Question 1

If nominal GDP = $15 trillion and the quantity of money is $3 trillion, what is the velocity of circulation?

Accepted Answer

A)  45 
B)  18 
C)  5 
D)  12 
A)  45 
B)  18 
C)  5 
D)  12

Question 2

-The table above shows the balance sheet for Ralph's Bank. If the desired reserve ratio is 15 percent, Ralph's Bank has unplanned reserves of

Accepted Answer

A)  $50. 
B)  $500. 
C)  $450. 
D)  $2,500. 
A)  $50. 
B)  $500. 
C)  $450. 
D)  $2,500.

Question 3

The "double coincidence of wants" problem is

Accepted Answer

A)  resolved under a system of barter. 
B)  always present in all economic systems. 
C)  resolved by the use of money. 
D)  created by the use of money. 
A)  resolved under a system of barter. 
B)  always present in all economic systems. 
C)  resolved by the use of money. 
D)  created by the use of money.

Question 4

The table below shows data (in millions) for Sun Trust Banks in September 2017 and September 2108.   The data show that Sun Trust

Accepted Answer

A)  increased its reserve ratio to 5.3 percent over the 12 months. 
B)  increased its reserve ratio to 6.4 percent over the 12 months. 
C)  has fewer excess reserves in 2018. 
D)  faced a higher currency drain ratio in 2018. 
A)  increased its reserve ratio to 5.3 percent over the 12 months. 
B)  increased its reserve ratio to 6.4 percent over the 12 months. 
C)  has fewer excess reserves in 2018. 
D)  faced a higher currency drain ratio in 2018.

Question 5

When the Fed wants to undertake open market operations, it

Accepted Answer

A)  can require all commercial banks to buy from or sell to it. 
B)  can require all member banks to buy from or sell to it. 
C)  buys or sells securities in the open market. 
D)  buys securities from or sells securities to the federal government. 
A)  can require all commercial banks to buy from or sell to it. 
B)  can require all member banks to buy from or sell to it. 
C)  buys or sells securities in the open market. 
D)  buys securities from or sells securities to the federal government.

Question 6

According to the quantity theory of money, in the long run, an increase in the quantity of money results in an equal percentage increase in

Accepted Answer

A)  the price level. 
B)  the growth rate of real GDP. 
C)  the inflation level. 
D)  the growth rate of potential GDP. 
A)  the price level. 
B)  the growth rate of real GDP. 
C)  the inflation level. 
D)  the growth rate of potential GDP.

Question 7

In an economy, there is $200 million in currency held outside banks, $100 million in traveler's checks, $250 million in currency held inside the banks, $300 million in checking deposits, and $600 million in savings deposits. The value of M1 is

Accepted Answer

A)  $750 million. 
B)  $1,200 million. 
C)  $1,150 million. 
D)  $600 million. 
A)  $750 million. 
B)  $1,200 million. 
C)  $1,150 million. 
D)  $600 million.

Question 8

Suppose the equilibrium interest rate in the money market is 3 percent and the current interest rate is 5 percent. As a result

Accepted Answer

A)  the interest rate rises. 
B)  real GDP increases. 
C)  the demand for money curve shifts rightward. 
D)  people buy bonds and the interest rate falls. 
A)  the interest rate rises. 
B)  real GDP increases. 
C)  the demand for money curve shifts rightward. 
D)  people buy bonds and the interest rate falls.

Question 9

Checking deposits are included in

Accepted Answer

A)  M1 only. 
B)  M2 only. 
C)  M1 and M2. 
D)  neither M1 nor M2. 
A)  M1 only. 
B)  M2 only. 
C)  M1 and M2. 
D)  neither M1 nor M2.

Question 10

The Federal Reserve has ________ regional Federal Reserve Banks and ________ members of the Board of Governors.

Accepted Answer

A)  12; 12 
B)  12; 7 
C)  7; 12 
D)  7; 7 
A)  12; 12 
B)  12; 7 
C)  7; 12 
D)  7; 7

Question 11

When you bought your textbook for this course, you were using money as a

Accepted Answer

A)  store of value. 
B)  price mechanism. 
C)  medium of exchange. 
D)  unit of account. 
A)  store of value. 
B)  price mechanism. 
C)  medium of exchange. 
D)  unit of account.

Question 12

If nominal GDP is $12 trillion, the price level is 120, and the quantity of money is $4 trillion, what is the velocity of circulation?

Accepted Answer

A)  3 
B)  2.5 
C)  30 
D)  25 
A)  3 
B)  2.5 
C)  30 
D)  25

Question 13

This group consists of seven members appointed by the President of the United States for 14-year terms

Accepted Answer

A)  the presidents of the Federal Reserve Banks. 
B)  the members of the Federal Open Market Committee. 
C)  the members of the Board of Governors of the Federal Reserve System. 
D)  None of the above answers are correct. 
A)  the presidents of the Federal Reserve Banks. 
B)  the members of the Federal Open Market Committee. 
C)  the members of the Board of Governors of the Federal Reserve System. 
D)  None of the above answers are correct.

Question 14

If the price level rises, the quantity of

Accepted Answer

A)  nominal money people demand increases. 
B)  real money people demand increases. 
C)  nominal money people demand decreases. 
D)  real money people demand decreases. 
A)  nominal money people demand increases. 
B)  real money people demand increases. 
C)  nominal money people demand decreases. 
D)  real money people demand decreases.

Question 15

The opportunity cost of holding money balances rather than holding other assets is

Accepted Answer

A)  the nominal interest rate. 
B)  the price level. 
C)  forgone consumption. 
D)  forgone liquidity. 
A)  the nominal interest rate. 
B)  the price level. 
C)  forgone consumption. 
D)  forgone liquidity.

Question 16

The smaller the currency drain, the

Accepted Answer

A)  smaller the increase in the quantity of money from an increase in reserves. 
B)  more likely it is that the banking system will hold a larger proportion of unplanned reserves. 
C)  the smaller the effect of a change in the discount rate. 
D)  larger the increase in the quantity of money from an increase in reserves. 
A)  smaller the increase in the quantity of money from an increase in reserves. 
B)  more likely it is that the banking system will hold a larger proportion of unplanned reserves. 
C)  the smaller the effect of a change in the discount rate. 
D)  larger the increase in the quantity of money from an increase in reserves.

Question 17

The quantity of money that people choose to hold is

Accepted Answer

A)  positively related to the nominal interest rate. 
B)  positively related to real GDP. 
C)  negatively related to the price level. 
D)  positively related to the availability of ATM machines. 
A)  positively related to the nominal interest rate. 
B)  positively related to real GDP. 
C)  negatively related to the price level. 
D)  positively related to the availability of ATM machines.

Question 18

Whenever a bank's actual reserves exceed its desired reserves, the bank

Accepted Answer

A)  can lend out additional funds. 
B)  needs to call in loans. 
C)  will go out of business. 
D)  must increase the amount of its required reserves by obtaining more cash. 
A)  can lend out additional funds. 
B)  needs to call in loans. 
C)  will go out of business. 
D)  must increase the amount of its required reserves by obtaining more cash.

Question 19

The U.S. historical evidence

Accepted Answer

A)  generally supports the quantity theory of money in the long run. 
B)  does not support the quantity theory of money. 
C)  demonstrates that there is no correlation between the money growth rate and inflation. 
D)  shows that a higher inflation rate causes an increase in the money growth rate. 
A)  generally supports the quantity theory of money in the long run. 
B)  does not support the quantity theory of money. 
C)  demonstrates that there is no correlation between the money growth rate and inflation. 
D)  shows that a higher inflation rate causes an increase in the money growth rate.

Question 20

Which of the following is NOT considered a function of money?

Accepted Answer

A)  It facilitates exchange. 
B)  It acts as a means of payment. 
C)  It can be held and exchanged for future goods and services. 
D)  It allows banks to lend out funds. 
A)  It facilitates exchange. 
B)  It acts as a means of payment. 
C)  It can be held and exchanged for future goods and services. 
D)  It allows banks to lend out funds.

If nominal GDP = $15 trillion and the quantity of money is $3 trillion, what is the velocity of circulation?

-The table above shows the balance sheet for Ralph's Bank. If the desired reserve ratio is 15 percent, Ralph's Bank has unplanned reserves of

The "double coincidence of wants" problem is

The table below shows data (in millions) for Sun Trust Banks in September 2017 and September 2108. The data show that Sun Trust

When the Fed wants to undertake open market operations, it

According to the quantity theory of money, in the long run, an increase in the quantity of money results in an equal percentage increase in

In an economy, there is $200 million in currency held outside banks, $100 million in traveler's checks, $250 million in currency held inside the banks, $300 million in checking deposits, and $600 million in savings deposits. The value of M1 is

Suppose the equilibrium interest rate in the money market is 3 percent and the current interest rate is 5 percent. As a result

Checking deposits are included in

The Federal Reserve has regional Federal Reserve Banks and members of the Board of Governors.

When you bought your textbook for this course, you were using money as a

If nominal GDP is $12 trillion, the price level is 120, and the quantity of money is $4 trillion, what is the velocity of circulation?

This group consists of seven members appointed by the President of the United States for 14-year terms

If the price level rises, the quantity of

The opportunity cost of holding money balances rather than holding other assets is

The smaller the currency drain, the

The quantity of money that people choose to hold is

Whenever a bank's actual reserves exceed its desired reserves, the bank

The U.S. historical evidence

Which of the following is NOT considered a function of money?

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 8: Money, the Price Level, and Inflation

If nominal GDP = $15 trillion and the quantity of money is $3 trillion, what is the velocity of circulation?

-The table above shows the balance sheet for Ralph's Bank. If the desired reserve ratio is 15 percent, Ralph's Bank has unplanned reserves of

The "double coincidence of wants" problem is

The table below shows data (in millions) for Sun Trust Banks in September 2017 and September 2108. The data show that Sun Trust

When the Fed wants to undertake open market operations, it

According to the quantity theory of money, in the long run, an increase in the quantity of money results in an equal percentage increase in

In an economy, there is $200 million in currency held outside banks, $100 million in traveler's checks, $250 million in currency held inside the banks, $300 million in checking deposits, and $600 million in savings deposits. The value of M1 is

Suppose the equilibrium interest rate in the money market is 3 percent and the current interest rate is 5 percent. As a result

Checking deposits are included in

The Federal Reserve has ________ regional Federal Reserve Banks and ________ members of the Board of Governors.

When you bought your textbook for this course, you were using money as a

If nominal GDP is $12 trillion, the price level is 120, and the quantity of money is $4 trillion, what is the velocity of circulation?

This group consists of seven members appointed by the President of the United States for 14-year terms

If the price level rises, the quantity of

The opportunity cost of holding money balances rather than holding other assets is

The smaller the currency drain, the

The quantity of money that people choose to hold is

Whenever a bank's actual reserves exceed its desired reserves, the bank

The U.S. historical evidence

Which of the following is NOT considered a function of money?

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

The Federal Reserve has regional Federal Reserve Banks and members of the Board of Governors.