Question 1

The Bank of Japan is Japan's central bank. As part of its duties, the Bank of Japan would

Accepted Answer

A)  provide banking services to Japan's citizens and firms. 
B)  provide banking services to foreigners. 
C)  control the quantity of money in circulation in Japan. 
D)  change tax rates. 
A)  provide banking services to Japan's citizens and firms. 
B)  provide banking services to foreigners. 
C)  control the quantity of money in circulation in Japan. 
D)  change tax rates.

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 desired reserves of

Accepted Answer

A)  $375. 
B)  $2,500. 
C)  $500. 
D)  $450. 
A)  $375. 
B)  $2,500. 
C)  $500. 
D)  $450.

Question 3

-The above table gives the initial balance sheet for Mega Bank. Barney comes into the bank and deposits $50 of currency into his checking account. The desired reserve ratio is 3 percent. After Barney's deposit, but before any other actions occur, MegaBank will have unplanned reserves of

Accepted Answer

A)  $15.00. 
B)  $33.00. 
C)  $48.50. 
D)  $50.00. 
A)  $15.00. 
B)  $33.00. 
C)  $48.50. 
D)  $50.00.

Question 4

The table below shows data for Indonesia between 2005 and 2006.   Assume the velocity of circulation did not change. According to the quantity theory of money, Indonesia's inflation rate

Accepted Answer

A)  is higher in 2005 than in 2006. 
B)  was 17.5 percent in 2006. 
C)  is 27.1 percent in 2005. 
D)  will increase over the 12 months. 
A)  is higher in 2005 than in 2006. 
B)  was 17.5 percent in 2006. 
C)  is 27.1 percent in 2005. 
D)  will increase over the 12 months.

Question 5

The money multiplier is

Accepted Answer

A)  the amount by which a change in the quantity of money is multiplied to determine the change in the monetary base. 
B)  the amount by which a change in the monetary base is multiplied to determine the change in the quantity of money. 
C)  equal to bank reserves divided by the change in the monetary base. 
D)  equal to bank reserves divided by the change the quantity of money. 
A)  the amount by which a change in the quantity of money is multiplied to determine the change in the monetary base. 
B)  the amount by which a change in the monetary base is multiplied to determine the change in the quantity of money. 
C)  equal to bank reserves divided by the change in the monetary base. 
D)  equal to bank reserves divided by the change the quantity of money.

Question 6

Which of the following is CORRECT? The demand for money

Accepted Answer

A)  increases as real GDP increases. 
B)  decreases as the price level increases. 
C)  depends on the quantity of money. 
D)  increases when the nominal interest rate rises. 
A)  increases as real GDP increases. 
B)  decreases as the price level increases. 
C)  depends on the quantity of money. 
D)  increases when the nominal interest rate rises.

Question 7

A small commercial bank has $10,000 in actual reserves, $60,000 in deposits, and has a 10 percent desired reserve ratio. Its unplanned reserves are

Accepted Answer

A)  $4,000. 
B)  $10,000. 
C)  $50,000. 
D)  $6,000. 
A)  $4,000. 
B)  $10,000. 
C)  $50,000. 
D)  $6,000.

Question 8

Which of the following is a primary function of money?

Accepted Answer

A)  to serve as a unit of account 
B)  to serve as an encouragement to work 
C)  to reduce the burden of excessive imports 
D)  to raise funds for the government 
A)  to serve as a unit of account 
B)  to serve as an encouragement to work 
C)  to reduce the burden of excessive imports 
D)  to raise funds for the government

Question 9

If an economy tried to use bananas as money, which function would bananas likely have the most difficult time fulfilling?

Accepted Answer

A)  a store of value 
B)  a unit of account 
C)  a medium of exchange 
D)  a means of payment 
A)  a store of value 
B)  a unit of account 
C)  a medium of exchange 
D)  a means of payment

Question 10

When the Fed is ________ it is ________.

Accepted Answer

A)  adjusting the amount of money in circulation; issuing government bonds 
B)  issuing government bonds; conducting monetary policy 
C)  adjusting the amount of money in circulation; conducting monetary policy 
D)  regulating the nation's financial institutions; conducting monetary policy 
A)  adjusting the amount of money in circulation; issuing government bonds 
B)  issuing government bonds; conducting monetary policy 
C)  adjusting the amount of money in circulation; conducting monetary policy 
D)  regulating the nation's financial institutions; conducting monetary policy

Question 11

Modern U.S. commercial banks perform all of the following functions EXCEPT

Accepted Answer

A)  accept checking deposits. 
B)  issue paper currency. 
C)  make loans to households and business firms. 
D)  accept savings deposits. 
A)  accept checking deposits. 
B)  issue paper currency. 
C)  make loans to households and business firms. 
D)  accept savings deposits.

Question 12

The quantity theory of money predicts that in the ________, a 10 percent increase in the quantity of money leads to a 10 percent increase in ________.

Accepted Answer

A)  long run; real GDP 
B)  short run; the velocity of circulation 
C)  long run; the velocity of circulation 
D)  long run; price level 
A)  long run; real GDP 
B)  short run; the velocity of circulation 
C)  long run; the velocity of circulation 
D)  long run; price level

Question 13

Which of the following is an example of money functioning as a unit of account?

Accepted Answer

A)  Bank of America charging 7 percent on an auto loan. 
B)  Pepsi charging $1 for a can of soda. 
C)  eBay using PayPal as a method of payment. 
D)  Your writing a check at Target to pay for new clothes. 
A)  Bank of America charging 7 percent on an auto loan. 
B)  Pepsi charging $1 for a can of soda. 
C)  eBay using PayPal as a method of payment. 
D)  Your writing a check at Target to pay for new clothes.

Question 14

A small commercial bank has $10,000 in actual reserves, $60,000 in deposits, and has a 10 percent required reserve ratio. Its ________reserves are ________.

Accepted Answer

A)  excess; $4,000 
B)  required; $4,000 
C)  excess; $6,000 
D)  required; $6,000 
A)  excess; $4,000 
B)  required; $4,000 
C)  excess; $6,000 
D)  required; $6,000

Question 15

The nation is divided into ________ Federal Reserve districts, each having a Federal Reserve Bank.

Accepted Answer

A)  10 
B)  50 
C)  12 
D)  7 
A)  10 
B)  50 
C)  12 
D)  7

Question 16

A decrease in ________ decreases the demand for money.

Accepted Answer

A)  the discount rate 
B)  real GDP 
C)  the interest rate 
D)  the quantity of money 
A)  the discount rate 
B)  real GDP 
C)  the interest rate 
D)  the quantity of money

Question 17

Suppose you hold $50 to buy groceries weekly and then the price of groceries increases by 5 percent. To be able to buy the same amount of groceries, what must happen to your nominal money holdings?

Accepted Answer

A)  They must increase by $5. 
B)  They can decrease by $5. 
C)  They must increase by $2.50. 
D)  They must increase, but the amount of the increase depends on income. 
A)  They must increase by $5. 
B)  They can decrease by $5. 
C)  They must increase by $2.50. 
D)  They must increase, but the amount of the increase depends on income.

Question 18

Are checks and credit cards money? Explain why or why not.

Accepted Answer

Checks are not money. Checks are instruc

Question 19

-In the figure above, if the interest rate is 8 percent, people demand $0.1 trillion

Accepted Answer

A)  less money than the quantity supplied and the interest rate will rise. 
B)  less money than the quantity supplied and the interest rate will fall. 
C)  more money than the quantity supplied and the interest rate will fall. 
D)  more money than the quantity supplied and the interest rate will rise. 
A)  less money than the quantity supplied and the interest rate will rise. 
B)  less money than the quantity supplied and the interest rate will fall. 
C)  more money than the quantity supplied and the interest rate will fall. 
D)  more money than the quantity supplied and the interest rate will rise.

Question 20

The banking system has just experienced an increase in deposits of $50,000. The currency drain ratio is 20 percent and the desired reserve ratio is 10 percent. What does the money multiplier equal?

Accepted Answer

A)  4.00 
B)  3.33 
C)  0.25 
D)  10.00 
A)  4.00 
B)  3.33 
C)  0.25 
D)  10.00

The Bank of Japan is Japan's central bank. As part of its duties, the Bank of Japan would

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

-The above table gives the initial balance sheet for Mega Bank. Barney comes into the bank and deposits $50 of currency into his checking account. The desired reserve ratio is 3 percent. After Barney's deposit, but before any other actions occur, MegaBank will have unplanned reserves of

The table below shows data for Indonesia between 2005 and 2006. Assume the velocity of circulation did not change. According to the quantity theory of money, Indonesia's inflation rate

The money multiplier is

Which of the following is CORRECT? The demand for money

A small commercial bank has $10,000 in actual reserves, $60,000 in deposits, and has a 10 percent desired reserve ratio. Its unplanned reserves are

Which of the following is a primary function of money?

If an economy tried to use bananas as money, which function would bananas likely have the most difficult time fulfilling?

When the Fed is it is .

Modern U.S. commercial banks perform all of the following functions EXCEPT

The quantity theory of money predicts that in the , a 10 percent increase in the quantity of money leads to a 10 percent increase in .

Which of the following is an example of money functioning as a unit of account?

A small commercial bank has $10,000 in actual reserves, $60,000 in deposits, and has a 10 percent required reserve ratio. Its reserves are .

The nation is divided into ________ Federal Reserve districts, each having a Federal Reserve Bank.

A decrease in ________ decreases the demand for money.

Suppose you hold $50 to buy groceries weekly and then the price of groceries increases by 5 percent. To be able to buy the same amount of groceries, what must happen to your nominal money holdings?

Are checks and credit cards money? Explain why or why not.

-In the figure above, if the interest rate is 8 percent, people demand $0.1 trillion

The banking system has just experienced an increase in deposits of $50,000. The currency drain ratio is 20 percent and the desired reserve ratio is 10 percent. What does the money multiplier equal?

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

The Bank of Japan is Japan's central bank. As part of its duties, the Bank of Japan would

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

-The above table gives the initial balance sheet for Mega Bank. Barney comes into the bank and deposits $50 of currency into his checking account. The desired reserve ratio is 3 percent. After Barney's deposit, but before any other actions occur, MegaBank will have unplanned reserves of

The table below shows data for Indonesia between 2005 and 2006. Assume the velocity of circulation did not change. According to the quantity theory of money, Indonesia's inflation rate

The money multiplier is

Which of the following is CORRECT? The demand for money

A small commercial bank has $10,000 in actual reserves, $60,000 in deposits, and has a 10 percent desired reserve ratio. Its unplanned reserves are

Which of the following is a primary function of money?

If an economy tried to use bananas as money, which function would bananas likely have the most difficult time fulfilling?

When the Fed is ________ it is ________.

Modern U.S. commercial banks perform all of the following functions EXCEPT

The quantity theory of money predicts that in the ________, a 10 percent increase in the quantity of money leads to a 10 percent increase in ________.

Which of the following is an example of money functioning as a unit of account?

A small commercial bank has $10,000 in actual reserves, $60,000 in deposits, and has a 10 percent required reserve ratio. Its ________reserves are ________.

The nation is divided into ________ Federal Reserve districts, each having a Federal Reserve Bank.

A decrease in ________ decreases the demand for money.

Suppose you hold $50 to buy groceries weekly and then the price of groceries increases by 5 percent. To be able to buy the same amount of groceries, what must happen to your nominal money holdings?

Are checks and credit cards money? Explain why or why not.

-In the figure above, if the interest rate is 8 percent, people demand $0.1 trillion

The banking system has just experienced an increase in deposits of $50,000. The currency drain ratio is 20 percent and the desired reserve ratio is 10 percent. What does the money multiplier equal?

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

When the Fed is it is .

The quantity theory of money predicts that in the , a 10 percent increase in the quantity of money leads to a 10 percent increase in .

A small commercial bank has $10,000 in actual reserves, $60,000 in deposits, and has a 10 percent required reserve ratio. Its reserves are .