Question 1

Consider four survivors on an island.   Which of the following pairs of survivors has a double-coincidence of wants?

Accepted Answer

A)  Rupert with Amber, and Rob with Tom 
B)  Amber with Tom 
C)  Rupert with Rob 
D)  None of the above are correct. 
A)  Rupert with Amber, and Rob with Tom 
B)  Amber with Tom 
C)  Rupert with Rob 
D)  None of the above are correct.

Question 2

A bank has $10,000 in deposits and $8,000 in loans. It has loaned out all it can given the reserve requirement. It follows that the reserve requirement is

Accepted Answer

A)  2 percent. 
B)  12.5 percent. 
C)  20 percent. 
D)  80 percent. 
A)  2 percent. 
B)  12.5 percent. 
C)  20 percent. 
D)  80 percent.

Question 3

Table 11-6.
  
-Refer to Table 11-6. If the Fed requires a reserve ratio of 6 percent, then what quantity of excess reserves does the Bank of Springfield now hold?

Accepted Answer

A)  $1,200 
B)  $2,400 
C)  $2,880 
D)  $4,800 
A)  $1,200 
B)  $2,400 
C)  $2,880 
D)  $4,800

Question 4

The Federal Open Market Committee meets approximately

Accepted Answer

A)  every three weeks 
B)  every six weeks 
C)  every 3 months 
D)  every 6 months. 
A)  every three weeks 
B)  every six weeks 
C)  every 3 months 
D)  every 6 months.

Question 5

Consider five individuals with different occupations.   Which of the following pairs of individuals has a double coincidence of wants?

Accepted Answer

A)  Mary and Clark 
B)  Clark and Nathan 
C)  Nathan and Polly 
D)  Polly and Paul 
A)  Mary and Clark 
B)  Clark and Nathan 
C)  Nathan and Polly 
D)  Polly and Paul

Question 6

The Federal Reserve

Accepted Answer

A)  was created in 1913. 
B)  is the U.S.'s central bank. 
C)  has other duties in addition to controlling the money supply. 
D)  All of the above are correct. 
A)  was created in 1913. 
B)  is the U.S.'s central bank. 
C)  has other duties in addition to controlling the money supply. 
D)  All of the above are correct.

Question 7

Which of the following is correct concerning the FOMC?

Accepted Answer

A)  the members of the Board of Governors have the majority of the votes 
B)  the New York Federal Reserve Bank District President is always a voting member 
C)  all Federal Reserve Bank presidents attend the meetings 
D)  All of the above are correct. 
A)  the members of the Board of Governors have the majority of the votes 
B)  the New York Federal Reserve Bank District President is always a voting member 
C)  all Federal Reserve Bank presidents attend the meetings 
D)  All of the above are correct.

Question 8

In a fractional-reserve banking system, an increase in reserve requirements

Accepted Answer

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

Question 9

Today, bank runs are not a major problem for the U.S. banking system because

Accepted Answer

A)  bank runs are now illegal. 
B)  banks now hold 100 percent of their deposits in reserve. 
C)  banks are now all government-operated. 
D)  the federal government now guarantees the safety of deposits at most banks. 
A)  bank runs are now illegal. 
B)  banks now hold 100 percent of their deposits in reserve. 
C)  banks are now all government-operated. 
D)  the federal government now guarantees the safety of deposits at most banks.

Question 10

Prisoners sometimes determine a single good to be used as money. This good becomes

Accepted Answer

A)  a medium of exchange and a unit of account. 
B)  a medium of exchange, but not a unit of account. 
C)  a unit of account, but not a medium of exchange. 
D)  neitehr a unit of account nor a medium of exchange. 
A)  a medium of exchange and a unit of account. 
B)  a medium of exchange, but not a unit of account. 
C)  a unit of account, but not a medium of exchange. 
D)  neitehr a unit of account nor a medium of exchange.

Question 11

If the reserve ratio is 8 percent, then an additional $1,000 of reserves can increase the money supply by as much as

Accepted Answer

A)  $6,400. 
B)  $8,000. 
C)  $12,500. 
D)  $20,000. 
A)  $6,400. 
B)  $8,000. 
C)  $12,500. 
D)  $20,000.

Question 12

If the money multiplier is 2 and the Fed wants to increase the money supply by $900,000, it could

Accepted Answer

A)  buy $300,000 worth of bonds. 
B)  buy $450,000 worth of bonds. 
C)  sell $300,000 worth of bonds. 
D)  sell $450,000 worth of bonds. 
A)  buy $300,000 worth of bonds. 
B)  buy $450,000 worth of bonds. 
C)  sell $300,000 worth of bonds. 
D)  sell $450,000 worth of bonds.

Question 13

In the months of November and December, people in the United States hold a larger part of their money in the form of currency because they intend to shop and travel for the holidays. As a result, other things the same, the money supply increases.

Accepted Answer

A) True 
 B)False

Question 14

Table 11-3.
  
-Refer to Table 11-3. The reserve ratio for this bank is

Accepted Answer

A)  0 percent. 
B)  20 percent. 
C)  80 percent. 
D)  100 percent. 
A)  0 percent. 
B)  20 percent. 
C)  80 percent. 
D)  100 percent.

Question 15

Assume that when $100 of new reserves enter the banking system, the money supply ultimately increases by $625. Assume also that no banks hold excess reserves and that the entire money supply consists of bank deposits. If, at a point in time, reserves for all banks amount to $500, then at that same point in time, loans for all banks amount to $2,625.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following will not help to prevent bank runs?

Accepted Answer

A)  government insurance of deposits 
B)  fractional reserve banking 
C)  100% reserve banking 
D)  All of the above prevent bank runs. 
A)  government insurance of deposits 
B)  fractional reserve banking 
C)  100% reserve banking 
D)  All of the above prevent bank runs.

Question 17

The members of the Federal Reserve's Board of Governors

Accepted Answer

A)  are appointed by the president of the U.S. and confirmed by the U.S. Senate. 
B)  serve six-year terms. 
C)  are also the presidents of the regional Federal Reserve banks. 
D)  share power equally, with no governor having any more influence or power than any other governor. 
A)  are appointed by the president of the U.S. and confirmed by the U.S. Senate. 
B)  serve six-year terms. 
C)  are also the presidents of the regional Federal Reserve banks. 
D)  share power equally, with no governor having any more influence or power than any other governor.

Question 18

You receive money as payment for babysitting your neighbors' children. This best illustrates which function of money?

Accepted Answer

A)  medium of exchange 
B)  unit of account 
C)  store of value 
D)  liquidity 
A)  medium of exchange 
B)  unit of account 
C)  store of value 
D)  liquidity

Question 19

If people decide to hold more currency relative to deposits, the money supply

Accepted Answer

A)  falls. The Fed could lessen the impact of this by buying Treasury bonds. 
B)  falls. The Fed could lessen the impact of this by selling Treasury bonds. 
C)  rises. The Fed could lessen the impact of this by buying Treasury bonds. 
D)  rises. The Fed could lessen the impact of the by selling Treasury bonds. 
A)  falls. The Fed could lessen the impact of this by buying Treasury bonds. 
B)  falls. The Fed could lessen the impact of this by selling Treasury bonds. 
C)  rises. The Fed could lessen the impact of this by buying Treasury bonds. 
D)  rises. The Fed could lessen the impact of the by selling Treasury bonds.

Question 20

Suppose the Fed requires banks to hold 10 percent of their deposits as reserves. A bank has $20,000 of excess reserves and then sells the Fed a Treasury bill for $9,000. How much does this bank now have to lend out if it decides to hold only required reserves?

Accepted Answer

A)  $29,000 
B)  $28,100 
C)  $19,100 
D)  $11,000 
A)  $29,000 
B)  $28,100 
C)  $19,100 
D)  $11,000

Consider four survivors on an island. Which of the following pairs of survivors has a double-coincidence of wants?

A bank has $10,000 in deposits and $8,000 in loans. It has loaned out all it can given the reserve requirement. It follows that the reserve requirement is

Table 11-6. -Refer to Table 11-6. If the Fed requires a reserve ratio of 6 percent, then what quantity of excess reserves does the Bank of Springfield now hold?

The Federal Open Market Committee meets approximately

Consider five individuals with different occupations. Which of the following pairs of individuals has a double coincidence of wants?

The Federal Reserve

Which of the following is correct concerning the FOMC?

In a fractional-reserve banking system, an increase in reserve requirements

Today, bank runs are not a major problem for the U.S. banking system because

Prisoners sometimes determine a single good to be used as money. This good becomes

If the reserve ratio is 8 percent, then an additional $1,000 of reserves can increase the money supply by as much as

If the money multiplier is 2 and the Fed wants to increase the money supply by $900,000, it could

In the months of November and December, people in the United States hold a larger part of their money in the form of currency because they intend to shop and travel for the holidays. As a result, other things the same, the money supply increases.

Table 11-3. -Refer to Table 11-3. The reserve ratio for this bank is

Which of the following will not help to prevent bank runs?

The members of the Federal Reserve's Board of Governors

You receive money as payment for babysitting your neighbors' children. This best illustrates which function of money?

If people decide to hold more currency relative to deposits, the money supply

Suppose the Fed requires banks to hold 10 percent of their deposits as reserves. A bank has $20,000 of excess reserves and then sells the Fed a Treasury bill for $9,000. How much does this bank now have to lend out if it decides to hold only required reserves?

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

Consider four survivors on an island. Which of the following pairs of survivors has a double-coincidence of wants?

A bank has $10,000 in deposits and $8,000 in loans. It has loaned out all it can given the reserve requirement. It follows that the reserve requirement is

Table 11-6. -Refer to Table 11-6. If the Fed requires a reserve ratio of 6 percent, then what quantity of excess reserves does the Bank of Springfield now hold?

The Federal Open Market Committee meets approximately

Consider five individuals with different occupations. Which of the following pairs of individuals has a double coincidence of wants?

The Federal Reserve

Which of the following is correct concerning the FOMC?

In a fractional-reserve banking system, an increase in reserve requirements

Today, bank runs are not a major problem for the U.S. banking system because

Prisoners sometimes determine a single good to be used as money. This good becomes

If the reserve ratio is 8 percent, then an additional $1,000 of reserves can increase the money supply by as much as

If the money multiplier is 2 and the Fed wants to increase the money supply by $900,000, it could

In the months of November and December, people in the United States hold a larger part of their money in the form of currency because they intend to shop and travel for the holidays. As a result, other things the same, the money supply increases.

Table 11-3. -Refer to Table 11-3. The reserve ratio for this bank is

Which of the following will not help to prevent bank runs?

The members of the Federal Reserve's Board of Governors

You receive money as payment for babysitting your neighbors' children. This best illustrates which function of money?

If people decide to hold more currency relative to deposits, the money supply

Suppose the Fed requires banks to hold 10 percent of their deposits as reserves. A bank has $20,000 of excess reserves and then sells the Fed a Treasury bill for $9,000. How much does this bank now have to lend out if it decides to hold only required reserves?

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