1. If the target federal funds rate reaches the lower bound the FOMC:
a- would likely raise the discount rate.
b- would likely raise the required reserve rate.
c- would likely shift their focus to purchasing longer-term securities.
d- must stop purchasing securities since they cannot lower nominal rates below zero.
2. The driving force in the balance-sheet channel of monetary policy mechanism is which of the following?
a- Bank net worth
b- Asset diversity
c- Information
d- Timing
3. An open market purchase of securities by the central bank from banks usually will:
a- induce the banks to make more loans since their revenue will decrease if they do nothing.
b- increase the banks' revenue even if the bank does nothing with the reserves.
c- decrease the amount of deposits in the banking system.
d- decrease the banks' willingness and ability to make loans.
4. The movement away from bank lending towards asset-backed securities has:
a- led the FOMC to abandon interest-rate targets.
b- increased the importance of the bank-lending channel of monetary policy.
c- eliminated the bank-lending channel as a mechanism for monetary policy.
d- decreased the importance of the bank-lending channel.