Middleton High - ECONOMICS AP Economi6.06 Intro to Monetary Policy

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Answer Key Question 1 (Worth points) Which of the following are included in contractionary monetary policy? (Select all that are correct) increase discount rate increase federal funds rate increa... se reserve requirement buy bonds decrease discount rate decrease reserve requirement decrease federal funds rate sell bonds Points earned on this question: 12 Question 2 The prime interest rate is the rate the Fed charges member banks to borrow money. set directly by the Fed through monetary policy. the rate banks charge each other to borrow money. set directly by the Fed through fiscal policy. the rate banks charge their best customers to borrow money. Points earned on this question: 4 Question 3 (Worth 4 points) This study source was downloaded by 100000816398418 from CourseHero.com on 03-27-2021 15:19:58 GMT -05:00 https://www.coursehero.com/file/23792868/606-Intro-to-Monetary-Policy/ This study resource was shared via CourseHero.comAccording to the graph above, this economy is experiencing inflationary gap. recessionary gap. Points earned on this question: 4 Question 4 (Worth 4 points) In response to an upturn in the economy, entrepreneurs seek to expand their businesses. What will happen to nominal interest rates and investment spending? What policy could the Fed use to reverse the trend? Nominal Interest Rates / Investment Spending / New Fed Policy Increase / Increase / Decrease Discount Rate Increase / Decrease / Decrease Discount Rate Decrease / Increase / Decrease Discount Rate Increase / Decrease / Increase Discount Rate Decrease / Decrease / Increase Discount Rate Points earned on this question: 4 Question 5 (Worth 4 points) If the Fed begins to sell treasury bills to counter inflation, we would expect to see an increase in the demand for money. a decrease in the demand for money. an increase in the quantity of money demanded. a decrease in the quantity demanded of money. This study source was downloaded by 100000816398418 from CourseHero.com on 03-27-2021 15:19:58 GMT -05:00 https://www.coursehero.com/file/23792868/606-Intro-to-Monetary-Policy/ This study resource was shared via CourseHero.c [Show More]

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