1. When the Fed adopts a contractionary monetary policy, the interest rate at which the Fed lends to other banks will be expected to and the money supply in the economy would be expected to
A. decrease; increase
B. increase; increase
C. increase; decrease
D. decrease; decrease
2. Which of the following is the main reason behind the financial crisis of 2008?
A. There was a sharp decline in the growth rate of money supply.
B. Banks had much higher requirements for borrowers to qualify for loans than normal.
C. There was a sharp increase in the quantity of exports from the U.S. to Asian countries.
D. Banks in the U.S. made subprime mortgage loans.
3. The discount rate is the
A. targeted inflation rate for an economy
B. nominal interest rate charged by financial intermediaries when they advance loans.
C. interest rate that the Fed charges on the loans it makes.
D. ongoing taxation rate in an economy.
4. The main liability on the Federal Reserve's balance sheet is
A. capital.
B. the monetary base.
C. securities.
D. discount loans.