Question 1

Why is the money multiplier smaller than the simple deposit multiplier?

Accepted Answer

In the case of the money multiplier, ind

Question 2

Open market purchase will result in:

Accepted Answer

A)  increase in bank reserves and a decrease in the federal funds rate. 
B)  increase in bank reserves and an increase in the federal funds rate. 
C)  decrease in bank reserves and a decrease in the federal funds rate. 
D)  decrease in bank reserves and an increase in the federal funds rate. 
A)  increase in bank reserves and a decrease in the federal funds rate. 
B)  increase in bank reserves and an increase in the federal funds rate. 
C)  decrease in bank reserves and a decrease in the federal funds rate. 
D)  decrease in bank reserves and an increase in the federal funds rate.

Question 3

The ability of a financial asset to be used to immediately make transactions is called:

Accepted Answer

A)  store of value. 
B)  medium of exchange. 
C)  illiquidity. 
D)  liquidity. 
A)  store of value. 
B)  medium of exchange. 
C)  illiquidity. 
D)  liquidity.

Question 4

The interest rate that commercial banks charge each other for loans of reserves to meet their minimum reserve requirements is called:

Accepted Answer

A)  treasury bill rate. 
B)  federal funds rate. 
C)  prime interest rate. 
D)  none of the above. 
A)  treasury bill rate. 
B)  federal funds rate. 
C)  prime interest rate. 
D)  none of the above.

Question 5

In the money market, an excess supply of money will:

Accepted Answer

A)  increase the demand for bonds, increase bond prices, and decrease interest rates. 
B)  increase the demand for bonds, decrease bond prices, and decrease interest rates. 
C)  decrease the demand for bonds, increase bonds prices, and increase interest rates. 
D)  decrease the demand for bonds, decrease bond prices, and increase interest rates. 
A)  increase the demand for bonds, increase bond prices, and decrease interest rates. 
B)  increase the demand for bonds, decrease bond prices, and decrease interest rates. 
C)  decrease the demand for bonds, increase bonds prices, and increase interest rates. 
D)  decrease the demand for bonds, decrease bond prices, and increase interest rates.

Question 6

Large denomination time deposits are included in:

Accepted Answer

A)  M1. 
B)  M2. 
C)  M3. 
D)  L. 
A)  M1. 
B)  M2. 
C)  M3. 
D)  L.

Question 7

The primary monetary policy tool is reserve requirements.

Accepted Answer

A) True 
 B)False

Question 8

The monetary base is smaller than the money supply.

Accepted Answer

A) True 
 B)False

Question 9

The money multiplier is computed as follows:

Accepted Answer

A)  c + 1)/c + rr + e). 
B)  c + 1)/c + rr). 
C)  1/rr. 
D)  c + 1)/c + e). 
A)  c + 1)/c + rr + e). 
B)  c + 1)/c + rr). 
C)  1/rr. 
D)  c + 1)/c + e).

Question 10

The function of money that enables prices of goods and services to be quoted is called:

Accepted Answer

A)  medium of exchange. 
B)  store of value. 
C)  unit of account. 
D)  measure of power. 
A)  medium of exchange. 
B)  store of value. 
C)  unit of account. 
D)  measure of power.

Question 11

How many Federal Reserve District Banks are there?

Accepted Answer

A)  5 
B)  7 
C)  12 
D)  1 
A)  5 
B)  7 
C)  12 
D)  1

Question 12

Open market sale will result in:

Accepted Answer

A)  increase in bank reserves and a decrease in the federal funds rate. 
B)  increase in bank reserves and an increase in the federal funds rate. 
C)  decrease in bank reserves and a decrease in the federal funds rate. 
D)  decrease in bank reserves and an increase in the federal funds rate. 
A)  increase in bank reserves and a decrease in the federal funds rate. 
B)  increase in bank reserves and an increase in the federal funds rate. 
C)  decrease in bank reserves and a decrease in the federal funds rate. 
D)  decrease in bank reserves and an increase in the federal funds rate.

Question 13

The most liquid form of money is M3.

Accepted Answer

A) True 
 B)False

Question 14

In the money market, an increase in money demand will:

Accepted Answer

A)  result in a rightward shift in the money demand curve increasing interest rates. 
B)  result in a rightward shift in the money demand curve decreasing interest rates. 
C)  result in a leftward shift in the money demand curve increasing interest rates. 
D)  result in a leftward shift in the money demand curve decreasing interest rates. 
A)  result in a rightward shift in the money demand curve increasing interest rates. 
B)  result in a rightward shift in the money demand curve decreasing interest rates. 
C)  result in a leftward shift in the money demand curve increasing interest rates. 
D)  result in a leftward shift in the money demand curve decreasing interest rates.

Question 15

The function of money that enables money to be used for future purchases is called:

Accepted Answer

A)  medium of exchange. 
B)  store of value. 
C)  unit of account. 
D)  measure of power. 
A)  medium of exchange. 
B)  store of value. 
C)  unit of account. 
D)  measure of power.

Question 16

The liquidity-money LM) curve shows the alternative combinations of interest rates and real income that clears the money market.

Accepted Answer

A) True 
 B)False

Question 17

In the context of the money market, graphically illustrate and explain the impact of an expansionary monetary policy on interest rates.

Accepted Answer

An increase in the nominal money supply

Question 18

Real demand for money is positively related to the level of real income in the economy.

Accepted Answer

A) True 
 B)False

Question 19

The book provides information of current economic conditions and is used by the Federal Reserve in formulating monetary policy.

Accepted Answer

A)  Red 
B)  Blue 
C)  Beige 
D)  Green 
A)  Red 
B)  Blue 
C)  Beige 
D)  Green

Question 20

The legislation that made all depository institutions regardless of Federal Reserve membership subject to the reserve requirements established by the Fed is called the:

Accepted Answer

A)  Glass-Steagall Act. 
B)  McFadden Act. 
C)  Monetary Control Act of 1980. 
D)  none of the above 
A)  Glass-Steagall Act. 
B)  McFadden Act. 
C)  Monetary Control Act of 1980. 
D)  none of the above

Why is the money multiplier smaller than the simple deposit multiplier?

Open market purchase will result in:

The ability of a financial asset to be used to immediately make transactions is called:

The interest rate that commercial banks charge each other for loans of reserves to meet their minimum reserve requirements is called:

In the money market, an excess supply of money will:

Large denomination time deposits are included in:

The primary monetary policy tool is reserve requirements.

The monetary base is smaller than the money supply.

The money multiplier is computed as follows:

The function of money that enables prices of goods and services to be quoted is called:

How many Federal Reserve District Banks are there?

Open market sale will result in:

The most liquid form of money is M3.

In the money market, an increase in money demand will:

The function of money that enables money to be used for future purchases is called:

The liquidity-money LM) curve shows the alternative combinations of interest rates and real income that clears the money market.

In the context of the money market, graphically illustrate and explain the impact of an expansionary monetary policy on interest rates.

Real demand for money is positively related to the level of real income in the economy.

The book provides information of current economic conditions and is used by the Federal Reserve in formulating monetary policy.

The legislation that made all depository institutions regardless of Federal Reserve membership subject to the reserve requirements established by the Fed is called the:

Managers and Economics

Demand, Supply, and Equilibrium Prices

Demand Elasticities

Techniques for Understanding Consumer Demand and Behavior

Production and Cost Analysis in the Short Run

Production and Cost Analysis in the Long Run

Market Structure: Perfect Competition

Market Structure: Monopoly and Monopolistic Competition

Market Structure: Oligopoly

Pricing Strategies for the Firm

Measuring Macroeconomic Activity

Spending by Individuals, Firms, and Governments on Real Goods and Services

The Aggregate Model of the Macro Economy

International and Balance of Payments Issues in the Macro Economy

Combining Micro and Macro Analysis for Managerial Decision Making

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Exam 13: The Role of Money in the Macro Economy

Why is the money multiplier smaller than the simple deposit multiplier?

Open market purchase will result in:

The ability of a financial asset to be used to immediately make transactions is called:

The interest rate that commercial banks charge each other for loans of reserves to meet their minimum reserve requirements is called:

In the money market, an excess supply of money will:

Large denomination time deposits are included in:

The primary monetary policy tool is reserve requirements.

The monetary base is smaller than the money supply.

The money multiplier is computed as follows:

The function of money that enables prices of goods and services to be quoted is called:

How many Federal Reserve District Banks are there?

Open market sale will result in:

The most liquid form of money is M3.

In the money market, an increase in money demand will:

The function of money that enables money to be used for future purchases is called:

The liquidity-money LM) curve shows the alternative combinations of interest rates and real income that clears the money market.

In the context of the money market, graphically illustrate and explain the impact of an expansionary monetary policy on interest rates.

Real demand for money is positively related to the level of real income in the economy.

The book provides information of current economic conditions and is used by the Federal Reserve in formulating monetary policy.

The legislation that made all depository institutions regardless of Federal Reserve membership subject to the reserve requirements established by the Fed is called the:

Managers and Economics

Demand, Supply, and Equilibrium Prices

Demand Elasticities

Techniques for Understanding Consumer Demand and Behavior

Production and Cost Analysis in the Short Run

Production and Cost Analysis in the Long Run

Market Structure: Perfect Competition

Market Structure: Monopoly and Monopolistic Competition

Market Structure: Oligopoly

Pricing Strategies for the Firm

Measuring Macroeconomic Activity

Spending by Individuals, Firms, and Governments on Real Goods and Services

The Aggregate Model of the Macro Economy

International and Balance of Payments Issues in the Macro Economy

Combining Micro and Macro Analysis for Managerial Decision Making

Filters