Question 1

The opportunity cost of holding money is

Accepted Answer

A)  the price level. 
B)  the interest rate. 
C)  the inverse of the price level multiplied by the interest rate. 
D)  real GDP. 
A)  the price level. 
B)  the interest rate. 
C)  the inverse of the price level multiplied by the interest rate. 
D)  real GDP.

Question 2

When the monetary base increases by $4 billion, the quantity of money increases by $10 billion. Thus, the money multiplier equals

Accepted Answer

A)  2.5 
B)  0.4 
C)  40.0 
D)  none of the above 
A)  2.5 
B)  0.4 
C)  40.0 
D)  none of the above

Question 3

What factors affect the demand for money?

Accepted Answer

Four factors influence the demand for mo

Question 4

In August 2007, Sun Trust Bank has $83 million in loans and $114 million in M1 deposits. If Sun Trust is holding $4 million in reserves, the bank's reserve ratio is

Accepted Answer

A)  $31 million. 
B)  3.5 percent. 
C)  4.8 percent 
D)  72.8 percent. 
A)  $31 million. 
B)  3.5 percent. 
C)  4.8 percent 
D)  72.8 percent.

Question 5

Which of the following is part of M2?

Accepted Answer

A)  credit cards 
B)  currency held inside a bank 
C)  checks 
D)  None of these are part of M1 or M2. 
A)  credit cards 
B)  currency held inside a bank 
C)  checks 
D)  None of these are part of M1 or M2.

Question 6

Which of the following affects the amount of money a person is willing to hold?

Accepted Answer

A)  The use of credit cards increases. 
B)  The interest rate that you earn on your savings account increases. 
C)  The price level rises from 103 to 107. 
D)  All of the above are correct. 
A)  The use of credit cards increases. 
B)  The interest rate that you earn on your savings account increases. 
C)  The price level rises from 103 to 107. 
D)  All of the above are correct.

Question 7

The largest component of M2 is

Accepted Answer

A)  travelers checks 
B)  savings deposits 
C)  money market mutual funds 
D)  currency 
A)  travelers checks 
B)  savings deposits 
C)  money market mutual funds 
D)  currency

Question 8

Using a credit card can best be likened to

Accepted Answer

A)  a barter exchange. 
B)  writing a check on your demand deposit account. 
C)  taking out a loan. 
D)  using any other form of money because you immediately get to take the goods home. 
A)  a barter exchange. 
B)  writing a check on your demand deposit account. 
C)  taking out a loan. 
D)  using any other form of money because you immediately get to take the goods home.

Question 9

Which of the following is the most liquid?

Accepted Answer

A)  gold. 
B)  the U.S. dollars that your professor used this morning to buy breakfast. 
C)  the pencil or pen in your hand right now. 
D)  your credit card. 
A)  gold. 
B)  the U.S. dollars that your professor used this morning to buy breakfast. 
C)  the pencil or pen in your hand right now. 
D)  your credit card.

Question 10

U.S. currency _.

Accepted Answer

A)  is the sum of M1 and M2 
B)  includes tobacco 
C)  is less efficient than barter 
D)  is composed of the bills and coins that we use today 
A)  is the sum of M1 and M2 
B)  includes tobacco 
C)  is less efficient than barter 
D)  is composed of the bills and coins that we use today

Question 11

The required reserve ratio is the ratio of reserves to required by banking regulations.

Accepted Answer

A)  profits 
B)  loans 
C)  deposits 
D)  cash 
A)  profits 
B)  loans 
C)  deposits 
D)  cash

Question 12

The unit of account

Accepted Answer

A)  is a type of value stored within all assets. 
B)  is an agreed measure for stating the prices of goods and services in an economy. 
C)  is a type of accounting of how many currency units there are in an economy. 
D)  is an accounting of the total units of goods and services produced in an economy. 
A)  is a type of value stored within all assets. 
B)  is an agreed measure for stating the prices of goods and services in an economy. 
C)  is a type of accounting of how many currency units there are in an economy. 
D)  is an accounting of the total units of goods and services produced in an economy.

Question 13

What is barter? What is a double coincidence of wants? How does the existence of money affect barter?

Accepted Answer

Barter is the direct exchange of one goo

Question 14

The banking system in the United States creates money through the combination of excess reserves and

Accepted Answer

A)  banks loaning excess reserves. 
B)  banks' assets being more than their liabilities. 
C)  stringent Federal Reserve regulations. 
D)  commodity money. 
A)  banks loaning excess reserves. 
B)  banks' assets being more than their liabilities. 
C)  stringent Federal Reserve regulations. 
D)  commodity money.

Question 15

The table below shows data (in millions) for Sun Trust Banks in September 2007 and September 200   The data show that Sun Trust

Accepted Answer

A)  increased its reserve ratio to 6.4 percent over the 12 months. 
B)  has fewer excess reserves in 2008. 
C)  faced a higher currency drain ratio in 2008. 
D)  increased its reserve ratio to 5.3 percent over the 12 months. 
A)  increased its reserve ratio to 6.4 percent over the 12 months. 
B)  has fewer excess reserves in 2008. 
C)  faced a higher currency drain ratio in 2008. 
D)  increased its reserve ratio to 5.3 percent over the 12 months.

Question 16

An individual wanting the most liquid asset possible will hold

Accepted Answer

A)  a savings account. 
B)  checkable deposits at a bank. 
C)  currency. 
D)  U.S government bonds. 
A)  a savings account. 
B)  checkable deposits at a bank. 
C)  currency. 
D)  U.S government bonds.

Question 17

The required reserve ratio

Accepted Answer

A)  is the amount of money that banks require borrowers to reserve in their accounts. 
B)  increases when withdrawals from a bank are made. 
C)  is the fraction of a bank's total deposits that are required to be held in reserve. 
D)  is higher for banks that make riskier loans. 
A)  is the amount of money that banks require borrowers to reserve in their accounts. 
B)  increases when withdrawals from a bank are made. 
C)  is the fraction of a bank's total deposits that are required to be held in reserve. 
D)  is higher for banks that make riskier loans.

Question 18

How does an increase in real GDP affect the demand for money curve?

Accepted Answer

An increase in real

Question 19

Open market operations are

Accepted Answer

A)  buying and selling U.S. government securities by citizens, banks and the Fed. 
B)  selling new government securities by the U.S. Treasury in order to finance a budget deficit. 
C)  selling new government securities by the U.S. Treasury in order to increase the quantity of money. 
D)  buying and selling U.S. government securities by the Fed. 
A)  buying and selling U.S. government securities by citizens, banks and the Fed. 
B)  selling new government securities by the U.S. Treasury in order to finance a budget deficit. 
C)  selling new government securities by the U.S. Treasury in order to increase the quantity of money. 
D)  buying and selling U.S. government securities by the Fed.

Question 20

A savings bank is a depository institution that .

Accepted Answer

A)  is owned by a social or economic group 
B)  sells shares which it uses to purchase shares in U.S. Treasury bills 
C)  makes mostly consumer loans 
D)  makes mostly mortgage loans 
A)  is owned by a social or economic group 
B)  sells shares which it uses to purchase shares in U.S. Treasury bills 
C)  makes mostly consumer loans 
D)  makes mostly mortgage loans

The opportunity cost of holding money is

When the monetary base increases by $4 billion, the quantity of money increases by $10 billion. Thus, the money multiplier equals

What factors affect the demand for money?

In August 2007, Sun Trust Bank has $83 million in loans and $114 million in M1 deposits. If Sun Trust is holding $4 million in reserves, the bank's reserve ratio is

Which of the following is part of M2?

Which of the following affects the amount of money a person is willing to hold?

The largest component of M2 is

Using a credit card can best be likened to

Which of the following is the most liquid?

U.S. currency _.

The required reserve ratio is the ratio of reserves to required by banking regulations.

The unit of account

What is barter? What is a double coincidence of wants? How does the existence of money affect barter?

The banking system in the United States creates money through the combination of excess reserves and

The table below shows data (in millions) for Sun Trust Banks in September 2007 and September 200 The data show that Sun Trust

An individual wanting the most liquid asset possible will hold

The required reserve ratio

How does an increase in real GDP affect the demand for money curve?

Open market operations are

A savings bank is a depository institution that .

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 8: Money, the Price Level, and Inflation

The opportunity cost of holding money is

When the monetary base increases by $4 billion, the quantity of money increases by $10 billion. Thus, the money multiplier equals

What factors affect the demand for money?

In August 2007, Sun Trust Bank has $83 million in loans and $114 million in M1 deposits. If Sun Trust is holding $4 million in reserves, the bank's reserve ratio is

Which of the following is part of M2?

Which of the following affects the amount of money a person is willing to hold?

The largest component of M2 is

Using a credit card can best be likened to

Which of the following is the most liquid?

U.S. currency _.

The required reserve ratio is the ratio of reserves to required by banking regulations.

The unit of account

What is barter? What is a double coincidence of wants? How does the existence of money affect barter?

The banking system in the United States creates money through the combination of excess reserves and

The table below shows data (in millions) for Sun Trust Banks in September 2007 and September 200 The data show that Sun Trust

An individual wanting the most liquid asset possible will hold

The required reserve ratio

How does an increase in real GDP affect the demand for money curve?

Open market operations are

A savings bank is a depository institution that .

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters