51. Which statement about the Federal Open Market Committee is untrue? (a) the Secretary of Treasury always is a voting member of the Committee on monetary policy decisions; (b) the President of the New York Fed, by tradition, always is a voting member on policy matters; (c) the Committee formulates, but does not implement, monetary policy; (d) its policy decisions do not require a consensus among voting members.
52. An open market operation designed to add reserves to the banking system would include: (a) issuance of new Treasury securities by the Fed; (b) instructing the Bureau of Engraving and Printing to print more currency (Federal Reserve notes); (c) takes place eight times a year only, immediately after an FOMC meeting; (d) the New York Fed buying securities in either permanently or temporarily.
53. Which of the following is the Fed’s most important policy interest rate? (a) federal funds rate; (b) the rate on 2-year Treasury notes; (c) the rate on 10-year Treasury notes; (d) the rate on 30-year fixed-rate mortgages.
54. In which market would a bank with excess reserves attempt to sell reserves to a bank with insufficient reserves? (a) Treasury bill market? (b) federal funds market; (c) bond market; (d) NASDAQ.
55. When compared with monetarist theory, Keynesian theory places greater emphasis on: (a) changes in supply of money as a determinant of GDP and inflation; (b) totally discounts the role of monetary policy in determining GDP and inflation; (c) fiscal policy as a determinant of money supply (d) changes in interest rates as a prerequisite to GDP growth and inflation.
56. Over time, the flattening and shifting inward of the traditional Phillips Curve suggests that: (a) the relationship between inflation and unemployment is stronger than ever; (b) a 1% change in the inflation is now associated with smaller changes than before in the unemployment rate; (c) every unemployment rate is now associated with a lower inflation rate than previously; (d) the U.S. now has an R* much higher than 1%.
57. According to the modern Phillips Curve, current inflation statistically is the summation of: (a) the real inflation rate and inflation expectations; (b) the previous period’s inflation and the product of short-run real economic growth and the sensitivity of inflation to it; (c) productivity growth and growth in the labor force; (d) labor compensation and productivity growth.
58. Almost always, the normal Treasury yield curve tends to: (a) be unaffected by monetary policy; (b) be monotonically upward sloping; (c) demonstrate that as time to maturity increases, expected yields tend to decline: (d) be affected by inflation expectations.
59. All things remaining the same, the yield on a five-year Treasury note can be expected to revert to which level? (a) the Fed’s 2% inflation target; (b) the level of inflation expectations over a 5-year period; (c) the average expected yield on Treasury securities 1, 2, 3, 4, and 5 years from maturity; (d) the S&P 500 dividend yield.
60. Which of the following is NOT a lesson to draw from the work of the Federal Reserve under Chairman Volcker when combatting stagflation? (a) fiscal policy is a critical complement to monetary policy when fighting high inflation rates; (b) choking off the supply of bank reserves can strangle money supply growth; (c) the process of strangling money supply growth reduces inflation expectations and eventually brings down long-term interest rates; (d) lower long-term interest rates would help to stimulate demand for the most interest-rate sensitive components of the economy.
61. In response both to Great Financial Crisis and the Covid-19 Crisis, the Federal Reserve: (a) performed reverse repurchase agreements daily; (b) engaged in permanent open market operations that expanded the Fed’s asset holdings; (c) sold Treasury securities and sold mortgage-backed securities; (d) increased its federal funds target range to between 2.00% and 2.25%.
62. The possibility that even a relatively or seemingly minor event somewhere in the world could spread and disrupt the entire real economy is known as: (a) operational risk; (b) credit risk; (c) a liquidity trap; (d) systemic risk.
63. A key function of microprudential supervision is to uncover: (a) the most effective monetary policy tools; (b) banking practices that jeopardize the safety and soundness of the financial system; (c) digital threats to the real economy; (d) obsolete international agreements hampering the U.S. banking system.
64. Development of new housing tracts in New Mexico is counted in GDP under: (a) personal consumption expenditures for durable goods; (b) personal consumption expenditures on housing services; (c) gross private domestic investment; (d) business fixed investment.
65. The Federal Open Market Committee of the Fed consists of: (a) the 7 members of the Board of Governors; (b) the Presidents of the 12 Federal Reserve Banks; (c) the 7 Governors and 12 Presidents; (d) the 7 Governors, the 12 Presidents and the Secretary of the Treasury.
65.(a) the 7 memebers of the board of governors.
64.(b) personal consumption expenditure on housing services.
63.(b) banking practices that jeopardize the safey and soundness of the financial sysytem.
62.(c) liquidity trap
61.(a) performed reverse repurchase agreements daily.
59.(a) the fed's 2% inflation target.
58.(c) demonstarte that as the time to maturity increases, expected yields end to decline.
57.(a) the real inflation rate and inflation expectation.
56.(a) the relationship between inflation and unempolyment is stronger than ever.
55.(a) changes in supply of money as determinant of gdp and inflation.
54.(b) fedral funds maket
53. (a) fedral funds rate
52(a) issuance of new tresury securities by the fed
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