1. If there is no discount lending, the Fed can change the _____ to change the amount of borrowing from the Federal Reserve. discount rate reserve requirement both of the above neither of the above 2. When the Fed raises the discount rate, the _____ of reserves shifts _____. supply, down demand, up demand, down supply, up 3. Which of the following countries had some success with targeting monetary aggregates? Germany United States New Zealand none of the aboveA. discount rateB. reserve requirementC. both of the aboveD. neither of the above Solution Answer: 1.Correct Answer = (A) Discount Rate Justification: Change in discount rate bring the change in the amount of borrowing, higher discount rate discourage the bank borrowing while lower discount rate shall encourage the bank borrowing. 2. Correct Answer = (A) Supply, Down Justification: Lower discount rate will encourage bank borrowing, increasing the supply of reserves inversely the Higher discount rate discourages the bank borrowing and decrease the supply of reserve. 3. Correct Answer = (A) Germany Justification: Germany and Switzerland are the countries who had some success with targeting monetary aggregates..

1. 1. If X is a hypergeometric random variable with parameters n, K, and N, and p = K/N, the mean
and variance of X are:
a. np and np(1 – p)
b. p and np(1 – p)
c. np and p(1 – p)
d. np and np(1 – p)[(N – n)/(N – 1)]
2. If X is a discrete uniform random variable defined on the consecutive integers 10, 11, …, 20,
the mean of X is:
a. 30
b. 15
c. 12
d. none
3. If S is the sample space of a random experiment and E is any event, the axioms of probability
are
a. P(S) = 1
b. 0 <= P(E) <= 1
c. For any two events E1, E2 with E1 intersect E2 = null, P(E1 union E2) = P(E1) + P(E2)
d. none of the above
e. all of the above
4. Two events A and B are independent with P(A) = P(B) = 0.5. Then P(A intersect B) is:
a. 0.50
b. 0.75
c. 1.0
d. 0.25
5. If X is a binomial random variable with n = 20 and p = 0.25, the mean of X is
a. 10

2. b. 5
c. 4
d. None
Solution
1. d 2. b (20-10)/2 = 15 3. d 4. d (.5)(.5) =.25 5. b n*p=20*.25=5