Question

11. Monetary policy affects which of the following variables in the long run?

the rate of unemployment

the level of output

the real interest rate

the rate of inflation

all of the above

12. There are how many members of the Board of Governors in the Federal Reserve system?

12

none of the above

7

15

4

13. There are how many members of the Federal Open Market Committee?

12

14

5

15

7

14. Which of the following would cause a reduction in M1?

none of the above

an open market operation where the Fed sells bonds

all of the above

a reduction in the discount rate

an increase in the required ratio of reserves to deposits

15. An economy is said to be in the liquidity trap when the short-term ________ is down to zero.

real interest rate on government bonds

nominal interest rate on government bonds

real interest rate on corporate bonds

nominal interest rate on corporate bonds

Please Answer All

Answer 1

Answer 11 : Option E is correct. The monetary policy means change in all the rate i.e employment rate, inflaton rate,real interest rate as well as all the factors has been effected an economy in one way or another.

Answer 12 : Option C is correct. There are seven members in the board of governers in the federal reserve system.

Answer 13 : Option A is correct. There are 12 members associated with the members of federal open market committee that control the money supply.

Answer 14 : Option A is correct. None of the above option is correct as it means that there is no decrease in the M1 in an economy.

Answer 15 : Option A is correct. It means that liquidity trap is a situation when short term real interest rate is almost equal to zero.