Question 1

The barter system requires the double coincidence of wants to be fulfilled.

Accepted Answer

A) True 
 B)False

Question 2

Define the three functions of money.

Accepted Answer

The medium of exchange enables one to un

Question 3

The liquidity-money (LM)curve shows the alternative combinations of interest rates and real income that clears the money market.

Accepted Answer

A) True 
 B)False

Question 4

During the 1920s,the discount rate was the major policy tool of the Federal Reserve.

Accepted Answer

A) True 
 B)False

Question 5

The quantity of money demanded is positively related to the interest rate.

Accepted Answer

A) True 
 B)False

Question 6

The reserve requirement is 0.20.What is the simple deposit multiplier?

Accepted Answer

A) 1 
B) 5 
C) 0.10 
D) 100 
A) 1 
B) 5 
C) 0.10 
D) 100

Question 7

The banking system in the U.S.is based on:

Accepted Answer

A) 100 percent reserve banking. 
B) fractional reserve banking. 
C) 0 percent reserve banking. 
D) none of the above. 
A) 100 percent reserve banking. 
B) fractional reserve banking. 
C) 0 percent reserve banking. 
D) none of the above.

Question 8

Holding the real money supply constant,an increase in real money demand will reduce interest rates.

Accepted Answer

A) True 
 B)False

Question 9

Real money supply expresses the money supply in terms of real goods and services.

Accepted Answer

A) True 
 B)False

Question 10

The money multiplier is computed as follows:

Accepted Answer

A) (c + 1)/(c + rr + e). 
B) (c + 1)/(c + rr). 
C) 1/rr. 
D) (c + 1)/(c + e). 
A) (c + 1)/(c + rr + e). 
B) (c + 1)/(c + rr). 
C) 1/rr. 
D) (c + 1)/(c + e).

Question 11

Banks with excess reserves will supply more reserves to the federal funds market as the interest rate increases.

Accepted Answer

A) True 
 B)False

Question 12

The function of money that enables money to be used for future purchases is called:

Accepted Answer

A) medium of exchange. 
B) store of value. 
C) unit of account. 
D) measure of power. 
A) medium of exchange. 
B) store of value. 
C) unit of account. 
D) measure of power.

Question 13

Open market purchases and sales are conducted at the:

Accepted Answer

A) Federal Reserve Bank of Kansas City. 
B) Federal Reserve Bank of New York. 
C) Federal Reserve Bank of Chicago. 
D) Federal Reserve Bank of St. Louis. 
A) Federal Reserve Bank of Kansas City. 
B) Federal Reserve Bank of New York. 
C) Federal Reserve Bank of Chicago. 
D) Federal Reserve Bank of St. Louis.

Question 14

The monetary base is $1,000 billion and the money multiplier is 5.5.What is the size of the money supply?

Accepted Answer

Monetary base x mone

Question 15

An increase in the reserve requirement would:

Accepted Answer

A) decrease excess reserves and reflect an expansionary monetary policy. 
B) decrease excess reserves and reflect a contractionary monetary policy. 
C) increase excess reserves and reflect an expansionary monetary policy. 
D) increase excess reserves and reflect a contractionary monetary policy. 
A) decrease excess reserves and reflect an expansionary monetary policy. 
B) decrease excess reserves and reflect a contractionary monetary policy. 
C) increase excess reserves and reflect an expansionary monetary policy. 
D) increase excess reserves and reflect a contractionary monetary policy.

Question 16

Open market sale 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 17

A decrease in the discount rate would:

Accepted Answer

A) decrease bank borrowing of reserves and reflect an expansionary monetary policy. 
B) decrease bank borrowing of reserves and reflect a contractionary monetary policy. 
C) increase bank borrowing of reserves and reflect an expansionary monetary policy. 
D) increase bank borrowing of reserves and reflect a contractionary monetary policy. 
A) decrease bank borrowing of reserves and reflect an expansionary monetary policy. 
B) decrease bank borrowing of reserves and reflect a contractionary monetary policy. 
C) increase bank borrowing of reserves and reflect an expansionary monetary policy. 
D) increase bank borrowing of reserves and reflect a contractionary monetary policy.

Question 18

The store of value does not require that money hold its value of time in terms of its purchasing power.

Accepted Answer

A) True 
 B)False

Question 19

The private financial market where banks borrow and loan reserves to meet the minimum research requirements is called:

Accepted Answer

A) federal funds market. 
B) loanable funds market. 
C) discount loans market. 
D) repo market. 
A) federal funds market. 
B) loanable funds market. 
C) discount loans market. 
D) repo market.

Question 20

The money supply consists of:

Accepted Answer

A) currency plus reserves. 
B) currency plus required reserves. 
C) currency plus excess reserves. 
D) currency plus demand deposits. 
A) currency plus reserves. 
B) currency plus required reserves. 
C) currency plus excess reserves. 
D) currency plus demand deposits.

The barter system requires the double coincidence of wants to be fulfilled.

Define the three functions of money.

The liquidity-money (LM)curve shows the alternative combinations of interest rates and real income that clears the money market.

During the 1920s,the discount rate was the major policy tool of the Federal Reserve.

The quantity of money demanded is positively related to the interest rate.

The reserve requirement is 0.20.What is the simple deposit multiplier?

The banking system in the U.S.is based on:

Holding the real money supply constant,an increase in real money demand will reduce interest rates.

Real money supply expresses the money supply in terms of real goods and services.

The money multiplier is computed as follows:

Banks with excess reserves will supply more reserves to the federal funds market as the interest rate increases.

The function of money that enables money to be used for future purchases is called:

Open market purchases and sales are conducted at the:

The monetary base is $1,000 billion and the money multiplier is 5.5.What is the size of the money supply?

An increase in the reserve requirement would:

Open market sale will result in:

A decrease in the discount rate would:

The store of value does not require that money hold its value of time in terms of its purchasing power.

The private financial market where banks borrow and loan reserves to meet the minimum research requirements is called:

The money supply consists of:

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

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Exam 13: The Role of Money in the Macro Economy

The barter system requires the double coincidence of wants to be fulfilled.

Define the three functions of money.

The liquidity-money (LM)curve shows the alternative combinations of interest rates and real income that clears the money market.

During the 1920s,the discount rate was the major policy tool of the Federal Reserve.

The quantity of money demanded is positively related to the interest rate.

The reserve requirement is 0.20.What is the simple deposit multiplier?

The banking system in the U.S.is based on:

Holding the real money supply constant,an increase in real money demand will reduce interest rates.

Real money supply expresses the money supply in terms of real goods and services.

The money multiplier is computed as follows:

Banks with excess reserves will supply more reserves to the federal funds market as the interest rate increases.

The function of money that enables money to be used for future purchases is called:

Open market purchases and sales are conducted at the:

The monetary base is $1,000 billion and the money multiplier is 5.5.What is the size of the money supply?

An increase in the reserve requirement would:

Open market sale will result in:

A decrease in the discount rate would:

The store of value does not require that money hold its value of time in terms of its purchasing power.

The private financial market where banks borrow and loan reserves to meet the minimum research requirements is called:

The money supply consists of:

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