Question 1

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 2

If the reserve ratio is 100-percent, then a new deposit of $1000 into a bank account

Accepted Answer

A)  eventually increases the money supply by $1000. 
B)  leaves the size of the money supply unchanged. 
C)  eventually decreases the size of the money supply by $1000. 
D)  eventually increases the money supply by $2000. 
A)  eventually increases the money supply by $1000. 
B)  leaves the size of the money supply unchanged. 
C)  eventually decreases the size of the money supply by $1000. 
D)  eventually increases the money supply by $2000.

Question 3

If the reserve requirement is 5 percent, a bank desires to hold no excess reserves, and it receives a new deposit of $10, then this bank

Accepted Answer

A)  must increase its required reserves by $10. 
B)  will initially see its total reserves increase by $10.50. 
C)  will be able to make new loans up to a maximum of $9.50. 
D)  All of the above are correct. 
A)  must increase its required reserves by $10. 
B)  will initially see its total reserves increase by $10.50. 
C)  will be able to make new loans up to a maximum of $9.50. 
D)  All of the above are correct.

Question 4

Which group within the Federal Reserve System meets to discuss changes in the economy and determine monetary policy?

Accepted Answer

A)  the Board of Governors 
B)  the FOMC 
C)  the regional Federal Reserve Bank presidents 
D)  the Central Bank Policy Commission 
A)  the Board of Governors 
B)  the FOMC 
C)  the regional Federal Reserve Bank presidents 
D)  the Central Bank Policy Commission

Question 5

The existence of money makes trade easier. How is it that money can also increase the standard of living?

Accepted Answer

The existence of money means the economy

Question 6

The Federal Reserve was created in 1913 after a series of bank failures in 1907.

Accepted Answer

A) True 
 B)False

Question 7

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. Assume that no banks in the economy want to hold excess reserves and that people only hold deposits and no currency. How much does the money supply ultimately increase when Metropolis National Bank lends out its excess reserves?

Accepted Answer

A)  $100,000 
B)  $110,000 
C)  $120,000 
D)  None of the above are correct. 
A)  $100,000 
B)  $110,000 
C)  $120,000 
D)  None of the above are correct.

Question 8

Which of the following is an example of barter?

Accepted Answer

A)  A parent gives a teenager a $10 bill in exchange for her babysitting services. 
B)  A homeowner gives an exterminator a check for $50 in exchange for extermination services. 
C)  A barber gives a plumber a haircut in exchange for the plumber fixing the barber's leaky faucet. 
D)  All of the above are examples of barter. 
A)  A parent gives a teenager a $10 bill in exchange for her babysitting services. 
B)  A homeowner gives an exterminator a check for $50 in exchange for extermination services. 
C)  A barber gives a plumber a haircut in exchange for the plumber fixing the barber's leaky faucet. 
D)  All of the above are examples of barter.

Question 9

Which of the following does the U.S. president appoint and the U.S. Senate confirm?

Accepted Answer

A)  members of the Board of Governors and regional Federal Reserve Bank Presidents. 
B)  members of the Board of Governors but not the regional Federal Reserve Bank Presidents. 
C)  the regional Federal Reserve Bank Presidents, but not members of the Board of Governors. 
D)  neither members of the Board of Governors nor regional Federal Reserve Bank Presidents. 
A)  members of the Board of Governors and regional Federal Reserve Bank Presidents. 
B)  members of the Board of Governors but not the regional Federal Reserve Bank Presidents. 
C)  the regional Federal Reserve Bank Presidents, but not members of the Board of Governors. 
D)  neither members of the Board of Governors nor regional Federal Reserve Bank Presidents.

Question 10

Which list ranks assets from most to least liquid?

Accepted Answer

A)  currency, fine art, stocks 
B)  currency, stocks, fine art 
C)  fine art, currency, stocks 
D)  fine art, stocks, currency 
A)  currency, fine art, stocks 
B)  currency, stocks, fine art 
C)  fine art, currency, stocks 
D)  fine art, stocks, currency

Question 11

Credit cards are

Accepted Answer

A)  a medium of exchange. 
B)  counted as part of M2 but not as part of M1. 
C)  important for analyzing the monetary system. 
D)  All of the above are correct. 
A)  a medium of exchange. 
B)  counted as part of M2 but not as part of M1. 
C)  important for analyzing the monetary system. 
D)  All of the above are correct.

Question 12

Why is the president of the New York Fed always a voting member of the FOMC?

Accepted Answer

New York is the financial capitol of the

Question 13

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

Accepted Answer

A)  since the U.S. has a fractional-reserve banking system, the amount of money in the economy depends in part on the behavior of depositors and bankers. 
B)  the Fed has to get the approval of the U.S. Treasury Department whenever it uses any of its monetary policy tools. 
C)  while the Fed has the ability to change the money supply by a large amount, it does not have the ability to change it by a small amount. 
D)  federal legislation in the 1950s stripped the Fed of its power to act as a lender of last resort to banks. 
A)  since the U.S. has a fractional-reserve banking system, the amount of money in the economy depends in part on the behavior of depositors and bankers. 
B)  the Fed has to get the approval of the U.S. Treasury Department whenever it uses any of its monetary policy tools. 
C)  while the Fed has the ability to change the money supply by a large amount, it does not have the ability to change it by a small amount. 
D)  federal legislation in the 1950s stripped the Fed of its power to act as a lender of last resort to banks.

Question 14

At any given time, the voting members of the Federal Open Market Committee include

Accepted Answer

A)  five of the presidents of the regional Federal Reserve banks. 
B)  the president of the Federal Reserve Bank of New York. 
C)  the seven members of the Board of Governors. 
D)  All of the above are correct. 
A)  five of the presidents of the regional Federal Reserve banks. 
B)  the president of the Federal Reserve Bank of New York. 
C)  the seven members of the Board of Governors. 
D)  All of the above are correct.

Question 15

When the Fed purchases government bonds the money supply and the federal funds rate .

Accepted Answer

increases,

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

Which of the following individuals serve a four-year term?

Accepted Answer

A)  the members of the Board of Governors 
B)  the Chair of the Board of Governors 
C)  the members of the FOMC 
D)  All of the above are correct. 
A)  the members of the Board of Governors 
B)  the Chair of the Board of Governors 
C)  the members of the FOMC 
D)  All of the above are correct.

Question 18

Which of the following is a function of money?

Accepted Answer

A)  a unit of account 
B)  a store of value 
C)  medium of exchange 
D)  All of the above are correct. 
A)  a unit of account 
B)  a store of value 
C)  medium of exchange 
D)  All of the above are correct.

Question 19

Which of the following entities actually executes open-market operations?

Accepted Answer

A)  the Board of Governors 
B)  the New York Federal Reserve Bank 
C)  the Federal Open Market Committee 
D)  the Open Market Committees of the regional Federal Reserve Banks 
A)  the Board of Governors 
B)  the New York Federal Reserve Bank 
C)  the Federal Open Market Committee 
D)  the Open Market Committees of the regional Federal Reserve Banks

Question 20

In Ugoland, the money supply is $8 million and reserves are $1 million. Assuming that people hold only deposits and no currency, and that banks hold no excess reserves, then the reserve requirement is

Accepted Answer

A)  14 percent. 
B)  12.5 percent. 
C)  8 percent. 
D)  None of the above is correct. 
A)  14 percent. 
B)  12.5 percent. 
C)  8 percent. 
D)  None of the above is correct.

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

If the reserve ratio is 100-percent, then a new deposit of $1000 into a bank account

If the reserve requirement is 5 percent, a bank desires to hold no excess reserves, and it receives a new deposit of $10, then this bank

Which group within the Federal Reserve System meets to discuss changes in the economy and determine monetary policy?

The existence of money makes trade easier. How is it that money can also increase the standard of living?

The Federal Reserve was created in 1913 after a series of bank failures in 1907.

Which of the following is an example of barter?

Which of the following does the U.S. president appoint and the U.S. Senate confirm?

Which list ranks assets from most to least liquid?

Credit cards are

Why is the president of the New York Fed always a voting member of the FOMC?

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

At any given time, the voting members of the Federal Open Market Committee include

When the Fed purchases government bonds the money supply and the federal funds rate .

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

Which of the following individuals serve a four-year term?

Which of the following is a function of money?

Which of the following entities actually executes open-market operations?

In Ugoland, the money supply is $8 million and reserves are $1 million. Assuming that people hold only deposits and no currency, and that banks hold no excess reserves, then the reserve requirement is

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

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

If the reserve ratio is 100-percent, then a new deposit of $1000 into a bank account

If the reserve requirement is 5 percent, a bank desires to hold no excess reserves, and it receives a new deposit of $10, then this bank

Which group within the Federal Reserve System meets to discuss changes in the economy and determine monetary policy?

The existence of money makes trade easier. How is it that money can also increase the standard of living?

The Federal Reserve was created in 1913 after a series of bank failures in 1907.

Which of the following is an example of barter?

Which of the following does the U.S. president appoint and the U.S. Senate confirm?

Which list ranks assets from most to least liquid?

Credit cards are

Why is the president of the New York Fed always a voting member of the FOMC?

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

At any given time, the voting members of the Federal Open Market Committee include

When the Fed purchases government bonds the money supply and the federal funds rate .

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

Which of the following individuals serve a four-year term?

Which of the following is a function of money?

Which of the following entities actually executes open-market operations?

In Ugoland, the money supply is $8 million and reserves are $1 million. Assuming that people hold only deposits and no currency, and that banks hold no excess reserves, then the reserve requirement is

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