1) All else the same, when the Fed calls in a $100 discount loan previously extended to the First National Bank, reserves in the banking system
A) increase by $100.
B) increase by more than $100.
C) decrease by $100.
D) decrease by more than $100.
2) When the Federal Reserve extends a discount loan to a bank, the monetary base ________ and reserves ________.
A) remains unchanged; decrease
B) remains unchanged; increase
C) increases; increase
D) increases; remain unchanged
3) When the Federal Reserve calls in a discount loan from a bank, the monetary base ________ and reserves ________.
A) remains unchanged; decrease
B) remains unchanged; increase
C) decreases; decrease
D) decreases; remains unchanged
4) If the Fed decides to reduce bank reserves, it can
A) purchase government bonds.
B) extend discount loans to banks.
C) sell government bonds.
D) print more currency.