Question 1

Paper dollars

Accepted Answer

A)  are commodity money and gold coins are fiat money. 
B)  are fiat money and gold coins are commodity money. 
C)  and gold coins are both commodity monies. 
D)  and gold coins are both fiat monies. 
A)  are commodity money and gold coins are fiat money. 
B)  are fiat money and gold coins are commodity money. 
C)  and gold coins are both commodity monies. 
D)  and gold coins are both fiat monies.

Question 2

Derek decides to forego a major appliance purchase and save the money. He transfers $2,100 from his checking account to his savings account. As a result of this transfer by itself

Accepted Answer

A)  M1 increases by $2,100 and M2 stays the same. 
B)  M1 increases by $2,100 and M2 increases by $2,100. 
C)  M1 decreases by $2,100 and M2 increases by $2,100. 
D)  M1 decreases by $2,100 and M2 stays the same. 
A)  M1 increases by $2,100 and M2 stays the same. 
B)  M1 increases by $2,100 and M2 increases by $2,100. 
C)  M1 decreases by $2,100 and M2 increases by $2,100. 
D)  M1 decreases by $2,100 and M2 stays the same.

Question 3

Which of the following is not included in either M1 or M2?

Accepted Answer

A)  money market deposit accounts 
B)  large time deposit 
C)  demand deposits 
D)  money market mutual funds 
A)  money market deposit accounts 
B)  large time deposit 
C)  demand deposits 
D)  money market mutual funds

Question 4

M1 equals currency plus demand deposits plus

Accepted Answer

A)  nothing else. 
B)  other checkable deposits. 
C)  traveler's checks plus other checkable deposits. 
D)  traveler's checks plus other checkable deposits plus savings deposits. 
A)  nothing else. 
B)  other checkable deposits. 
C)  traveler's checks plus other checkable deposits. 
D)  traveler's checks plus other checkable deposits plus savings deposits.

Question 5

What does the Fed auction at the Term-Auction Facility?

Accepted Answer

A)  government bonds of a quantity it sets 
B)  government bonds with the quantity determined at the auction 
C)  loans of a quantity it sets 
D)  loans with the quantity determined at the auction 
A)  government bonds of a quantity it sets 
B)  government bonds with the quantity determined at the auction 
C)  loans of a quantity it sets 
D)  loans with the quantity determined at the auction

Question 6

When conducting an open-market purchase, the Fed

Accepted Answer

A)  buys government bonds, and in so doing increases the money supply. 
B)  buys government bonds, and in so doing decreases the money supply. 
C)  sells government bonds, and in so doing increases the money supply. 
D)  sells government bonds, and in so doing decreases the money supply. 
A)  buys government bonds, and in so doing increases the money supply. 
B)  buys government bonds, and in so doing decreases the money supply. 
C)  sells government bonds, and in so doing increases the money supply. 
D)  sells government bonds, and in so doing decreases the money supply.

Question 7

A problem that the Fed faces when it attempts to control the money supply is that

Accepted Answer

A)  the 100-percent-reserve banking system in the U.S. makes it difficult for the Fed to carry out its monetary policy. 
B)  the Fed has to get the approval of the U.S. Treasury Department whenever it uses any of its monetary policy tools. 
C)  the Fed does not have a tool that it can use to change the money supply by either a small amount or a large amount. 
D)  the Fed does not control the amount of money that households choose to hold as deposits in banks. 
A)  the 100-percent-reserve banking system in the U.S. makes it difficult for the Fed to carry out its monetary policy. 
B)  the Fed has to get the approval of the U.S. Treasury Department whenever it uses any of its monetary policy tools. 
C)  the Fed does not have a tool that it can use to change the money supply by either a small amount or a large amount. 
D)  the Fed does not control the amount of money that households choose to hold as deposits in banks.

Question 8

Which of the following can banks use to borrow from the Federal Reserve?

Accepted Answer

A)  the discount window or the term auction facility 
B)  the discount window but not the term auction facility 
C)  the term auction facility but not the discount window 
D)  Banks can not borrow from the Federal Reserve, only the government can. 
A)  the discount window or the term auction facility 
B)  the discount window but not the term auction facility 
C)  the term auction facility but not the discount window 
D)  Banks can not borrow from the Federal Reserve, only the government can.

Question 9

Other things the same if reserve requirements are decreased, the reserve ratio

Accepted Answer

A)  decreases, the money multiplier increases, and the money supply decreases. 
B)  increases, the money multiplier increases, and the money supply increases. 
C)  decreases, the money multiplier increases, and the money supply increases. 
D)  increases, the money multiplier increases, and the money supply decreases. 
A)  decreases, the money multiplier increases, and the money supply decreases. 
B)  increases, the money multiplier increases, and the money supply increases. 
C)  decreases, the money multiplier increases, and the money supply increases. 
D)  increases, the money multiplier increases, and the money supply decreases.

Question 10

Table 11-1. The information in the table pertains to an imaginary economy.
  
-Refer to Table 11-1. What is the M2 money supply?

Accepted Answer

A)  $125 billion 
B)  $296 billion 
C)  $351 billion 
D)  $431 billion 
A)  $125 billion 
B)  $296 billion 
C)  $351 billion 
D)  $431 billion

Question 11

If a bank uses $100 of excess reserves to make a new loan when the reserve ratio is 10 percent, this action by itself initially makes the money supply

Accepted Answer

A)  and wealth increase by $100. 
B)  and wealth decrease by $100. 
C)  increase by $100 while wealth does not change. 
D)  decrease by $100 while wealth decreases by $100. 
A)  and wealth increase by $100. 
B)  and wealth decrease by $100. 
C)  increase by $100 while wealth does not change. 
D)  decrease by $100 while wealth decreases by $100.

Question 12

Credit cards are a medium of exchange.

Accepted Answer

A) True 
 B)False

Question 13

Economists use the term "money" to refer to

Accepted Answer

A)  all wealth. 
B)  all assets, including real assets and financial assets. 
C)  all financial assets, but not real assets. 
D)  those types of wealth that are regularly accepted by sellers in exchange for goods and services. 
A)  all wealth. 
B)  all assets, including real assets and financial assets. 
C)  all financial assets, but not real assets. 
D)  those types of wealth that are regularly accepted by sellers in exchange for goods and services.

Question 14

There is a

Accepted Answer

A)  short-run tradeoff between inflation and unemployment. 
B)  short-run tradeoff between an increase in the money supply and inflation. 
C)  long-run tradeoff between inflation and unemployment. 
D)  long-run tradeoff between an increase in the money supply and inflation. 
A)  short-run tradeoff between inflation and unemployment. 
B)  short-run tradeoff between an increase in the money supply and inflation. 
C)  long-run tradeoff between inflation and unemployment. 
D)  long-run tradeoff between an increase in the money supply and inflation.

Question 15

The Federal Reserve

Accepted Answer

A)  is responsible for conducting the nation's monetary policy, and it plays a role in regulating banks. 
B)  is responsible for conducing the nation's monetary policy, but it plays no role in regulating banks. 
C)  is not responsible for conducting the nation's monetary policy, and it plays a role in regulating banks. 
D)  is not responsible for conducing the nation's monetary policy, and it plays no role in regulating banks. 
A)  is responsible for conducting the nation's monetary policy, and it plays a role in regulating banks. 
B)  is responsible for conducing the nation's monetary policy, but it plays no role in regulating banks. 
C)  is not responsible for conducting the nation's monetary policy, and it plays a role in regulating banks. 
D)  is not responsible for conducing the nation's monetary policy, and it plays no role in regulating banks.

Question 16

The Board of Governors

Accepted Answer

A)  is chaired by the U.S. Secretary of the Treasury. 
B)  members are elected by the U.S. public. 
C)  has 7 members. 
D)  All of the above are correct. 
A)  is chaired by the U.S. Secretary of the Treasury. 
B)  members are elected by the U.S. public. 
C)  has 7 members. 
D)  All of the above are correct.

Question 17

Which of the following functions of money is also a common function of most other financial assets?

Accepted Answer

A)  a unit of account 
B)  a store of value 
C)  medium of exchange 
D)  None of the above is correct. 
A)  a unit of account 
B)  a store of value 
C)  medium of exchange 
D)  None of the above is correct.

Question 18

Gary's wealth is $1 million. Economists would say that Gary has $1 million worth of money.

Accepted Answer

A) True 
 B)False

Question 19

Reserves decrease if the Federal Reserve

Accepted Answer

A)  raises the discount rate or auctions more credit. 
B)  raises the discount rate but not if it auctions more credit. 
C)  lowers the discount rate or auctions more credit. 
D)  lowers the discount rate but not if it auctions more credit. 
A)  raises the discount rate or auctions more credit. 
B)  raises the discount rate but not if it auctions more credit. 
C)  lowers the discount rate or auctions more credit. 
D)  lowers the discount rate but not if it auctions more credit.

Question 20

Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 10 percent, and excess reserves are $3 billion. What is the level of loans?

Accepted Answer

A)  $3,603 billion 
B)  $3,600 billion 
C)  $3,573 billion 
D)  $3,570 billion 
A)  $3,603 billion 
B)  $3,600 billion 
C)  $3,573 billion 
D)  $3,570 billion

Paper dollars

Derek decides to forego a major appliance purchase and save the money. He transfers $2,100 from his checking account to his savings account. As a result of this transfer by itself

Which of the following is not included in either M1 or M2?

M1 equals currency plus demand deposits plus

What does the Fed auction at the Term-Auction Facility?

When conducting an open-market purchase, the Fed

A problem that the Fed faces when it attempts to control the money supply is that

Which of the following can banks use to borrow from the Federal Reserve?

Other things the same if reserve requirements are decreased, the reserve ratio

Table 11-1. The information in the table pertains to an imaginary economy. -Refer to Table 11-1. What is the M2 money supply?

If a bank uses $100 of excess reserves to make a new loan when the reserve ratio is 10 percent, this action by itself initially makes the money supply

Credit cards are a medium of exchange.

Economists use the term "money" to refer to

There is a

The Federal Reserve

The Board of Governors

Which of the following functions of money is also a common function of most other financial assets?

Gary's wealth is $1 million. Economists would say that Gary has $1 million worth of money.

Reserves decrease if the Federal Reserve

Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 10 percent, and excess reserves are $3 billion. What is the level of loans?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

Money Growth and Inflation

Open-Economy Macroeconomic Models

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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Exam 11: The Monetary System

Paper dollars

Derek decides to forego a major appliance purchase and save the money. He transfers $2,100 from his checking account to his savings account. As a result of this transfer by itself

Which of the following is not included in either M1 or M2?

M1 equals currency plus demand deposits plus

What does the Fed auction at the Term-Auction Facility?

When conducting an open-market purchase, the Fed

A problem that the Fed faces when it attempts to control the money supply is that

Which of the following can banks use to borrow from the Federal Reserve?

Other things the same if reserve requirements are decreased, the reserve ratio

Table 11-1. The information in the table pertains to an imaginary economy. -Refer to Table 11-1. What is the M2 money supply?

If a bank uses $100 of excess reserves to make a new loan when the reserve ratio is 10 percent, this action by itself initially makes the money supply

Credit cards are a medium of exchange.

Economists use the term "money" to refer to

There is a

The Federal Reserve

The Board of Governors

Which of the following functions of money is also a common function of most other financial assets?

Gary's wealth is $1 million. Economists would say that Gary has $1 million worth of money.

Reserves decrease if the Federal Reserve

Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 10 percent, and excess reserves are $3 billion. What is the level of loans?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

Money Growth and Inflation

Open-Economy Macroeconomic Models

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters