Question 1

A goal of expansionary monetary policy is to:

Accepted Answer

A) decrease the rate of growth of real GDP. 
B) increase the rate of growth of real GDP. 
C) increase inflation. 
D) none of the above. 
A) decrease the rate of growth of real GDP. 
B) increase the rate of growth of real GDP. 
C) increase inflation. 
D) none of the above. B

Question 2

Open market purchase will result in:

Accepted Answer

A) increase in bank reserves and a decrease in the federal funds rate. 
B) increase in bank reserves and an increase in the federal funds rate. 
C) decrease in bank reserves and a decrease in the federal funds rate. 
D) decrease in bank reserves and an increase in the federal funds rate. 
A) increase in bank reserves and a decrease in the federal funds rate. 
B) increase in bank reserves and an increase in the federal funds rate. 
C) decrease in bank reserves and a decrease in the federal funds rate. 
D) decrease in bank reserves and an increase in the federal funds rate. A

Question 3

You are given the following information on the banking system.
Reserve requirement rr = 0.08
Currency-deposit ratio c = 0.10
Excess reserve ratio e = 0.05
Compute the simple deposit and money multipliers.

Accepted Answer

Simple deposit multiplier 1/rr = 1/0.08 = 12.5
Money multiplier (c + 1)/(c + rr + e)= (0.10 + 1)/(0.10 + 0.08 + 0.05)= 4.78

Question 4

In the money market,an excess demand for money is equivalent to an excess demand for bonds.

Accepted Answer

A) True 
 B)False

Question 5

Describe the fractional reserve banking system.

Accepted Answer

Banks hold a portion of deposits in requ

Question 6

Large denomination time deposits are included in:

Accepted Answer

A) M1. 
B) M2. 
C) M3. 
D) L) 
A) M1. 
B) M2. 
C) M3. 
D) L)

Question 7

Open market sale of government securities by the Fed decreases the federal funds rate.

Accepted Answer

A) True 
 B)False

Question 8

Financial innovations such as ATMs and electronic banking have caused an increase in the demand for money.

Accepted Answer

A) True 
 B)False

Question 9

The most liquid form of money is M3.

Accepted Answer

A) True 
 B)False

Question 10

The ability of a financial asset to be used to immediately make transactions is called:

Accepted Answer

A) store of value. 
B) medium of exchange. 
C) illiquidity. 
D) liquidity. 
A) store of value. 
B) medium of exchange. 
C) illiquidity. 
D) liquidity.

Question 11

In the money market,an increase in money demand will:

Accepted Answer

A) result in a rightward shift in the money demand curve increasing interest rates. 
B) result in a rightward shift in the money demand curve decreasing interest rates. 
C) result in a leftward shift in the money demand curve increasing interest rates. 
D) result in a leftward shift in the money demand curve decreasing interest rates. 
A) result in a rightward shift in the money demand curve increasing interest rates. 
B) result in a rightward shift in the money demand curve decreasing interest rates. 
C) result in a leftward shift in the money demand curve increasing interest rates. 
D) result in a leftward shift in the money demand curve decreasing interest rates.

Question 12

The Resolution Trust Corporation insures bank deposits.

Accepted Answer

A) True 
 B)False

Question 13

Open market operations are an appropriate tool for day-to-day changes in monetary policy.

Accepted Answer

A) True 
 B)False

Question 14

An increase in the discount rate will result in:

Accepted Answer

A) increase in bank reserves and a decrease in the federal funds rate. 
B) increase in bank reserves and an increase in the federal funds rate. 
C) decrease in bank reserves and a decrease in the federal funds rate. 
D) decrease in bank reserves and an increase in the federal funds rate. 
A) increase in bank reserves and a decrease in the federal funds rate. 
B) increase in bank reserves and an increase in the federal funds rate. 
C) decrease in bank reserves and a decrease in the federal funds rate. 
D) decrease in bank reserves and an increase in the federal funds rate.

Question 15

The ________ book provides information of current economic conditions and is used by the Federal Reserve in formulating monetary policy.

Accepted Answer

A) Red 
B) Blue 
C) Beige 
D) Green 
A) Red 
B) Blue 
C) Beige 
D) Green

Question 16

Open market purchase of government securities results in:

Accepted Answer

A) an increase in bank reserves. 
B) a decrease in bank reserves. 
C) an increase in interest rates. 
D) none of the above. 
A) an increase in bank reserves. 
B) a decrease in bank reserves. 
C) an increase in interest rates. 
D) none of the above.

Question 17

If $1000 was deposited in a bank and the reserve requirement is 0.20,how much is available for loans?

Accepted Answer

A) $900 
B) $910 
C) $800 
D) $930 
A) $900 
B) $910 
C) $800 
D) $930

Question 18

Open market purchase of government securities by the Fed increases the federal funds rate.

Accepted Answer

A) True 
 B)False

Question 19

The interest rate that commercial banks charge each other for loans of reserves to meet their minimum reserve requirements is called:

Accepted Answer

A) treasury bill rate. 
B) federal funds rate. 
C) prime interest rate. 
D) none of the above. 
A) treasury bill rate. 
B) federal funds rate. 
C) prime interest rate. 
D) none of the above.

Question 20

There are 15 Federal Reserve District Banks.

Accepted Answer

A) True 
 B)False

A goal of expansionary monetary policy is to:

Open market purchase will result in:

You are given the following information on the banking system. Reserve requirement rr = 0.08 Currency-deposit ratio c = 0.10 Excess reserve ratio e = 0.05 Compute the simple deposit and money multipliers.

In the money market,an excess demand for money is equivalent to an excess demand for bonds.

Describe the fractional reserve banking system.

Large denomination time deposits are included in:

Open market sale of government securities by the Fed decreases the federal funds rate.

Financial innovations such as ATMs and electronic banking have caused an increase in the demand for money.

The most liquid form of money is M3.

The ability of a financial asset to be used to immediately make transactions is called:

In the money market,an increase in money demand will:

The Resolution Trust Corporation insures bank deposits.

Open market operations are an appropriate tool for day-to-day changes in monetary policy.

An increase in the discount rate will result in:

The ________ book provides information of current economic conditions and is used by the Federal Reserve in formulating monetary policy.

Open market purchase of government securities results in:

If $1000 was deposited in a bank and the reserve requirement is 0.20,how much is available for loans?

Open market purchase of government securities by the Fed increases the federal funds rate.

The interest rate that commercial banks charge each other for loans of reserves to meet their minimum reserve requirements is called:

There are 15 Federal Reserve District Banks.

Managers and Economics

Demand, supply, and Equilibrium Prices

Demand Elasticities

Techniques for Understanding Consumer Demand and Behavior

Production and Cost Analysis in the Short Run

Production and Cost Analysis in the Long Run

Market Structure: Perfect Competition

Market Structure: Monopoly and Monopolistic Competition

Market Structure: Oligopoly

Pricing Strategies for the Firm

Measuring Macroeconomic Activity

Spending by Individuals, firms, and Governments on Real Goods and Services

The Aggregate Model of the Macro Economy

International and Balance of Payments Issues in the Macro Economy

Combining Micro and Macro Analysis for Managerial Decision Making

Filters

Exam 13: The Role of Money in the Macro Economy

A goal of expansionary monetary policy is to:

Open market purchase will result in:

You are given the following information on the banking system. Reserve requirement rr = 0.08 Currency-deposit ratio c = 0.10 Excess reserve ratio e = 0.05 Compute the simple deposit and money multipliers.

In the money market,an excess demand for money is equivalent to an excess demand for bonds.

Describe the fractional reserve banking system.

Large denomination time deposits are included in:

Open market sale of government securities by the Fed decreases the federal funds rate.

Financial innovations such as ATMs and electronic banking have caused an increase in the demand for money.

The most liquid form of money is M3.

The ability of a financial asset to be used to immediately make transactions is called:

In the money market,an increase in money demand will:

The Resolution Trust Corporation insures bank deposits.

Open market operations are an appropriate tool for day-to-day changes in monetary policy.

An increase in the discount rate will result in:

The ________ book provides information of current economic conditions and is used by the Federal Reserve in formulating monetary policy.

Open market purchase of government securities results in:

If $1000 was deposited in a bank and the reserve requirement is 0.20,how much is available for loans?

Open market purchase of government securities by the Fed increases the federal funds rate.

The interest rate that commercial banks charge each other for loans of reserves to meet their minimum reserve requirements is called:

There are 15 Federal Reserve District Banks.

Managers and Economics

Demand, supply, and Equilibrium Prices

Demand Elasticities

Techniques for Understanding Consumer Demand and Behavior

Production and Cost Analysis in the Short Run

Production and Cost Analysis in the Long Run

Market Structure: Perfect Competition

Market Structure: Monopoly and Monopolistic Competition

Market Structure: Oligopoly

Pricing Strategies for the Firm

Measuring Macroeconomic Activity

Spending by Individuals, firms, and Governments on Real Goods and Services

The Aggregate Model of the Macro Economy

International and Balance of Payments Issues in the Macro Economy

Combining Micro and Macro Analysis for Managerial Decision Making

Filters