Reading 65: Understanding Yield Spreads - LOS a ～ Q1-3 available, following, likely, policy, Board

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1.Which of the following policy tools is the least likely to be available to the U.S. Federal Reserve Board?

A)   Setting the discount rate at which banks can borrow from the Federal Reserve.

B)   Requiring the banking system to tighten or loosen its credit policies.

C)   Buying and selling Treasury securities in the open market.

D)   Increasing or decreasing bank reserve requirements.

2.Which of the following are the two most important tools available to the Federal Reserve?

A)   Changing the discount rate and changing bank reserve requirements.

B)   Open market operations and changing bank reserve requirements.

C)   Changing the discount rate and open market operations.

D)   Changing the discount rate and persuading banks to tighten or loosen lending requirements.

3.If the Federal Reserve wishes to lower market interest rates without changing the discount rate, it can:

A)   increase bank reserve requirements.

B)   raise the yield on Treasury securities.

C)   persuade banks to tighten lending requirements.

D)   buy Treasury securities.

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答案和详解如下：

1.Which of the following policy tools is the least likely to be available to the U.S. Federal Reserve Board?

A)   Setting the discount rate at which banks can borrow from the Federal Reserve.

B)   Requiring the banking system to tighten or loosen its credit policies.

C)   Buying and selling Treasury securities in the open market.

D)   Increasing or decreasing bank reserve requirements.

The correct answer was B)

The U.S. Federal Reserve can encourage or persuade banks as a whole to tighten or loosen their credit policies, but it cannot compel them to do so.

2.Which of the following are the two most important tools available to the Federal Reserve?

A)   Changing the discount rate and changing bank reserve requirements.

B)   Open market operations and changing bank reserve requirements.

C)   Changing the discount rate and open market operations.

D)   Changing the discount rate and persuading banks to tighten or loosen lending requirements.

The correct answer was C)

The two most important tools available to the Fed are changing the discount rate, the rate at which banks can borrow from the Fed’s discount window, and open market operations, the Fed’s activity of buying and selling Treasury securities.

3.If the Federal Reserve wishes to lower market interest rates without changing the discount rate, it can:

A)   increase bank reserve requirements.

B)   raise the yield on Treasury securities.

C)   persuade banks to tighten lending requirements.

D)   buy Treasury securities.

The correct answer was D)

Buying Treasury securities pumps money into the economy, lowering interest rates. Higher reserve requirements and tighter lending requirements will restrict the money supply, causing rates to rise. The Federal Reserve has no direct control over the yield on existing Treasury securities.