Question Details

What kind of intervention is being referred to 


1. "Earlier in the week the central bank's traders intervened aggressively in the money market to push the yield on last week's Treasury bills sharply higher." 
What kind of intervention is being referred to ? The central bank 
a) sold bills b) bought bills 
c) announced an easier monetary policy d) raised the legal reserve requirement 
2. "Several government bond issues will raise $400 million, with the central bank picking up at least $200 million. The central bank can also be counted on to take down more of the bonds than the planned $200 million it has announced if they seem to be selling badly." This suggests that monetary policy is 
a) flexible b) inconsistent c) targeting on a fixed interest rate 
d) targeting on a fixed growth rate of the money supply 
3. "Basically, investors profit in two ways from putting their money into bonds: through the coupon rate, or interest rate, that is attached to each bond and provides a steady income; and through ..........." Complete this clipping. 
a) possible increases in bond prices b) capital gains if the interest rate rises 
c) avoiding the deleterious effects of unexpected inflation 
d) avoiding capital losses because the bond has a fixed face value 
4. "The average yield at this week's auction of $17.8 billion of 91-day treasury bills was 11.17 percent, up from 10.95 percent last week. The average bid price was $97.290." Compared to last week, the average bid price 61 
a) has risen b) has fallen c) is unchanged d) cannot tell 
5. "Some economists criticized the central bank for not moving in the face of the waning recovery. One, who prefers anonymity, stated: 'The failure to move today leaves us with low inflation, a weak economy and climbing jobless claims; these are classic signs of an impending downturn. The Fed fiddles while the economy burns.'" This economist would want to see 
a) a higher interest rate b) a higher reserve requirement 
c) a decrease in the money supply d) an increase in the money supply


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