Question 1

Suppose that in a country people gain more confidence in the banking system and so hold relatively less currency and more deposits. As a result, bank reserves will

Accepted Answer

A)  decrease and the money supply will eventually decrease. 
B)  decrease and the money supply will eventually increase. 
C)  increase and the money supply will eventually decrease. 
D)  increase and the money supply will eventually increase. 
A)  decrease and the money supply will eventually decrease. 
B)  decrease and the money supply will eventually increase. 
C)  increase and the money supply will eventually decrease. 
D)  increase and the money supply will eventually increase.

Question 2

If an economy uses silver as money, then that economy's money

Accepted Answer

A)  serves as a store of value but not as a medium of exchange. 
B)  serves as a medium of exchange but not as a unit of account. 
C)  is commodity money. 
D)  has no intrinsic value. 
A)  serves as a store of value but not as a medium of exchange. 
B)  serves as a medium of exchange but not as a unit of account. 
C)  is commodity money. 
D)  has no intrinsic value.

Question 3

Table 29-9
Metropolis National Bank is currently holding 2% of its deposits as excess reserves.
  
-Refer to Table 29-9. Metropolis National Bank is currently holding 2% of deposits as excess reserves. Assuming that all banks have the same required reserve ratio, and then none want to hold excess reserves what is the value of the money multiplier?

Accepted Answer

A)  8.25 
B)  10 
C)  12 
D)  20 
A)  8.25 
B)  10 
C)  12 
D)  20

Question 4

The discount rate is

Accepted Answer

A)  the rate at which public banks lend to other public banks. 
B)  the rate at which the Fed lends to banks. 
C)  the percentage difference between the face value of a Treasury bond and what the Fed pays for it. 
D)  the percentage of deposits banks hold as excess reserves. 
A)  the rate at which public banks lend to other public banks. 
B)  the rate at which the Fed lends to banks. 
C)  the percentage difference between the face value of a Treasury bond and what the Fed pays for it. 
D)  the percentage of deposits banks hold as excess reserves.

Question 5

The discount rate is

Accepted Answer

A)  the interest rate the Fed charges banks. 
B)  one divided by the difference between one and the reserve ratio. 
C)  the interest rate banks receive on reserve deposits with the Fed. 
D)  the interest rate that banks charge on overnight loans to other banks. 
A)  the interest rate the Fed charges banks. 
B)  one divided by the difference between one and the reserve ratio. 
C)  the interest rate banks receive on reserve deposits with the Fed. 
D)  the interest rate that banks charge on overnight loans to other banks.

Question 6

Federal Reserve governors are given long terms to insulate them from politics.

Accepted Answer

A) True 
 B)False

Question 7

Table 29-3. An economy starts with $50,000 in currency. All of this currency is deposited into a single bank, and the bank then makes loans totaling $45,750. The T-account of the bank is shown below.
  
-Refer to Table 29-3. If all banks in the economy have the same reserve ratio as this bank, then an increase in reserves of $150 for this bank has the potential to increase deposits for all banks by

Accepted Answer

A)  $287.25. 
B)  $1,614.71. 
C)  $1,764.71. 
D)  $2,000 or more. 
A)  $287.25. 
B)  $1,614.71. 
C)  $1,764.71. 
D)  $2,000 or more.

Question 8

Marc puts prices on surfboards and skateboards at his sporting goods store. He is using money as a unit of account.

Accepted Answer

A) True 
 B)False

Question 9

Credit cards

Accepted Answer

A)  defer payments. 
B)  are a store of value. 
C)  have led to wider use of currency. 
D)  are part of the money supply. 
A)  defer payments. 
B)  are a store of value. 
C)  have led to wider use of currency. 
D)  are part of the money supply.

Question 10

Name three actions the Fed can take to increase the money supply.

Accepted Answer

Open-market purchases buy gove

Question 11

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 12

Table 29-5.
  
-Refer to Table 29-5. If the bank faces a reserve requirement of 20 percent, then it

Accepted Answer

A)  has $10,000 of excess reserves. 
B)  needs $10,000 more reserves to meet its reserve requirements. 
C)  needs $20,000 more reserves to meet its reserve requirements. 
D)  just meets its reserve requirement. 
A)  has $10,000 of excess reserves. 
B)  needs $10,000 more reserves to meet its reserve requirements. 
C)  needs $20,000 more reserves to meet its reserve requirements. 
D)  just meets its reserve requirement.

Question 13

Table 29-6.
  
-Refer to Table 29-6. Assume the Fed's reserve requirement is 5 percent and all banks besides the Bank of Pleasantville are exactly in compliance with the 5 percent requirement. Further assume that people hold only deposits and no currency. Starting from the situation as depicted by the T-account, if the Bank of Pleasantville decides to make new loans so as to end up with no excess reserves, then by how much does the money supply eventually increase?

Accepted Answer

A)  $10,833.33. 
B)  $13,000. 
C)  $8,333.33. 
D)  $10,000. 
A)  $10,833.33. 
B)  $13,000. 
C)  $8,333.33. 
D)  $10,000.

Question 14

Which of the following increase when the Fed makes open market purchases?

Accepted Answer

A)  currency and reserves 
B)  currency but not reserves 
C)  reserves but not currency 
D)  neither currency nor reserves 
A)  currency and reserves 
B)  currency but not reserves 
C)  reserves but not currency 
D)  neither currency nor reserves

Question 15

Dollar bills, rare paintings, and emerald necklaces are all

Accepted Answer

A)  media of exchange. 
B)  units of account. 
C)  stores of value. 
D)  All of the above are correct. 
A)  media of exchange. 
B)  units of account. 
C)  stores of value. 
D)  All of the above are correct.

Question 16

The agency responsible for regulating the money supply in the United States is

Accepted Answer

A)  the Comptroller of the Currency. 
B)  the U.S. Treasury. 
C)  the Federal Reserve. 
D)  the U.S. Bank. 
A)  the Comptroller of the Currency. 
B)  the U.S. Treasury. 
C)  the Federal Reserve. 
D)  the U.S. Bank.

Question 17

M1 includes

Accepted Answer

A)  currency. 
B)  demand deposits. 
C)  traveler's checks. 
D)  All of the above are correct. 
A)  currency. 
B)  demand deposits. 
C)  traveler's checks. 
D)  All of the above are correct.

Question 18

Table 29-8
  
-Refer to Table 29-8. The required reserve ratio is 12 percent and First National Bank sells $120 of its short-term securities to the Federal Reserve. This action will

Accepted Answer

A)  increase First National's reserves by $120. Its excess reserves are $240. 
B)  decrease First National's reserves by $120. Its excess reserves are $0. 
C)  increase First National's loans by $120. Its reserves decrease by $120. 
D)  decrease First National's loans by $120. Its reserves increase by $120. 
A)  increase First National's reserves by $120. Its excess reserves are $240. 
B)  decrease First National's reserves by $120. Its excess reserves are $0. 
C)  increase First National's loans by $120. Its reserves decrease by $120. 
D)  decrease First National's loans by $120. Its reserves increase by $120.

Question 19

Table 29-6.
  
-Refer to Table 29-6. Assume there is a reserve requirement and the Bank of Pleasantville is exactly in compliance with that requirement. Assume the same is true for all other banks. Lastly, assume people hold only deposits and no currency. What is the money multiplier?

Accepted Answer

A)  6 
B)  16.7 
C)  15.6 
D)  6.4 
A)  6 
B)  16.7 
C)  15.6 
D)  6.4

Question 20

Which list ranks assets from most to least liquid?

Accepted Answer

A)  currency, demand deposits, money market mutual funds 
B)  currency, money market mutual funds, demand deposits 
C)  money market mutual funds, demand deposits, currency 
D)  demand deposits, money market mutual funds, currency 
A)  currency, demand deposits, money market mutual funds 
B)  currency, money market mutual funds, demand deposits 
C)  money market mutual funds, demand deposits, currency 
D)  demand deposits, money market mutual funds, currency

Suppose that in a country people gain more confidence in the banking system and so hold relatively less currency and more deposits. As a result, bank reserves will

If an economy uses silver as money, then that economy's money

The discount rate is

The discount rate is

Federal Reserve governors are given long terms to insulate them from politics.

Marc puts prices on surfboards and skateboards at his sporting goods store. He is using money as a unit of account.

Credit cards

Name three actions the Fed can take to increase the money supply.

Which of the following is correct concerning the FOMC?

Table 29-5. -Refer to Table 29-5. If the bank faces a reserve requirement of 20 percent, then it

Which of the following increase when the Fed makes open market purchases?

Dollar bills, rare paintings, and emerald necklaces are all

The agency responsible for regulating the money supply in the United States is

M1 includes

Table 29-8 -Refer to Table 29-8. The required reserve ratio is 12 percent and First National Bank sells $120 of its short-term securities to the Federal Reserve. This action will

Table 29-6. -Refer to Table 29-6. Assume there is a reserve requirement and the Bank of Pleasantville is exactly in compliance with that requirement. Assume the same is true for all other banks. Lastly, assume people hold only deposits and no currency. What is the money multiplier?

Which list ranks assets from most to least liquid?

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 and Its Natural Rate

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

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 Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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Exam 11: The Monetary System

Suppose that in a country people gain more confidence in the banking system and so hold relatively less currency and more deposits. As a result, bank reserves will

If an economy uses silver as money, then that economy's money

The discount rate is

The discount rate is

Federal Reserve governors are given long terms to insulate them from politics.

Marc puts prices on surfboards and skateboards at his sporting goods store. He is using money as a unit of account.

Credit cards

Name three actions the Fed can take to increase the money supply.

Which of the following is correct concerning the FOMC?

Table 29-5. -Refer to Table 29-5. If the bank faces a reserve requirement of 20 percent, then it

Which of the following increase when the Fed makes open market purchases?

Dollar bills, rare paintings, and emerald necklaces are all

The agency responsible for regulating the money supply in the United States is

M1 includes

Table 29-8 -Refer to Table 29-8. The required reserve ratio is 12 percent and First National Bank sells $120 of its short-term securities to the Federal Reserve. This action will

Table 29-6. -Refer to Table 29-6. Assume there is a reserve requirement and the Bank of Pleasantville is exactly in compliance with that requirement. Assume the same is true for all other banks. Lastly, assume people hold only deposits and no currency. What is the money multiplier?

Which list ranks assets from most to least liquid?

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 and Its Natural Rate

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

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 Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters