Question 1

If the reserve ratio is 5 percent, then $600 of additional reserves can create up to

Accepted Answer

A)  $30 of new money. 
B)  $3,000 of new money. 
C)  $12,000 of new money. 
D)  None of the above is correct. 
A)  $30 of new money. 
B)  $3,000 of new money. 
C)  $12,000 of new money. 
D)  None of the above is correct.

Question 2

When the Fed conducts open-market sales,

Accepted Answer

A)  it sells Treasury securities, which increases the money supply. 
B)  it sells Treasury securities, which decreases the money supply. 
C)  it auctions term loans, which increases the money supply. 
D)  it auctions term loans, which decreases the money supply. 
A)  it sells Treasury securities, which increases the money supply. 
B)  it sells Treasury securities, which decreases the money supply. 
C)  it auctions term loans, which increases the money supply. 
D)  it auctions term loans, which decreases the money supply.

Question 3

At the Federal Reserve,

Accepted Answer

A)  the nation's monetary and fiscal policies are made by the Federal Open Market Committee, which meets about every six weeks. 
B)  the nation's monetary and fiscal policies are made by the Federal Open Market Committee, which meets twice a year. 
C)  the nation's monetary policy is made by the Federal Open Market Committee, which meets about every six weeks. 
D)  the nation's monetary policy is made by the Federal Open Market Committee, which meets twice a year. 
A)  the nation's monetary and fiscal policies are made by the Federal Open Market Committee, which meets about every six weeks. 
B)  the nation's monetary and fiscal policies are made by the Federal Open Market Committee, which meets twice a year. 
C)  the nation's monetary policy is made by the Federal Open Market Committee, which meets about every six weeks. 
D)  the nation's monetary policy is made by the Federal Open Market Committee, which meets twice a year.

Question 4

Jim transfers money from his money market account to his savings account. This action

Accepted Answer

A)  reduced M1 and increases M2. 
B)  increases M1 and reduces M2. 
C)  has no effect on M1 or M2. 
D)  increases M1 and M2. 
A)  reduced M1 and increases M2. 
B)  increases M1 and reduces M2. 
C)  has no effect on M1 or M2. 
D)  increases M1 and M2.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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 7

List two examples of commodity money.

Accepted Answer

Commodity money refers to mone

Question 8

The Fed's primary tool to change the money supply is

Accepted Answer

A)  changing the interest rate on reserves. 
B)  changing the reserve requirement. 
C)  conducting open market operations. 
D)  redeeming Federal Reserve notes. 
A)  changing the interest rate on reserves. 
B)  changing the reserve requirement. 
C)  conducting open market operations. 
D)  redeeming Federal Reserve notes.

Question 9

Economists call an institution designed to oversee the banking system and regulate the quantity of money in the economy

Accepted Answer

A)  a central bank. 
B)  a charter bank. 
C)  a national bank. 
D)  a state bank. 
A)  a central bank. 
B)  a charter bank. 
C)  a national bank. 
D)  a state bank.

Question 10

The money supply increases when the Fed

Accepted Answer

A)  buys bonds. The increase will be larger, the smaller is the reserve ratio. 
B)  buys bonds. The increase will be larger, the larger is the reserve ratio. 
C)  sells bonds. The increase will be larger, the smaller is the reserve ratio. 
D)  sells bonds. The increase will be larger, the larger is the reserve ratio. 
A)  buys bonds. The increase will be larger, the smaller is the reserve ratio. 
B)  buys bonds. The increase will be larger, the larger is the reserve ratio. 
C)  sells bonds. The increase will be larger, the smaller is the reserve ratio. 
D)  sells bonds. The increase will be larger, the larger is the reserve ratio.

Question 11

When the Fed conducts open-market purchases,

Accepted Answer

A)  banks buy Treasury securities from Fed, which increases the money supply. 
B)  banks buy Treasury securities from the Fed, which decreases the money supply. 
C)  it buys Treasury securities, which increases the money supply. 
D)  it buys Treasury securities, which decreases the money supply. 
A)  banks buy Treasury securities from Fed, which increases the money supply. 
B)  banks buy Treasury securities from the Fed, which decreases the money supply. 
C)  it buys Treasury securities, which increases the money supply. 
D)  it buys Treasury securities, which decreases the money supply.

Question 12

The members of the Federal Reserve's Board of Governors

Accepted Answer

A)  are elected to office by the public every fourteen years. 
B)  are nominated by the U.S. Senate banking committee and confirmed by the U.S. house of representatives. 
C)  are elected by bankers in each Federal Reserve Region. 
D)  are appointed by the president of the U.S. and confirmed by the U.S. Senate. 
A)  are elected to office by the public every fourteen years. 
B)  are nominated by the U.S. Senate banking committee and confirmed by the U.S. house of representatives. 
C)  are elected by bankers in each Federal Reserve Region. 
D)  are appointed by the president of the U.S. and confirmed by the U.S. Senate.

Question 13

Table 29-8
  
-Refer to Table 29-8. This bank's leverage ratio is

Accepted Answer

A)  2. 
B)  50. 
C)  13.3. 
D)  7.5. 
A)  2. 
B)  50. 
C)  13.3. 
D)  7.5.

Question 14

Over one time horizon or another, Fed policy decisions influence

Accepted Answer

A)  inflation and employment. 
B)  inflation but not employment. 
C)  employment but not inflation. 
D)  neither inflation nor employment. 
A)  inflation and employment. 
B)  inflation but not employment. 
C)  employment but not inflation. 
D)  neither inflation nor employment.

Question 15

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 16

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

Accepted Answer

A)  U.S. Treasury bills 
B)  small time deposits 
C)  demand deposits 
D)  money market mutual funds 
A)  U.S. Treasury bills 
B)  small time deposits 
C)  demand deposits 
D)  money market mutual funds

Question 17

A bank has $30,000 in deposits and has $5,400 in reserves. What is its reserve ratio?

Accepted Answer

The answer of A bank has $30,000 in deposits and...

Question 18

Traveler's checks are included in

Accepted Answer

A)  M1 but not M2. 
B)  M2 but not M1. 
C)  M1 and M2. 
D)  neither M1 nor M2. 
A)  M1 but not M2. 
B)  M2 but not M1. 
C)  M1 and M2. 
D)  neither M1 nor M2.

Question 19

The manager of the bank where you work tells you that your bank has $6 million in excess reserves. She also tells you that the bank has $400 million in deposits and $362 million dollars in loans. Given this information you find that the reserve requirement must be

Accepted Answer

A)  44/400. 
B)  6/362. 
C)  38/400. 
D)  32/400. 
A)  44/400. 
B)  6/362. 
C)  38/400. 
D)  32/400.

Question 20

Credit cards

Accepted Answer

A)  represent the largest component of M1. 
B)  are not included in M1 but are included in M2. 
C)  are a form of money unique to the U.S. 
D)  are not considered money. 
A)  represent the largest component of M1. 
B)  are not included in M1 but are included in M2. 
C)  are a form of money unique to the U.S. 
D)  are not considered money.

If the reserve ratio is 5 percent, then $600 of additional reserves can create up to

When the Fed conducts open-market sales,

At the Federal Reserve,

Jim transfers money from his money market account to his savings account. This action

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

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

List two examples of commodity money.

The Fed's primary tool to change the money supply is

Economists call an institution designed to oversee the banking system and regulate the quantity of money in the economy

The money supply increases when the Fed

When the Fed conducts open-market purchases,

The members of the Federal Reserve's Board of Governors

Table 29-8 -Refer to Table 29-8. This bank's leverage ratio is

Over one time horizon or another, Fed policy decisions influence

The members of the Federal Reserve's Board of Governors

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

A bank has $30,000 in deposits and has $5,400 in reserves. What is its reserve ratio?

Traveler's checks are included in

The manager of the bank where you work tells you that your bank has $6 million in excess reserves. She also tells you that the bank has $400 million in deposits and $362 million dollars in loans. Given this information you find that the reserve requirement must be

Credit cards

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

If the reserve ratio is 5 percent, then $600 of additional reserves can create up to

When the Fed conducts open-market sales,

At the Federal Reserve,

Jim transfers money from his money market account to his savings account. This action

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

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

List two examples of commodity money.

The Fed's primary tool to change the money supply is

Economists call an institution designed to oversee the banking system and regulate the quantity of money in the economy

The money supply increases when the Fed

When the Fed conducts open-market purchases,

The members of the Federal Reserve's Board of Governors

Table 29-8 -Refer to Table 29-8. This bank's leverage ratio is

Over one time horizon or another, Fed policy decisions influence

The members of the Federal Reserve's Board of Governors

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

A bank has $30,000 in deposits and has $5,400 in reserves. What is its reserve ratio?

Traveler's checks are included in

The manager of the bank where you work tells you that your bank has $6 million in excess reserves. She also tells you that the bank has $400 million in deposits and $362 million dollars in loans. Given this information you find that the reserve requirement must be

Credit cards

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