1. An increase in the assets of Federal Reserve banks will
(a) decrease the monetary base.
(b) increase the monetary base.
(c) has no effect on monetary base.
(d) always decrease another Federal Reserve Bank asset.
2. An increase in excess reserves will cause
(a) the Fed Funds rate to rise.
(b) planned inventory investment to fall.
(c) depository institutions to lend more freely.
(d) foreign investors to buy more T-Bills.
3. Consumption spending should increase if
(a) financial wealth decreases.
(b) reserve requirements decrease.
(c) interest rates increase.
(d) credit availability decreases.