Question 1

To increase the money supply, the Fed can

Accepted Answer

A)  buy government bonds or increase the discount rate. 
B)  buy government bonds or decrease the discount rate. 
C)  sell government bonds or increase the discount rate. 
D)  sell government bonds or decrease the discount rate. 
A)  buy government bonds or increase the discount rate. 
B)  buy government bonds or decrease the discount rate. 
C)  sell government bonds or increase the discount rate. 
D)  sell government bonds or decrease the discount rate.

Question 2

If the reserve ratio is 20 percent, then $100 of new reserves can generate

Accepted Answer

A)  $60 of new money in the economy. 
B)  $250 of new money in the economy. 
C)  $500 of new money in the economy. 
D)  $2,000 of new money in the economy. 
A)  $60 of new money in the economy. 
B)  $250 of new money in the economy. 
C)  $500 of new money in the economy. 
D)  $2,000 of new money in the economy.

Question 3

If the reserve ratio is 5 percent, then $1,000 of additional reserves can create up to

Accepted Answer

A)  $200 of new money. 
B)  $2,000 of new money. 
C)  $20,000 of new money. 
D)  None of the above is correct. 
A)  $200 of new money. 
B)  $2,000 of new money. 
C)  $20,000 of new money. 
D)  None of the above is correct.

Question 4

If the money multiplier is 2 and the Fed buys $50,000 worth of bonds, what happens to the money supply?

Accepted Answer

A)  it increases by $100,000 
B)  it increases by $150,000 
C)  it decreases by $100,000 
D)  it decreases by $150,000 
A)  it increases by $100,000 
B)  it increases by $150,000 
C)  it decreases by $100,000 
D)  it decreases by $150,000

Question 5

If the public decides to hold more currency and fewer deposits in banks, bank reserves

Accepted Answer

A)  decrease and the money supply eventually decreases. 
B)  decrease but the money supply does not change. 
C)  increase and the money supply eventually increases. 
D)  increase but the money supply does not change. 
A)  decrease and the money supply eventually decreases. 
B)  decrease but the money supply does not change. 
C)  increase and the money supply eventually increases. 
D)  increase but the money supply does not change.

Question 6

Which of the following defer payments?

Accepted Answer

A)  credit cards and debit cards 
B)  neither credit cards nor debit cards 
C)  credit cards but not debit cards 
D)  debit cards but not credit cards 
A)  credit cards and debit cards 
B)  neither credit cards nor debit cards 
C)  credit cards but not debit cards 
D)  debit cards but not credit cards

Question 7

When the Fed decreases the discount rate, banks will

Accepted Answer

A)  borrow more from the Fed and lend more to the public. The money supply increases. 
B)  borrow more from the Fed and lend less to the public. The money supply decreases. 
C)  borrow less from the Fed and lend more to the public. The money supply increases. 
D)  borrow less from the Fed and lend less to the public. The money supply decreases. 
A)  borrow more from the Fed and lend more to the public. The money supply increases. 
B)  borrow more from the Fed and lend less to the public. The money supply decreases. 
C)  borrow less from the Fed and lend more to the public. The money supply increases. 
D)  borrow less from the Fed and lend less to the public. The money supply decreases.

Question 8

Banks cannot influence the money supply if they are required to hold all deposits in reserve.

Accepted Answer

A) True 
 B)False

Question 9

The confidence you have that a retailer will accept dollars in exchange for goods is based primarily on money

Accepted Answer

A)  being a unit of account. 
B)  being a medium of exchange. 
C)  serving as a store of value. 
D)  having intrinsic value. 
A)  being a unit of account. 
B)  being a medium of exchange. 
C)  serving as a store of value. 
D)  having intrinsic value.

Question 10

As opposed to a payments system based on barter, a payments system based on money

Accepted Answer

A)  requires a double coincidence of wants. 
B)  leads to less specialization. 
C)  makes trades less costly. 
D)  None of the above is correct. 
A)  requires a double coincidence of wants. 
B)  leads to less specialization. 
C)  makes trades less costly. 
D)  None of the above is correct.

Question 11

The Fed can influence unemployment in

Accepted Answer

A)  the short run and in the long run. 
B)  the short run, but not in the long run. 
C)  the long run, but not in the short run. 
D)  neither the short nor the long run. 
A)  the short run and in the long run. 
B)  the short run, but not in the long run. 
C)  the long run, but not in the short run. 
D)  neither the short nor the long run.

Question 12

The set of items that serve as media of exchange clearly includes

Accepted Answer

A)  balances that lie behind debit cards. 
B)  demand deposits. 
C)  other checkable depositis. 
D)  All of the above are correct. 
A)  balances that lie behind debit cards. 
B)  demand deposits. 
C)  other checkable depositis. 
D)  All of the above are correct.

Question 13

The Federal Reserve primarily uses open-market operations to change the money supply.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not correct?

Accepted Answer

A)  The regional Federal Reserve Banks play a role in regulating banks and ensuring the health of the banking system. 
B)  The President of the New York Federal Reserve Regional Bank always gets to vote on the decisions made by the Federal Open Market Committee. 
C)  U.S. monetary policy is made by the Federal Open Market Committee. 
D)  The Federal Open Market Committee meets every 12 weeks. 
A)  The regional Federal Reserve Banks play a role in regulating banks and ensuring the health of the banking system. 
B)  The President of the New York Federal Reserve Regional Bank always gets to vote on the decisions made by the Federal Open Market Committee. 
C)  U.S. monetary policy is made by the Federal Open Market Committee. 
D)  The Federal Open Market Committee meets every 12 weeks.

Question 15

Which of the following is not included in M1?

Accepted Answer

A)  currency 
B)  demand deposits 
C)  traveler's checks 
D)  credit cards 
A)  currency 
B)  demand deposits 
C)  traveler's checks 
D)  credit cards

Question 16

Currently, bank runs are a major problem for the U.S. banking system and the Fed.

Accepted Answer

A) True 
 B)False

Question 17

The money supply increases when the Fed

Accepted Answer

A)  lowers the discount rate. The increase will be larger the smaller the reserve ratio is. 
B)  lowers the discount rate. The increase will be larger the larger the reserve ratio is. 
C)  raises the discount rate. The increase will be larger the smaller the reserve ratio is. 
D)  raises the discount rate. The increase will be larger the larger the reserve ratio is. 
A)  lowers the discount rate. The increase will be larger the smaller the reserve ratio is. 
B)  lowers the discount rate. The increase will be larger the larger the reserve ratio is. 
C)  raises the discount rate. The increase will be larger the smaller the reserve ratio is. 
D)  raises the discount rate. The increase will be larger the larger the reserve ratio is.

Question 18

If the reserve ratio is 5 percent, then $2,500 of additional reserves can create up to

Accepted Answer

A)  $62,500 of new money. 
B)  $50,000 of new money. 
C)  $45,600 of new money. 
D)  $37,500 of new money. 
A)  $62,500 of new money. 
B)  $50,000 of new money. 
C)  $45,600 of new money. 
D)  $37,500 of new money.

Question 19

Money is

Accepted Answer

A)  the most liquid asset and a perfect store of value. 
B)  the most liquid asset but an imperfect store of value. 
C)  not the most liquid asset but a perfect store of value. 
D)  neither the most liquid asset and nor a perfect store of value. 
A)  the most liquid asset and a perfect store of value. 
B)  the most liquid asset but an imperfect store of value. 
C)  not the most liquid asset but a perfect store of value. 
D)  neither the most liquid asset and nor a perfect store of value.

Question 20

Consider five individuals with different occupations.   In a barter system which of the following pairs has a double coincidence of wants?

Accepted Answer

A)  Allen and Eric 
B)  Diedre and Calvin 
C)  Both A and B are correct. 
D)  None of the above are correct. 
A)  Allen and Eric 
B)  Diedre and Calvin 
C)  Both A and B are correct. 
D)  None of the above are correct.

To increase the money supply, the Fed can

If the reserve ratio is 20 percent, then $100 of new reserves can generate

If the reserve ratio is 5 percent, then $1,000 of additional reserves can create up to

If the money multiplier is 2 and the Fed buys $50,000 worth of bonds, what happens to the money supply?

If the public decides to hold more currency and fewer deposits in banks, bank reserves

Which of the following defer payments?

When the Fed decreases the discount rate, banks will

Banks cannot influence the money supply if they are required to hold all deposits in reserve.

The confidence you have that a retailer will accept dollars in exchange for goods is based primarily on money

As opposed to a payments system based on barter, a payments system based on money

The Fed can influence unemployment in

The set of items that serve as media of exchange clearly includes

The Federal Reserve primarily uses open-market operations to change the money supply.

Which of the following is not correct?

Which of the following is not included in M1?

Currently, bank runs are a major problem for the U.S. banking system and the Fed.

The money supply increases when the Fed

If the reserve ratio is 5 percent, then $2,500 of additional reserves can create up to

Money is

Consider five individuals with different occupations. In a barter system which of the following pairs has a double coincidence of wants?

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

To increase the money supply, the Fed can

If the reserve ratio is 20 percent, then $100 of new reserves can generate

If the reserve ratio is 5 percent, then $1,000 of additional reserves can create up to

If the money multiplier is 2 and the Fed buys $50,000 worth of bonds, what happens to the money supply?

If the public decides to hold more currency and fewer deposits in banks, bank reserves

Which of the following defer payments?

When the Fed decreases the discount rate, banks will

Banks cannot influence the money supply if they are required to hold all deposits in reserve.

The confidence you have that a retailer will accept dollars in exchange for goods is based primarily on money

As opposed to a payments system based on barter, a payments system based on money

The Fed can influence unemployment in

The set of items that serve as media of exchange clearly includes

The Federal Reserve primarily uses open-market operations to change the money supply.

Which of the following is not correct?

Which of the following is not included in M1?

Currently, bank runs are a major problem for the U.S. banking system and the Fed.

The money supply increases when the Fed

If the reserve ratio is 5 percent, then $2,500 of additional reserves can create up to

Money is

Consider five individuals with different occupations. In a barter system which of the following pairs has a double coincidence of wants?

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