1If in the market for money the amount of money supplied exceeds the amount of money households and businesses want to hold, the interest rate will:
a. fall, causing households and businesses to hold less money. b. rise, causing households and businesses to hold less money. c. rise, causing households and businesses to hold more money. d. fall, causing households and businesses to hold more money.
2 If the Federal Reserve authorities were attempting to reduce demand-pull inflation, the proper policies would be to:
a. sell government securities, raise reserve requirements, and raise the discount rate. b. buy government securities, raise reserve requirements, and raise the discount rate. c. sell government securities, lower reserve requirements, and lower the discount rate. d. sell government securities, raise reserve requirements, and lower the discount rate.
3 Projecting that it might temporarily fall short of legally required reserves in the coming days, the Bank of Beano decides to borrow money from its regional Federal Reserve Bank. The interest rate on the loan is called the:
a. prime rate. b. Federal funds rate. c. Treasury bill rate. d. discount rate.
Milan




