Krugman's Economics for AP

Margaret Ray

Chapter 27 The Federal Reserve System: Monetary Policy - all with Video Answers

Educators

Chapter Questions

Problem 1

Which of the following is a function of the Federal Reserve System?
I. examine commercial banks
II. conduct fiscal policy
III. conduct monetary policy
a. I only
b. II only
c. III only
d. I and III only
e. I, II, and III

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Problem 2

Which of the following financial services does the Federal Reserve provide for commercial banks?
I. clearing checks
II. holding reserves
III. making loans
a. I only
b. II only
c. III only
d. I and II
e. I, II, and III

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Problem 3

When the Fed makes a loan to a commercial bank, it charges
a. no interest.
b. the prime rate.
c. the federal funds rate.
d. the discount rate.
e. the market interest rate.

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04:23

Problem 4

If the Fed purchases U.S. Treasury bills from a commercial bank, what happens to bank reserves and the money supply?
Bank reserves
Money supply
a. increase decrease
b. increase increase
c. decrease decrease
d. decrease increase
e. increase no change

Ben Meadows

Numerade Educator

02:33

Problem 5

When banks make loans to each other, they charge the
a. prime rate.
b. discount rate.
c. federal funds rate.
d. CD rate.
e. mortgage rate.

David Gagnon

Numerade Educator