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1. | The president of the United States appoints the _____-member Federal Reserve Board of Governors to ______-year terms.
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| A) 5, 4
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| B) 8, 15
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| C) 7, 14
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| D) 10, 12
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2. | Reserves are used to ___________.
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| A) clear checks and control the size of the money supply
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| B) increase the money supply and lower inflation
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| C) decrease the money supply and raise inflation
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| D) increase Gross Domestic Product and lower inflation
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3. | A portion of the deposits that banks and other depository institutions must legally reserve are called ________ reserves.
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| A) monetary
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| B) excess
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| C) fractional
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| D) legal
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4. | The ___________ is the interest the Fed charges on loans to financial institutions.
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| A) margin requirement
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| B) discount requirement
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| C) prime rate
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| D) discount rate
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5. | In the short run, monetary policy affects __________.
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| A) Gross Domestic Product
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| B) interest rates and available credit
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| C) inflation
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| D) productive resources
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6. | In the long run, changes in the supply of money affect the ____________.
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| A) aggregate money supply
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| B) Gross National Product
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| C) civilian unemployment rate
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| D) general level of prices
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7. | Repeated short-run attempts to keep interest rates low result in a _________ of the money supply, making inflation _________.
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| A) long-term expansion, worse
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| B) short-term expansion, lessen
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| C) long-term contraction, lessen
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| D) short-term contraction, worse
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8. | ___________ includes traveler's checks, coins, currency, demand deposits, and other checkable deposits.
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| A) M1
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| B) M2
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| C) M3
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| D) M4
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