1) The Fed does not tightly control the monetary base because it does not completely control
A) open market purchases.
B) open market sales.
C) borrowed reserves.
D) the discount rate.
2) Subtracting borrowed reserves from the monetary base obtains
A) reserves.
B) high powered money.
C) the nonborrowed monetary base.
D) the borrowed monetary base.
3) The relationship between borrowed reserves, the nonborrowed monetary base, and the monetary base is
A) MB = MBn BR.
B) BR = MBn MB.
C) BR = MB MBn.
D) MB = BR MBn.
4) Explain two ways by which the Federal Reserve System can increase the monetary base. Why is the effect of Federal Reserve actions on bank reserves less exact than the effect on the monetary base?