Question 1

Which of the following is NOT included in the M1 measure of money?

Accepted Answer

A)  checking deposits 
B)  currency 
C)  traveler's checks 
D)  savings deposits 
A)  checking deposits 
B)  currency 
C)  traveler's checks 
D)  savings deposits

Question 2

The quantity theory asserts that real GDP is

Accepted Answer

A)  not influenced by the quantity of money. 
B)  never different from potential GDP. 
C)  equal to nominal GDP multiplied by the quantity of money. 
D)  equal to nominal GDP divided by the quantity of money. 
A)  not influenced by the quantity of money. 
B)  never different from potential GDP. 
C)  equal to nominal GDP multiplied by the quantity of money. 
D)  equal to nominal GDP divided by the quantity of money.

Question 3

An increase in the nominal interest rate

Accepted Answer

A)  shifts the demand for money curve rightward. 
B)  shifts the demand for money curve leftward. 
C)  leads to an upward movement along the demand for money curve. 
D)  leads to a downward movement along the demand for money curve. 
A)  shifts the demand for money curve rightward. 
B)  shifts the demand for money curve leftward. 
C)  leads to an upward movement along the demand for money curve. 
D)  leads to a downward movement along the demand for money curve.

Question 4

When the interest rate is above the equilibrium interest rate there is an

Accepted Answer

A)  excess quantity of money and people will sell bonds. 
B)  excess demand for money and people will sell bonds. 
C)  excess quantity of money and people will buy bonds. 
D)  excess demand for money and people will buy bonds. 
A)  excess quantity of money and people will sell bonds. 
B)  excess demand for money and people will sell bonds. 
C)  excess quantity of money and people will buy bonds. 
D)  excess demand for money and people will buy bonds.

Question 5

The monetary expansion process from an open market operation continues until

Accepted Answer

A)  required reserves are eliminated. 
B)  the Federal Reserve takes actions to stop the process. 
C)  the discount rate is lower than market interest rates. 
D)  unplanned bank reserves are eliminated. 
A)  required reserves are eliminated. 
B)  the Federal Reserve takes actions to stop the process. 
C)  the discount rate is lower than market interest rates. 
D)  unplanned bank reserves are eliminated.

Question 6

If the Fed sells $100 million of U.S. government securities, what happens to the quantity of money?

Accepted Answer

If the Fed sells $100 million of U.S. go

Question 7

When the interest rate falls in the money market, the quantity of money demanded ________ and the quantity of money supplied ________.

Accepted Answer

A)  increases; decreases 
B)  decreases; increases 
C)  stays the same; decreases 
D)  increases; stays the same 
A)  increases; decreases 
B)  decreases; increases 
C)  stays the same; decreases 
D)  increases; stays the same

Question 8

What makes up M1? Is M1 larger or smaller than real GDP?

Accepted Answer

M1 is the sum of currency outside of the

Question 9

Which of the following institutions is NOT a depository institution?

Accepted Answer

A)  the U.S. Treasury 
B)  a commercial bank 
C)  a money market mutual fund 
D)  a thrift institution, such as a savings and loan association 
A)  the U.S. Treasury 
B)  a commercial bank 
C)  a money market mutual fund 
D)  a thrift institution, such as a savings and loan association

Question 10

Give an example of how money functions as a unit of account.

Accepted Answer

Money functions as a unit of a

Question 11

When the Fed buys U.S. government securities from a bank, the Fed

Accepted Answer

A)  loans the money needed to buy the securities to the bank. 
B)  increases the bank's reserves at the Fed. 
C)  obtains the money for the purchase from the U.S. Treasury. 
D)  decreases the monetary base and raises the federal funds rate. 
A)  loans the money needed to buy the securities to the bank. 
B)  increases the bank's reserves at the Fed. 
C)  obtains the money for the purchase from the U.S. Treasury. 
D)  decreases the monetary base and raises the federal funds rate.

Question 12

Which of the following is NOT an asset of the Federal Reserve?

Accepted Answer

A)  currency 
B)  government securities 
C)  mortgage-backed securities 
D)  None of the above are correct because they are all assets of the Federal Reserve. 
A)  currency 
B)  government securities 
C)  mortgage-backed securities 
D)  None of the above are correct because they are all assets of the Federal Reserve.

Question 13

A commercial bank puts the funds it receives from various sources into

Accepted Answer

A)  securities, cash assets and loans. 
B)  loans, notes and coins in the bank's vault and deposits. 
C)  reserves, deposits and loans. 
D)  securities, cash assets and deposits. 
A)  securities, cash assets and loans. 
B)  loans, notes and coins in the bank's vault and deposits. 
C)  reserves, deposits and loans. 
D)  securities, cash assets and deposits.

Question 14

Regional Federal Reserve Banks

Accepted Answer

A)  are located in each of the 50 states. 
B)  are run by the governors of the states in which they are located. 
C)  provide general banking services to the public. 
D)  None of the above answers is correct. 
A)  are located in each of the 50 states. 
B)  are run by the governors of the states in which they are located. 
C)  provide general banking services to the public. 
D)  None of the above answers is correct.

Question 15

Examples of thrift institutions include

Accepted Answer

A)  savings and loans associations, money market mutual funds and credit unions. 
B)  commercial banks, savings and loan associations, and credit unions. 
C)  savings and loan associations, savings banks, and credit unions. 
D)  money market mutual funds, commercial banks, and credit unions. 
A)  savings and loans associations, money market mutual funds and credit unions. 
B)  commercial banks, savings and loan associations, and credit unions. 
C)  savings and loan associations, savings banks, and credit unions. 
D)  money market mutual funds, commercial banks, and credit unions.

Question 16

The quantity theory of money addresses the

Accepted Answer

A)  long-run effect the quantity of money has on the price level. 
B)  determinants of potential GDP. 
C)  determinants of the equilibrium unemployment rate. 
D)  short-run effect the quantity of money has on the price level. 
A)  long-run effect the quantity of money has on the price level. 
B)  determinants of potential GDP. 
C)  determinants of the equilibrium unemployment rate. 
D)  short-run effect the quantity of money has on the price level.

Question 17

If M = $100, Y = $500 and P = $2, then V is equal to

Accepted Answer

A)  0.10 
B)  1. 
C)  10. 
D)  50. 
A)  0.10 
B)  1. 
C)  10. 
D)  50.

Question 18

Barter occurs when you exchange

Accepted Answer

A)  money for goods. 
B)  goods for money. 
C)  goods for other goods. 
D)  one type of money, such as U.S. dollars, for a different type of money, such as Japanese yen. 
A)  money for goods. 
B)  goods for money. 
C)  goods for other goods. 
D)  one type of money, such as U.S. dollars, for a different type of money, such as Japanese yen.

Question 19

Which of the following is NOT included in the M1 measure of money?

Accepted Answer

A)  currency held outside banks 
B)  currency held in bank vaults 
C)  checking deposits at commercial banks 
D)  checking deposits at credit unions 
A)  currency held outside banks 
B)  currency held in bank vaults 
C)  checking deposits at commercial banks 
D)  checking deposits at credit unions

Question 20

If real GDP is $10 trillion and the velocity of circulation is 2, the quantity of money

Accepted Answer

A)  is $2 trillion. 
B)  is $5 trillion. 
C)  is $20 trillion. 
D)  cannot be determined from the information given. 
A)  is $2 trillion. 
B)  is $5 trillion. 
C)  is $20 trillion. 
D)  cannot be determined from the information given.

Which of the following is NOT included in the M1 measure of money?

The quantity theory asserts that real GDP is

An increase in the nominal interest rate

When the interest rate is above the equilibrium interest rate there is an

The monetary expansion process from an open market operation continues until

If the Fed sells $100 million of U.S. government securities, what happens to the quantity of money?

When the interest rate falls in the money market, the quantity of money demanded and the quantity of money supplied .

What makes up M1? Is M1 larger or smaller than real GDP?

Which of the following institutions is NOT a depository institution?

Give an example of how money functions as a unit of account.

When the Fed buys U.S. government securities from a bank, the Fed

Which of the following is NOT an asset of the Federal Reserve?

A commercial bank puts the funds it receives from various sources into

Regional Federal Reserve Banks

Examples of thrift institutions include

The quantity theory of money addresses the

If M = $100, Y = $500 and P = $2, then V is equal to

Barter occurs when you exchange

Which of the following is NOT included in the M1 measure of money?

If real GDP is $10 trillion and the velocity of circulation is 2, the quantity 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

Which of the following is NOT included in the M1 measure of money?

The quantity theory asserts that real GDP is

An increase in the nominal interest rate

When the interest rate is above the equilibrium interest rate there is an

The monetary expansion process from an open market operation continues until

If the Fed sells $100 million of U.S. government securities, what happens to the quantity of money?

When the interest rate falls in the money market, the quantity of money demanded ________ and the quantity of money supplied ________.

What makes up M1? Is M1 larger or smaller than real GDP?

Which of the following institutions is NOT a depository institution?

Give an example of how money functions as a unit of account.

When the Fed buys U.S. government securities from a bank, the Fed

Which of the following is NOT an asset of the Federal Reserve?

A commercial bank puts the funds it receives from various sources into

Regional Federal Reserve Banks

Examples of thrift institutions include

The quantity theory of money addresses the

If M = $100, Y = $500 and P = $2, then V is equal to

Barter occurs when you exchange

Which of the following is NOT included in the M1 measure of money?

If real GDP is $10 trillion and the velocity of circulation is 2, the quantity 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

When the interest rate falls in the money market, the quantity of money demanded and the quantity of money supplied .