Series 6 practice questions, page 13 of 13, with answer review and explanations.
Question 61
The Federal Reserve announces that it plans to buy $3.89 billion in Treasury securities on the open market. All else equal, which of the following is a likely result of this Fed action?
Interest rates will rise, causing security prices to fall.
Money supply will increase, causing interest rates to fall.
Stock and bond prices should increase.
Both B and C are likely results of this Fed action.
Question 62
Which of the following are fiscal policy tools under the jurisdiction of the U.S. Congress?
the decision on the amount of cash reserves that a bank must hold
the decision on whether to raise or lower effective tax rates
the decision on whether to raise or lower the rate at which banks can borrow money from the Federal Reserve
Both A and B are fiscal policy tools
Question 63
Which of the following actions can be expected to result in a decrease in stock and bond prices, all else equal? I. The Federal Reserve announces a decrease in the discount rate. II. Congress votes to decrease payments to Social Security recipients. III. Congress votes to decrease taxes. IV. The Federal Reserve announces that it will sell some of the Treasury securities it owns on the open market.