It is a way for the Fed to create open-ended market-driven interest rates (a) It used...

It is a way for the Fed to create open-ended market-driven interest rates (a) It used to be a practice that the Fed stopped using after the Great Depression (b)It ensures that anyone who wants a loan can get one (c) It is how the Fed ensures that banks lend money at the targeted Fed funds rate 90 The money supply is best defined as which of the following? (a)It's the discount rate that the Federal Reserve charges banks to borrows at its discount window(b)It's found in the Fed's weekly report on the total amount of currency held by the public(c)It's the amount of money the central bank has in its vaults at the end of the business day (C) Which of the following is not one of the Fed's three primary monetary policy tools? (a)IMF interest rate margin(b) Open market operations (c) The discount rate (D) The term "liquidity" refers to which one of the following? (a) The amount of capital available to invest or lend (b) The amount of interest that a bank can charge its customers(c)The amount of money that the government has at its disposal

Expert Solution

Q1- It is a way for the Fed to create open-ended market driven interest rate

Option (a) is wrong as this practice has not been stopped after great depression. Option (b) is wrong as this is not for anyone in the country to get loan. It is for the banks in the economy. Option (ç) is the right answer as the open market operations are mainly to fun the banks and the rate would be at the targeted fed funds rate

Answer - (ç)

Q2 - the money supply is best defined as which is the following-

Option (a) is wrong as it's no related to the discount rate. Option (b) is the correct answer. Money supply is the total amount of currency/money held by the public at a point in time. It is also published by US Fed. Option (ç) is wrong as money supply is not something which central bank has in its vaults

Answer - (b)

Q3- which of the following is not one of the fed's three primary monetary policy tools

Option (a) is the right answer. IMF interest rate margin is nothing to do with Red monetary policy tools. Option (b) and (ç) are the monetary policy tools.

Answer - (a)

Q4- the term "liquidity" refers to which one of the following

Liquidity refers to availability of cash for individual or firm

Option (a) correct as it is the amount of capital available to invest or lend. Option (b) is wrong as it is nothing to do with interest rate. Option(ç) is wrong as it's not only restricted to government

Answer - (a)

Rahul Sunny answered 1 year ago

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