Question 1

The definition of M2 includes
I. M1.
II. money market mutual funds.
III. currency held outside of banks.

Accepted Answer

A)  I and II only 
B)  I and III only 
C)  II and III only 
D)  I, II, and III 
A)  I and II only 
B)  I and III only 
C)  II and III only 
D)  I, II, and III

Question 2

The fact that money can be exchanged for goods reflects money's role as a

Accepted Answer

A)  cause of inflation. 
B)  medium of exchange. 
C)  unit of account. 
D)  store of value. 
A)  cause of inflation. 
B)  medium of exchange. 
C)  unit of account. 
D)  store of value.

Question 3

The Chairman of the Fed is appointed by

Accepted Answer

A)  the Board of Governors of the Federal Reserve System. 
B)  the President of the United States. 
C)  Congress. 
D)  the U.S. Senate. 
A)  the Board of Governors of the Federal Reserve System. 
B)  the President of the United States. 
C)  Congress. 
D)  the U.S. Senate.

Question 4

How does an increase in real GDP affect the demand for money curve?

Accepted Answer

An increase in real

Question 5

Pooling of risk occurs when depository institutions

Accepted Answer

A)  make assets more liquid. 
B)  specialize in loaning only to good borrowers. 
C)  bring lenders together. 
D)  lend to a variety of different borrowers. 
A)  make assets more liquid. 
B)  specialize in loaning only to good borrowers. 
C)  bring lenders together. 
D)  lend to a variety of different borrowers.

Question 6

What is barter? What is a double coincidence of wants? How does the existence of money affect barter?

Accepted Answer

Barter is the direct exchange of one goo

Question 7

If the desired reserve ratio rises, the money multiplier

Accepted Answer

A)  decreases. 
B)  increases. 
C)  stays the same. 
D)  probably changes but more information is needed to determine if it increases or decreases. 
A)  decreases. 
B)  increases. 
C)  stays the same. 
D)  probably changes but more information is needed to determine if it increases or decreases.

Question 8

If you have assets that include $50 in cash, a checking account with $135, a savings account with $500, and a jar of coins for laundry of $15.75, how much M1 do you have?

Accepted Answer

You have $200.75 of M1, compri

Question 9

The quantity of money people want to hold increases if

Accepted Answer

A)  the price level falls. 
B)  the nominal interest rate rises. 
C)  real GDP increases. 
D)  All of the above answers are correct. 
A)  the price level falls. 
B)  the nominal interest rate rises. 
C)  real GDP increases. 
D)  All of the above answers are correct.

Question 10

In a world with no money, costs are expressed in terms of other goods. If one video game costs two hamburgers, and a hamburger costs three sodas, how many sodas would it take to buy a video game?

Accepted Answer

A)  6 
B)  5 
C)  3 
D)  3/2 
A)  6 
B)  5 
C)  3 
D)  3/2

Question 11

In the short run, which of the following actions lower the interest rate?

Accepted Answer

A)  a decrease in the demand for money 
B)  an increase in the demand for money 
C)  a decrease in the quantity of money 
D)  a decrease in bond prices 
A)  a decrease in the demand for money 
B)  an increase in the demand for money 
C)  a decrease in the quantity of money 
D)  a decrease in bond prices

Question 12

Which of the following is NOT a function of money?

Accepted Answer

A)  medium of exchange 
B)  barter 
C)  unit of account 
D)  store of value 
A)  medium of exchange 
B)  barter 
C)  unit of account 
D)  store of value

Question 13

The increased use of automatic teller machines has decreased the demand for money.

Accepted Answer

A) True 
 B)False

Question 14

If a bank receives an additional deposit of $50,000 and the desired reserve ratio is 20 percent, what is the amount of new loans the bank can make?

Accepted Answer

The bank can make loans equal to its unp

Question 15

If you use $500 of currency to make a deposit in a saving deposit

Accepted Answer

A)  M1 decreases, but M2 is unchanged. 
B)  M1 decreases and M2 increases. 
C)  M1 is unchanged, but M2 increases. 
D)  M1 and M2 both increase. 
A)  M1 decreases, but M2 is unchanged. 
B)  M1 decreases and M2 increases. 
C)  M1 is unchanged, but M2 increases. 
D)  M1 and M2 both increase.

Question 16

In the long run, when the Fed increases the quantity of money,

Accepted Answer

A)  no real variable changes. 
B)  the price level falls. 
C)  the real interest rate rises. 
D)  the nominal interest rate falls. 
A)  no real variable changes. 
B)  the price level falls. 
C)  the real interest rate rises. 
D)  the nominal interest rate falls.

Question 17

-In the balance sheet for the FBN bank above, the entries are in millions of dollars.. After FBN Bank loans the maximum amount it can, the loans have been spent, and the proceeds have been deposited in other banks, FBN Bank has unplanned reserves of

Accepted Answer

A)  $360 million. 
B)  $280 million. 
C)  $100 million. 
D)  $0. 
A)  $360 million. 
B)  $280 million. 
C)  $100 million. 
D)  $0.

Question 18

Depository institutions undertake all the following activities EXCEPT they do not

Accepted Answer

A)  print money. 
B)  minimize the cost of monitoring borrowers. 
C)  pool risk. 
D)  create liquidity. 
A)  print money. 
B)  minimize the cost of monitoring borrowers. 
C)  pool risk. 
D)  create liquidity.

Question 19

Suppose prices are quoted in dollars and transactions are conducted in pesos. The peso serves as a

Accepted Answer

A)  medium of exchange. 
B)  store of value. 
C)  unit of account. 
D)  all of the above. 
A)  medium of exchange. 
B)  store of value. 
C)  unit of account. 
D)  all of the above.

Question 20

Which of the following affects the amount of money a person is willing to hold?

Accepted Answer

A)  The use of credit cards increases. 
B)  The price level rises from 103 to 107. 
C)  The interest rate that you earn on your savings account increases. 
D)  All of the above are correct. 
A)  The use of credit cards increases. 
B)  The price level rises from 103 to 107. 
C)  The interest rate that you earn on your savings account increases. 
D)  All of the above are correct.

The definition of M2 includes I. M1. II. money market mutual funds. III. currency held outside of banks.

The fact that money can be exchanged for goods reflects money's role as a

The Chairman of the Fed is appointed by

How does an increase in real GDP affect the demand for money curve?

Pooling of risk occurs when depository institutions

What is barter? What is a double coincidence of wants? How does the existence of money affect barter?

If the desired reserve ratio rises, the money multiplier

If you have assets that include $50 in cash, a checking account with $135, a savings account with $500, and a jar of coins for laundry of $15.75, how much M1 do you have?

The quantity of money people want to hold increases if

In a world with no money, costs are expressed in terms of other goods. If one video game costs two hamburgers, and a hamburger costs three sodas, how many sodas would it take to buy a video game?

In the short run, which of the following actions lower the interest rate?

Which of the following is NOT a function of money?

The increased use of automatic teller machines has decreased the demand for money.

If a bank receives an additional deposit of $50,000 and the desired reserve ratio is 20 percent, what is the amount of new loans the bank can make?

If you use $500 of currency to make a deposit in a saving deposit

In the long run, when the Fed increases the quantity of money,

-In the balance sheet for the FBN bank above, the entries are in millions of dollars.. After FBN Bank loans the maximum amount it can, the loans have been spent, and the proceeds have been deposited in other banks, FBN Bank has unplanned reserves of

Depository institutions undertake all the following activities EXCEPT they do not

Suppose prices are quoted in dollars and transactions are conducted in pesos. The peso serves as a

Which of the following affects the amount of money a person is willing to hold?

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 definition of M2 includes I. M1. II. money market mutual funds. III. currency held outside of banks.

The fact that money can be exchanged for goods reflects money's role as a

The Chairman of the Fed is appointed by

How does an increase in real GDP affect the demand for money curve?

Pooling of risk occurs when depository institutions

What is barter? What is a double coincidence of wants? How does the existence of money affect barter?

If the desired reserve ratio rises, the money multiplier

If you have assets that include $50 in cash, a checking account with $135, a savings account with $500, and a jar of coins for laundry of $15.75, how much M1 do you have?

The quantity of money people want to hold increases if

In a world with no money, costs are expressed in terms of other goods. If one video game costs two hamburgers, and a hamburger costs three sodas, how many sodas would it take to buy a video game?

In the short run, which of the following actions lower the interest rate?

Which of the following is NOT a function of money?

The increased use of automatic teller machines has decreased the demand for money.

If a bank receives an additional deposit of $50,000 and the desired reserve ratio is 20 percent, what is the amount of new loans the bank can make?

If you use $500 of currency to make a deposit in a saving deposit

In the long run, when the Fed increases the quantity of money,

-In the balance sheet for the FBN bank above, the entries are in millions of dollars.. After FBN Bank loans the maximum amount it can, the loans have been spent, and the proceeds have been deposited in other banks, FBN Bank has unplanned reserves of

Depository institutions undertake all the following activities EXCEPT they do not

Suppose prices are quoted in dollars and transactions are conducted in pesos. The peso serves as a

Which of the following affects the amount of money a person is willing to hold?

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