Question

1. Suppose that the Federal Reserve sets its target for the federal funds rate at a range of 0.25 to 0.50 percent. This means that the discount rate on primary loans will be set at ____ percent and the discount rate on secondary loans will be set at ___ percent.

1. 1.00; 1.50
2. 1.00; 0.50
3. 0.50; 1.00
4. 1.25; 1.50
5. 1.50; 1.00

2. Which of the following is an example of an operating target that can potentially be used by the federal reserve?

1. The interest rate paid on reserves
2. The inflation rate
3. The federal funds rate
4. The interest rate on the ten-year treasury note
5. The growth rate of the money supply

3. Which of the following is an example of an operating target that can potentially be used by the federal reserve?

1. The interest rate paid on reserves
2. The inflation rate
3. The federal funds rate
4. The interest rate on the ten-year treasury note
5. The growth rate of the money supply

4. All of the following help make the Fed independent of the political process EXCEPT

1. Board members receive a long, nonrenewable appointment
2. Financial independence
3. The chair of the Fed receives a lifetime appointment
4. Board members’ terms expire at different times, reducing the possible number of appointees by any one president

Answer 1