Question 1

A goal of contractionary 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.

Question 2

The most liquid form of money is M3.

Accepted Answer

A) True 
 B)False

Question 3

The simple deposit multiplier is larger than the money multiplier.

Accepted Answer

A) True 
 B)False

Question 4

Define the three functions of money.

Accepted Answer

The medium of exchange enables one to un

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

An increase in the real money supply can result from:

Accepted Answer

A) increase in the nominal money supply or an increase in the price level. 
B) increase in the nominal money supply or a decrease in the price level. 
C) decrease in the nominal money supply or an increase in the price level. 
D) decrease in the nominal money supply or a decrease in the price level. 
A) increase in the nominal money supply or an increase in the price level. 
B) increase in the nominal money supply or a decrease in the price level. 
C) decrease in the nominal money supply or an increase in the price level. 
D) decrease in the nominal money supply or a decrease in the price level.

Question 7

A subway token does not fulfill the three functions of money.

Accepted Answer

A) True 
 B)False

Question 8

The equilibrium price in the money market is the:

Accepted Answer

A) inflation rate. 
B) exchange rate. 
C) interest rate. 
D) none of the above. 
A) inflation rate. 
B) exchange rate. 
C) interest rate. 
D) none of the above.

Question 9

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 10

Expansionary monetary policy is achieved by:

Accepted Answer

A) decreasing the amount of bank reserves and lowering the federal funds rate. 
B) decreasing the amount of bank reserves and raising the federal funds rate. 
C) increasing the amount of bank reserves and lowering the federal funds rate. 
D) increasing the amount of bank reserves and raising the federal funds rate. 
A) decreasing the amount of bank reserves and lowering the federal funds rate. 
B) decreasing the amount of bank reserves and raising the federal funds rate. 
C) increasing the amount of bank reserves and lowering the federal funds rate. 
D) increasing the amount of bank reserves and raising the federal funds rate.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Credit cards do not fulfill the three functions of money.

Accepted Answer

A) True 
 B)False

Question 13

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 14

In the money market, a decrease 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 15

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 16

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 17

In the context of the money market, graphically illustrate and explain the impact of an increase in the use of ATM machines on interest rates.

Accepted Answer

An increase in ATM machines would decrea

Question 18

An increase 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 19

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

Accepted Answer

A) True 
 B)False

Question 20

A system where goods and services are exchanged directly without a common unit of account is called the:

Accepted Answer

A) commodity system. 
B) fiat system. 
C) barter system. 
D) none of the above. 
A) commodity system. 
B) fiat system. 
C) barter system. 
D) none of the above.

A goal of contractionary monetary policy is to:

The most liquid form of money is M3.

The simple deposit multiplier is larger than the money multiplier.

Define the three functions of money.

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

An increase in the real money supply can result from:

A subway token does not fulfill the three functions of money.

The equilibrium price in the money market is the:

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

Expansionary monetary policy is achieved by:

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

Credit cards do not fulfill 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.

In the money market, a decrease in money demand will:

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

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

In the context of the money market, graphically illustrate and explain the impact of an increase in the use of ATM machines on interest rates.

An increase in the discount rate would:

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

A system where goods and services are exchanged directly without a common unit of account is called the:

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

A goal of contractionary monetary policy is to:

The most liquid form of money is M3.

The simple deposit multiplier is larger than the money multiplier.

Define the three functions of money.

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

An increase in the real money supply can result from:

A subway token does not fulfill the three functions of money.

The equilibrium price in the money market is the:

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

Expansionary monetary policy is achieved by:

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

Credit cards do not fulfill 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.

In the money market, a decrease in money demand will:

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

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

In the context of the money market, graphically illustrate and explain the impact of an increase in the use of ATM machines on interest rates.

An increase in the discount rate would:

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

A system where goods and services are exchanged directly without a common unit of account is called the:

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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