B) Libor determines the costs and availability of mortgages. C) Interbank lending. D) Indicator of trust between anks & reflects the health of ban. Show Answer Correct Answer: A) Libor has no impact on costs and availability of mortgages. 3. If the economy is experiencing rapidly rising prices (high inflation) the Federal Reserve could limit growth in the money supply by: A) Cutting the discount rate. B) Selling government securities. C) Lowering bank taxes. D) Lowering the reserve requirements. Show Answer Correct Answer: B) Selling government securities. 4. Which recent president favored supply-side economics? A) Richard Nixon. B) Jimmy Carter. C) Ronald Reagan. D) Bill Clinton. Show Answer Correct Answer: C) Ronald Reagan. 5. Discount policy affects the money supply by affecting the volume of ..... and the ..... A) Excess reserves; monetary base. B) Borrowed reserves; monetary base. C) Excess reserves; money multiplier. D) Borrowed reserves; money multiplier. Show Answer Correct Answer: B) Borrowed reserves; monetary base. 6. What are the objects that have value, that can be exchanged for something else of value? A) Fiat Money. B) Representative Money. C) Commodity Money. D) Money Supply. Show Answer Correct Answer: B) Representative Money. 7. What money characteristic is being met, by the appearance of the USA currency? A) Portability. B) Uniformity. C) Divisibility. D) Acceptability. Show Answer Correct Answer: B) Uniformity. 8. During an inflation period Central Banks will use A) Expansionary monetary policy. B) Contractionary monetary policy. C) Supply side policy. D) None of above. Show Answer Correct Answer: B) Contractionary monetary policy. 9. Which of the following is NOT an example of money, as defined by M1? A) Currency. B) A credit card balance. C) Traveler's checks. D) A checking account. Show Answer Correct Answer: B) A credit card balance. 10. When bad storms slow the check-clearing process, float tends to ..... causing the Fed to initiate defensive open market ..... A) Decrease; sales. B) Decrease; purchases. C) Increase; sales. D) Increase; purchases. Show Answer Correct Answer: C) Increase; sales. 11. The Federal Funds Rate is: A) The interest rate charged for overnight loans between banks. B) The rate at which the Federal Reserve is able to supply money to its banks. C) The interest rate charged on personal loans. D) None of above. Show Answer Correct Answer: A) The interest rate charged for overnight loans between banks. 12. What is an action of monetary policy? A) Reduce taxes. B) Changing reserve requirements. C) Increase spending. D) Borrow money for deficit. Show Answer Correct Answer: B) Changing reserve requirements. 13. If the economy is suffering from a recessionary gap, the Fed should conduct ..... monetary policy by ..... the money supply. A) Expansionary; decrease. B) Expansionary; increase. C) Contractionary; decrease. D) None of above. Show Answer Correct Answer: B) Expansionary; increase. 14. Monetary policy is designed by A) Government. B) Commercial bank. C) Central bank. D) None of above. Show Answer Correct Answer: C) Central bank. 15. What does NOT happen when the FED alters the Money Supply? A) Interest Rates change. B) Money Value changes. C) Demand changes. D) Production remains the same. Show Answer Correct Answer: D) Production remains the same. 16. If the RR is 10%, the money multiplier will be A) 5. B) 10. C) 20. D) 25. Show Answer Correct Answer: B) 10. 17. Which decision making body in the Federal Reserve meets 8 times a year to determine monetary policy? A) The Reserve Banking Advisory Committee. B) The Board of Governors of the Federal Reserve. C) The Regional Bank Presidents Committee. D) The Federal Open Market Committee. Show Answer Correct Answer: D) The Federal Open Market Committee. 18. What is the amount of money held within the FED & circulated through the economy? A) Fiscal Policy. B) Monetary Policy. C) Money Supply. D) FOMC. Show Answer Correct Answer: C) Money Supply. 19. An increase in the money supply will A) Reduce interest rates and increase aggregate demand. B) Reduce interest rates and decrease aggregate demand. C) Raise interest rates and increase aggregate demand. D) Raise interest rates and decrease aggregate demand. Show Answer Correct Answer: A) Reduce interest rates and increase aggregate demand. 20. If the reserve requirement is 5%, what is the excess reserves on a deposit of $ 5, 000? what is the money multiplier? A) 4750; 20. B) 4500; 25. C) 4000; 50. D) None of above. Show Answer Correct Answer: A) 4750; 20. Next →Related QuizzesMonetary QuizzesMonetary Policy Quiz 2Monetary Policy Quiz 3Monetary Policy Quiz 4Monetary Policy Quiz 5Monetary Policy Quiz 6Monetary Policy Quiz 7Monetary Policy Quiz 8Monetary Policy Quiz 9Monetary Policy Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books