Fina3317 Quiz 4

FINA3317, Quiz 4

Chapter 4,

September 19, 2013

Name:_______________________________________ __________1. The two main liabilities of a central bank, such as the US Federal Reserve system, are: (please select two) A. Gold B. Bank reserves C. Government bonds D. Stocks E. Currency F. None of the above. __________2. The main assets of a modern central bank, such as the US Federal Reserve system, are: A. Gold B. Bank reserves C. Government bonds D. Stocks E. Currency F. None of the above.

__________3. Deposits that commercial banks keep at their local Federal Reserve branch are called: (answer all that apply) A. Required reserves B. Currency in circulation C. Treasury bonds D. The discount window E. Fed funds F. None of the above. __________4. When a bank lends excess reserves to another bank, the interest rate on this loan is called the: A. Fed’s discount rate B. yield-to-maturity C. current yield D. fed funds rate E. inflation rate F. None of the above. __________5. When a bank borrows from the Fed’s discount window, this is: (answer all that apply)

A. at the fed funds rate B. at a rate equal to the long-term bond yield C. at the Fed’s discount rate D. a long-term loan E. secured by collateral such as Treasury Bills F. None of the above. __________6. A large increase in the money supply through the purchase of bonds by the Fed is called: (answer all that apply) A. Discount window lending B. Open market operations C. Fed funds D. Quantitative easing E. the dual mandate F. None of the above. __________7. If a country has a history of banking instability and high inflation, then how do the assets of its central bank differ from those of the US Federal Reserve? (answer all that apply) A. They hold more of their country’s government bonds as assets. B. They hold more foreign currency bonds as assets. C. They hold more government deposits as assets. D. They hold more bank reserves as assets. E. The hold more corporate bonds as assets. F. None of the above....