Practice
Answer first, then reveal. Anything you mark Unsure or Missed goes to your review queue.
9 of 11 have the textbook's official worked answer.
- 1
Why is it important for the members of the Board of Governors of the Federal Reserve to have longer terms in office than elected officials, like the President?
- 2
Given the danger of bank runs, why do banks not keep the majority of deposits on hand to meet the demands of depositors?
- 3
Bank runs are often described as “self-fulfilling prophecies.” Why is this phrase appropriate to bank runs?
- 4
If the central bank sells $500 in bonds to a bank that has issued $10,000 in loans and is exactly meeting the reserve requirement of 10%, what will happen to the amount of loans and to the money supply in general?
- 5
What would be the effect of increasing the banks' reserve requirements on the money supply?
- 6
Why does contractionary monetary policy cause interest rates to rise?
- 7
Why does expansionary monetary policy causes interest rates to drop?
- 8
Why might banks want to hold excess reserves in time of recession?
- 9
Why might the velocity of money change unexpectedly?
- 10
Explain how to use the IORB to lower interest rates.
No official answer is published for this question — work it through, then rate yourself.
- 11
Explain how to use the IORB to raise interest rates.
No official answer is published for this question — work it through, then rate yourself.