Suppose the Federal Reserve wants to stimulate the economy, thereby increasing GDP. Which of the following policy change should be implemented?       Raising the reserve requirement ratio       Sell bonds through open market operations       Lower the discount rate       Only a & c are correct

7. The four major instruments (or tools) of monetary policy are: 1) Open market operations 2) The Discount Rate 3) The reserve ratio 4) Interest on Reserves The Fed uses four major tools to control the reserves of banks and the size of the money supply. 1) The Federal Reserve can buy or sell government securities in the open market to change the lending ability of the banking system: (a) buying government securities in the open market from either banks or the public ( increases, decreases ) the excess reserves of banks; (b) selling government securities in the open market to either banks or the public ( increases, decreases ) the excess reserves of banks. 2) The Fed can raise or lower the reserve ratio: (a) raising the reserve ratio ( increases, decreases ) the excess reserves of banks and the size of the monetary (checkable-deposit) multiplier; (b) lowering the reserve ratio (increases, decreases) the excess reserves of banks and the size of the monetary multiplier. 3) The Fed can…

Which statement(s) is/are TRUE? I. Increasing the reserve requirement would decrease the money supply. II. Decreasing the discount rate would decrease the money supply. III. Buying government bonds would increase the money supply. II only III only I and III only I and II only

5. The Federal Reserve's organization While all members of the Federal Reserve Board of Governors vote at Federal Open Market Committee (FOMC) meetings, only bank presidents are members of the FOMC. of the regional The Federal Reserve's role as a lender of last resort involves lending to which of the following financially troubled institutions? OUS banks that cannot borrow elsewhere OUS state governments when they run short on tax revenues Governments in developing countries during currency crises The Federal Reserve's primary tool for changing the money supply s In order to increase the number of dollars in the US economy (the money supply), the Federal Reserve will government bonds.

8. The function of the Federal Open Market Committee is to:   Question 8 options:   a)  decide on Federal Reserve purchases/sales of securities to control the federal funds rate.   b)  set the discount rate.   c)  decide on new currency issues.   d)  approve and disapprove new Fed membership applications.