Unit 4 Quizziz Review

Open market operations take place when the

• central bank buys or sells stocks

• central bank buys or sells government bonds

• central bank increases or decreases the discount rate to monitor the money supply

• central bank increases or decreases reserve requirements for depository institutions

• commercial banks borrow reserves from the central bank

Which of the following would most likely cause the United States economy to fall into a recession?

• An increase in welfare payments

• An increase in exports

• A decrease in savings by consumers

• A decrease in the required reserve ratio

• An open market sale by the Federal Reserve

Which of the following will most likely result in an increase in aggregate demand?

• An increase in the interest rates charged on credit card balances

• A disruption in global oil supply

• An open-market purchase of government bonds by the central bank

• A reduction of pay and benefits for government employees

• A decrease in the wealth of households

Which of the following will lead to an increase in the money supply?

• A decrease in income tax rates

• A decrease in government spending

• Open-market purchase of securities by the central bank

• Increased borrowing by the federal government by issuing new bonds

• An increase in the discount rate

Which of the following will lead to a decrease in a nation’s money supply?

• A decrease in income tax rates

• A decrease in the discount rate

• An open market purchase of government securities by the central bank

• An increase in reserve requirements

• An increase in government expenditures on goods and services

Which of the following will lower the prices of a country’s outstanding government bonds?

• An open-market purchase of government bonds by the country’s central bank

• A decrease in the required reserve ratio for the country’s commercial banks

• An outflow of financial capital to other countries

• A decrease in the country’s government spending

• A decrease in inflationary expectations in the country

Which of the following will cause an increase in the equilibrium real interest rate?

• An increase in investment demand

• An increase in national saving

• An increase in the government budget surplus

• A decrease in the government budget deficit

• The purchase of government bonds by the central bank

Which of the following is most likely to increase the real interest rate in Country Z ?

• Country Z’s central bank purchases government securities from banks and citizens.

• Country Z reduces government expenditures.

• Country Z is viewed as having increased political and economic risk.

• Country Z’s citizens increase their savings in anticipation of needed retirement income.

• Country Z introduces a tax on consumption goods.

Which of the following changes would most likely cause an increase in interest rates in the short run?

• A decrease in reserve requirements

• An increase in trade deficits

• An open market purchase of government bonds by the Federal Reserve

• An increase in government spending financed by borrowing

• An increase in the price of bonds

The loanable funds market is best described as bringing together

• savers and borrowers

• investors and borrowers

• financial institutions and investors

• savers and lenders

• banks and savers