Exam 9: The Nature and Creation of Money

Table 9-6: Deposit Expansion Stages In Table 9-6, assume that banks loan out 100% of their excess banking reserves, there are no cash withdrawals, and all loan proceeds are spent. Figures have been rounded up to the nearest whole number. -Refer to Table 9-6. What is the value of $D in Stage 4 (round up to the nearest whole number)?

Which of the following best illustrates the unit of account function of money?

Money is any item that is widely used and freely accepted as payment for goods and services.

For a given level of reserves, a decrease in the reserve requirement ratio will

The federal funds rate is the interest rate the Fed charges to banks when it lends reserves to them.

Because commodity money is not uniform in quality, there is a tendency

Which of the following items serve as a medium of exchange in the United States? I. $100 cash II. 50 euros III. the balance in your checking account IV. a $1,000 corporate stock that you own

The Fed seldom uses the reserve requirement ratio to influence the money supply. What is the reason for this?

A bank that has no excess reserves

The monetary aggregate, M1, increases when

Money that some authority has declared legal tender is called

When the Fed buys U.S. Treasury bonds from a bank, it increases the supply of reserves by crediting the seller's account at the Fed.

Which of the following is an interest rate that is set directly by the Fed?

Money that has value apart from its use as money is called

When the Fed sells government bonds in the open market, the money supply will increase.

Table 9-1 -Refer to Table 9-1. The money supply measured by M1 is

Debit cards are the electronic equivalent of a check, but neither debit cards nor checks are money.

An activity performed by commercial banks that is not performed by insurance companies is

The Dodd-Frank Wall Street Reform Act was a response to the financial crisis of 2008.

Which of the following is not a function of the Federal Reserve System?