Question 1

What is the money multiplier and what affects its size?

Accepted Answer

The money multiplier is the amount by wh

Question 2

-In the balance sheet for the FBN bank above, the entries are in millions of dollars. If the desired reserve ratio equals 10 percent, FBN Bank has unplanned reserves of

Accepted Answer

A)  $280 million. 
B)  $200 million. 
C)  $360 million. 
D)  $0. 
A)  $280 million. 
B)  $200 million. 
C)  $360 million. 
D)  $0.

Question 3

Which of the following is a service of depository institutions?

Accepted Answer

A)  decreasing the liquidity drain of funds in the banking system 
B)  monitoring the Federal Reserve 
C)  pooling risk 
D)  loaning funds to other depository institutions at the discount rate 
A)  decreasing the liquidity drain of funds in the banking system 
B)  monitoring the Federal Reserve 
C)  pooling risk 
D)  loaning funds to other depository institutions at the discount rate

Question 4

If the velocity of circulation was equal to 4 in 2017, it means that

Accepted Answer

A)  consumers held four dollars in wealth for each dollar they spent in 2017. 
B)  on average, each dollar of money in the economy purchased four dollars of goods and services in GDP in 2017. 
C)  for each additional dollar of money injected into the economy, the price level rose 4 percent in 2017. 
D)  real output of goods and services in GDP rose by four dollars for each additional dollar of money consumers saved. 
A)  consumers held four dollars in wealth for each dollar they spent in 2017. 
B)  on average, each dollar of money in the economy purchased four dollars of goods and services in GDP in 2017. 
C)  for each additional dollar of money injected into the economy, the price level rose 4 percent in 2017. 
D)  real output of goods and services in GDP rose by four dollars for each additional dollar of money consumers saved.

Question 5

When part of the quantity of money is held in currency, then

Accepted Answer

A)  a currency drain occurs. 
B)  there is a higher level of excess reserves. 
C)  the money multiplier will increase in value. 
D)  the Fed will find it beneficial to increase the discount rate. 
A)  a currency drain occurs. 
B)  there is a higher level of excess reserves. 
C)  the money multiplier will increase in value. 
D)  the Fed will find it beneficial to increase the discount rate.

Question 6

If required reserves are $150 and deposits are $1,000, what is the required reserve ratio?

Accepted Answer

A)  10 percent 
B)  15 percent 
C)  5 percent 
D)  85 percent 
A)  10 percent 
B)  15 percent 
C)  5 percent 
D)  85 percent

Question 7

In September 2008, Regions Bank has $89 million in M1 deposits, $3 million in reserves and $81 million in loans. Regions Bank's desired reserve ratio is

Accepted Answer

A)  3.4 percent. 
B)  3.7 percent. 
C)  91 percent. 
D)  29.67 percent. 
A)  3.4 percent. 
B)  3.7 percent. 
C)  91 percent. 
D)  29.67 percent.

Question 8

The main policy-making body of the Federal Reserve System is the

Accepted Answer

A)  Board of Governors. 
B)  Federal Open Market Committee. 
C)  Federal Reserve Banks. 
D)  member commercial banks. 
A)  Board of Governors. 
B)  Federal Open Market Committee. 
C)  Federal Reserve Banks. 
D)  member commercial banks.

Question 9

Excess reserves are

Accepted Answer

A)  desired reserves minus actual reserves. 
B)  required reserves minus actual reserves. 
C)  actual reserves minus desired reserves. 
D)  actual reserves minus required reserves. 
A)  desired reserves minus actual reserves. 
B)  required reserves minus actual reserves. 
C)  actual reserves minus desired reserves. 
D)  actual reserves minus required reserves.

Question 10

In the list of assets below, which is the most liquid?

Accepted Answer

A)  $500 worth of Ford Motors common stock 
B)  $500 worth of Ford Motors bonds 
C)  a $500 traveler's check 
D)  a one-ounce gold coin 
A)  $500 worth of Ford Motors common stock 
B)  $500 worth of Ford Motors bonds 
C)  a $500 traveler's check 
D)  a one-ounce gold coin

Question 11

When real GDP increases, the demand for money

Accepted Answer

A)  increases. 
B)  decreases. 
C)  stays the same. 
D)  We cannot make a prediction without additional information. 
A)  increases. 
B)  decreases. 
C)  stays the same. 
D)  We cannot make a prediction without additional information.

Question 12

-In the balance sheet for the FBN bank above, the entries are in millions of dollars. If the desired reserve ratio is 10 percent, FBN Bank can loan an additional

Accepted Answer

A)  $280 million. 
B)  $200 million. 
C)  $100 million. 
D)  $360 million. 
A)  $280 million. 
B)  $200 million. 
C)  $100 million. 
D)  $360 million.

Question 13

If an economy has a velocity of circulation of 3, then

Accepted Answer

A)  the quantity of money is 3 times real GDP. 
B)  in a year the average dollar is exchanged 3 times to purchase goods and services in GDP. 
C)  nominal GDP is 1/3 the size of the quantity of money. 
D)  the quantity of money is $3 for every dollar of GDP. 
A)  the quantity of money is 3 times real GDP. 
B)  in a year the average dollar is exchanged 3 times to purchase goods and services in GDP. 
C)  nominal GDP is 1/3 the size of the quantity of money. 
D)  the quantity of money is $3 for every dollar of GDP.

Question 14

The Federal Open Market Committee of the Federal Reserve System is responsible for

Accepted Answer

A)  maintaining competition among the nation's commercial banks. 
B)  determining monetary policy actions. 
C)  establishing the official price of gold. 
D)  defining the foreign exchange value of the dollar. 
A)  maintaining competition among the nation's commercial banks. 
B)  determining monetary policy actions. 
C)  establishing the official price of gold. 
D)  defining the foreign exchange value of the dollar.

Question 15

A bank with $100 million in deposits has $15 million of cash in the bank, $10 million in deposits with the Fed, and $15 million in government securities in its vault. Its total reserves equal

Accepted Answer

A)  $10 million. 
B)  $15 million. 
C)  $25 million. 
D)  $40 million. 
A)  $10 million. 
B)  $15 million. 
C)  $25 million. 
D)  $40 million.

Question 16

Control of the nation's quantity of money is handled by

Accepted Answer

A)  Congress. 
B)  the Federal Reserve System. 
C)  the President of the United States. 
D)  Congress, the Federal Reserve System, and all commercial banks. 
A)  Congress. 
B)  the Federal Reserve System. 
C)  the President of the United States. 
D)  Congress, the Federal Reserve System, and all commercial banks.

Question 17

Suppose a bank is exactly meeting its desired reserve ratio of 10 percent and a new deposit of $75,000 is made. Immediately after the deposit is made, the bank's unplanned reserves equal

Accepted Answer

A)  zero. 
B)  $7,500. 
C)  $67,500. 
D)  It is impossible to determine without additional information. 
A)  zero. 
B)  $7,500. 
C)  $67,500. 
D)  It is impossible to determine without additional information.

Question 18

-In the above figure, suppose the economy is at point a. If there is an increase in real GDP, there is a movement to point such as

Accepted Answer

A)  b. 
B)  c. 
C)  d. 
D)  e. 
A)  b. 
B)  c. 
C)  d. 
D)  e.

Question 19

The Fed buys $100 million of government securities from Bank A. What is the effect on Bank A's balance sheet?

Accepted Answer

A)  Securities decrease by $100 million and reserves increase by $100 million. 
B)  Securities decrease by $100 million and deposits decrease by $100 million. 
C)  Securities increase by $100 million and reserves decrease by $100 million. 
D)  Securities increase by $100 million and reserves increase by $100 million. 
A)  Securities decrease by $100 million and reserves increase by $100 million. 
B)  Securities decrease by $100 million and deposits decrease by $100 million. 
C)  Securities increase by $100 million and reserves decrease by $100 million. 
D)  Securities increase by $100 million and reserves increase by $100 million.

Question 20

If you hold $25 in cash, have $150 in a checking account, and have $250 in a savings account, how much of M2 do you have?

Accepted Answer

All of the assets me

What is the money multiplier and what affects its size?

-In the balance sheet for the FBN bank above, the entries are in millions of dollars. If the desired reserve ratio equals 10 percent, FBN Bank has unplanned reserves of

Which of the following is a service of depository institutions?

If the velocity of circulation was equal to 4 in 2017, it means that

When part of the quantity of money is held in currency, then

If required reserves are $150 and deposits are $1,000, what is the required reserve ratio?

In September 2008, Regions Bank has $89 million in M1 deposits, $3 million in reserves and $81 million in loans. Regions Bank's desired reserve ratio is

The main policy-making body of the Federal Reserve System is the

Excess reserves are

In the list of assets below, which is the most liquid?

When real GDP increases, the demand for money

-In the balance sheet for the FBN bank above, the entries are in millions of dollars. If the desired reserve ratio is 10 percent, FBN Bank can loan an additional

If an economy has a velocity of circulation of 3, then

The Federal Open Market Committee of the Federal Reserve System is responsible for

A bank with $100 million in deposits has $15 million of cash in the bank, $10 million in deposits with the Fed, and $15 million in government securities in its vault. Its total reserves equal

Control of the nation's quantity of money is handled by

Suppose a bank is exactly meeting its desired reserve ratio of 10 percent and a new deposit of $75,000 is made. Immediately after the deposit is made, the bank's unplanned reserves equal

-In the above figure, suppose the economy is at point a. If there is an increase in real GDP, there is a movement to point such as

The Fed buys $100 million of government securities from Bank A. What is the effect on Bank A's balance sheet?

If you hold $25 in cash, have $150 in a checking account, and have $250 in a savings account, how much of M2 do you have?

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

What is the money multiplier and what affects its size?

-In the balance sheet for the FBN bank above, the entries are in millions of dollars. If the desired reserve ratio equals 10 percent, FBN Bank has unplanned reserves of

Which of the following is a service of depository institutions?

If the velocity of circulation was equal to 4 in 2017, it means that

When part of the quantity of money is held in currency, then

If required reserves are $150 and deposits are $1,000, what is the required reserve ratio?

In September 2008, Regions Bank has $89 million in M1 deposits, $3 million in reserves and $81 million in loans. Regions Bank's desired reserve ratio is

The main policy-making body of the Federal Reserve System is the

Excess reserves are

In the list of assets below, which is the most liquid?

When real GDP increases, the demand for money

-In the balance sheet for the FBN bank above, the entries are in millions of dollars. If the desired reserve ratio is 10 percent, FBN Bank can loan an additional

If an economy has a velocity of circulation of 3, then

The Federal Open Market Committee of the Federal Reserve System is responsible for

A bank with $100 million in deposits has $15 million of cash in the bank, $10 million in deposits with the Fed, and $15 million in government securities in its vault. Its total reserves equal

Control of the nation's quantity of money is handled by

Suppose a bank is exactly meeting its desired reserve ratio of 10 percent and a new deposit of $75,000 is made. Immediately after the deposit is made, the bank's unplanned reserves equal

-In the above figure, suppose the economy is at point a. If there is an increase in real GDP, there is a movement to point such as

The Fed buys $100 million of government securities from Bank A. What is the effect on Bank A's balance sheet?

If you hold $25 in cash, have $150 in a checking account, and have $250 in a savings account, how much of M2 do you have?

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