Question 1

If real GDP is $10 trillion, the price level is 120, and the quantity of money is $4 trillion, what is the velocity of circulation?

Accepted Answer

A)  3 
B)  2.5 
C)  25 
D)  30 
A)  3 
B)  2.5 
C)  25 
D)  30

Question 2

On the Fed's balance sheet, assets include

Accepted Answer

A)  depository institutions deposits at the Federal Reserve and loans to depository institutions. 
B)  Federal Reserve notes and loans to depository institutions. 
C)  U.S. government securities and loans to depository institutions. 
D)  Federal Reserve notes and depository institutions' deposits at the Federal Reserve. 
A)  depository institutions deposits at the Federal Reserve and loans to depository institutions. 
B)  Federal Reserve notes and loans to depository institutions. 
C)  U.S. government securities and loans to depository institutions. 
D)  Federal Reserve notes and depository institutions' deposits at the Federal Reserve.

Question 3

In an economy, there is $200 million in currency held outside banks, $100 million in traveler's checks, $250 million in currency held inside the banks, $300 million in checking deposits, and $600 million in savings deposits. The value of M1 is _ .

Accepted Answer

A)  $600 million 
B)  $1,150 million 
C)  $1,200 million 
D)  $750 million 
A)  $600 million 
B)  $1,150 million 
C)  $1,200 million 
D)  $750 million

Question 4

The First National Bank of Townville has $125,000 in U.S. government securities, $200,000 in savings accounts,
$300,000 in checking accounts, $50,000 in its reserve account at the Fed, $10,000 of currency in its vault, and loans of $250,000. What is the amount of its reserves?

Accepted Answer

Reserves include the bank's de

Question 5

-In the above figure, suppose the economy is at point a. If there is an increase in real GDP, there is a movement to point such as

Accepted Answer

A)  b. 
B)  d. 
C)  c. 
D)  e. 
A)  b. 
B)  d. 
C)  c. 
D)  e.

Question 6

-The above table has the balance of the University National Bank. All figures are in millions of dollars. The desired reserve ratio is 20 percent. What is the value of excess reserves held by the University National Bank?

Accepted Answer

A)  $760 million 
B)  $320 million 
C)  $120 million 
D)  $232 million 
A)  $760 million 
B)  $320 million 
C)  $120 million 
D)  $232 million

Question 7

A money market mutual fund is

Accepted Answer

A)  a time deposit of more than $100,000. 
B)  essentially the same as a demand deposit account. 
C)  a depository institution that sells shares and buys securities such as U.S. Treasury bills. 
D)  a time deposit of $100,000 or less. 
A)  a time deposit of more than $100,000. 
B)  essentially the same as a demand deposit account. 
C)  a depository institution that sells shares and buys securities such as U.S. Treasury bills. 
D)  a time deposit of $100,000 or less.

Question 8

How would a widespread adoption of credit cards affect the demand for money and the demand for money curve?

Accepted Answer

The widespread adoption of cre

Question 9

The money multiplier is

Accepted Answer

A)  the amount by which a change in the quantity of money is multiplied to determine the change in the monetary base. 
B)  equal to bank reserves divided by the change in the monetary base. 
C)  the amount by which a change in the monetary base is multiplied to determine the change in the quantity of money. 
D)  equal to bank reserves divided by the change the quantity of money. 
A)  the amount by which a change in the quantity of money is multiplied to determine the change in the monetary base. 
B)  equal to bank reserves divided by the change in the monetary base. 
C)  the amount by which a change in the monetary base is multiplied to determine the change in the quantity of money. 
D)  equal to bank reserves divided by the change the quantity of money.

Question 10

Which of the following institutions is NOT part of the structure of the Federal Reserve system?

Accepted Answer

A)  The Federal Open Market Committee 
B)  The Federal Reserve Banks 
C)  The Federal Government 
D)  The Board of Governors 
A)  The Federal Open Market Committee 
B)  The Federal Reserve Banks 
C)  The Federal Government 
D)  The Board of Governors

Question 11

What is the opportunity cost of holding money?

Accepted Answer

The opportunity cost

Question 12

-In the figure above, an increase in the monetary base would create a change such as a

Accepted Answer

A)  shift from the supply of money curve MS0 to the supply of money curve MS1. 
B)  shift from the supply of money curve MS1 to the supply of money curve MS0. 
C)  movement from point b to point a along the supply of money curve MS0. 
D)  movement from point a to point b along the supply of money curve MS0. 
A)  shift from the supply of money curve MS0 to the supply of money curve MS1. 
B)  shift from the supply of money curve MS1 to the supply of money curve MS0. 
C)  movement from point b to point a along the supply of money curve MS0. 
D)  movement from point a to point b along the supply of money curve MS0.

Question 13

The Board of Governors of the Federal Reserve System does NOT

Accepted Answer

A)  consist of members whose appointments have been approved by the Senate. 
B)  include the presidents of the twelve Federal Reserve Banks. 
C)  consist of seven members with fourteen- year terms. 
D)  utilize a system of rotations so that a position comes open every two years. 
A)  consist of members whose appointments have been approved by the Senate. 
B)  include the presidents of the twelve Federal Reserve Banks. 
C)  consist of seven members with fourteen- year terms. 
D)  utilize a system of rotations so that a position comes open every two years.

Question 14

Which of the following is NOT a function of money?

Accepted Answer

A)  unit of account 
B)  barter 
C)  store of value 
D)  medium of exchange 
A)  unit of account 
B)  barter 
C)  store of value 
D)  medium of exchange

Question 15

Read the following statements and determine if they are true or false.
I. According to the quantity theory of money, an increase in the growth rate of the quantity of mo increases inflation in the long run.
II. Historical and international data show that there is no correlation between inflation and money growth.

Accepted Answer

A)  I and II are both true. 
B)  I is true and II is false. 
C)  I is false and II is true. 
D)  I and II are both false. 
A)  I and II are both true. 
B)  I is true and II is false. 
C)  I is false and II is true. 
D)  I and II are both false.

Question 16

M1 includes

Accepted Answer

A)  currency, checking deposits and traveler's checks. 
B)  money market mutual funds, stocks and bonds. 
C)  money, checking deposits and traveler's checks. 
D)  money, stocks and bonds. 
A)  currency, checking deposits and traveler's checks. 
B)  money market mutual funds, stocks and bonds. 
C)  money, checking deposits and traveler's checks. 
D)  money, stocks and bonds.

Question 17

If there is an excess quantity of money, people will buy bonds.

Accepted Answer

A) True 
 B)False

Question 18

Controlling the quantity of money and interest rates to influence aggregate economic activity is called

Accepted Answer

A)  bank antitrust policy. 
B)  monetary policy. 
C)  fiscal policy. 
D)  foreign policy. 
A)  bank antitrust policy. 
B)  monetary policy. 
C)  fiscal policy. 
D)  foreign policy.

Question 19

Which of the following is included in M1?

Accepted Answer

A)  the $200 loan you arranged to purchase your textbooks 
B)  the $200 you charged on your credit card to purchase your textbooks 
C)  the $200 check you wrote to purchase your textbooks 
D)  the $200 in cash you used to purchase your textbooks 
A)  the $200 loan you arranged to purchase your textbooks 
B)  the $200 you charged on your credit card to purchase your textbooks 
C)  the $200 check you wrote to purchase your textbooks 
D)  the $200 in cash you used to purchase your textbooks

Question 20

A bank reports reserves of $100,000, government securities of $50,000, loans of $750,000, and checkable deposits of $900,000. The desired reserve ratio is 10 percent. What is the amount of excess reserves for this bank? Show your work.

Accepted Answer

Excess reserves equal the actual reserve

If real GDP is $10 trillion, the price level is 120, and the quantity of money is $4 trillion, what is the velocity of circulation?

On the Fed's balance sheet, assets include

In an economy, there is $200 million in currency held outside banks, $100 million in traveler's checks, $250 million in currency held inside the banks, $300 million in checking deposits, and $600 million in savings deposits. The value of M1 is _ .

The First National Bank of Townville has $125,000 in U.S. government securities, $200,000 in savings accounts, $300,000 in checking accounts, $50,000 in its reserve account at the Fed, $10,000 of currency in its vault, and loans of $250,000. What is the amount of its reserves?

-In the above figure, suppose the economy is at point a. If there is an increase in real GDP, there is a movement to point such as

-The above table has the balance of the University National Bank. All figures are in millions of dollars. The desired reserve ratio is 20 percent. What is the value of excess reserves held by the University National Bank?

A money market mutual fund is

How would a widespread adoption of credit cards affect the demand for money and the demand for money curve?

The money multiplier is

Which of the following institutions is NOT part of the structure of the Federal Reserve system?

What is the opportunity cost of holding money?

-In the figure above, an increase in the monetary base would create a change such as a

The Board of Governors of the Federal Reserve System does NOT

Which of the following is NOT a function of money?

M1 includes

If there is an excess quantity of money, people will buy bonds.

Controlling the quantity of money and interest rates to influence aggregate economic activity is called

Which of the following is included in M1?

A bank reports reserves of $100,000, government securities of $50,000, loans of $750,000, and checkable deposits of $900,000. The desired reserve ratio is 10 percent. What is the amount of excess reserves for this bank? Show your work.

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

If real GDP is $10 trillion, the price level is 120, and the quantity of money is $4 trillion, what is the velocity of circulation?

On the Fed's balance sheet, assets include

In an economy, there is $200 million in currency held outside banks, $100 million in traveler's checks, $250 million in currency held inside the banks, $300 million in checking deposits, and $600 million in savings deposits. The value of M1 is _ .

The First National Bank of Townville has $125,000 in U.S. government securities, $200,000 in savings accounts, $300,000 in checking accounts, $50,000 in its reserve account at the Fed, $10,000 of currency in its vault, and loans of $250,000. What is the amount of its reserves?

-In the above figure, suppose the economy is at point a. If there is an increase in real GDP, there is a movement to point such as

-The above table has the balance of the University National Bank. All figures are in millions of dollars. The desired reserve ratio is 20 percent. What is the value of excess reserves held by the University National Bank?

A money market mutual fund is

How would a widespread adoption of credit cards affect the demand for money and the demand for money curve?

The money multiplier is

Which of the following institutions is NOT part of the structure of the Federal Reserve system?

What is the opportunity cost of holding money?

-In the figure above, an increase in the monetary base would create a change such as a

The Board of Governors of the Federal Reserve System does NOT

Which of the following is NOT a function of money?

M1 includes

If there is an excess quantity of money, people will buy bonds.

Controlling the quantity of money and interest rates to influence aggregate economic activity is called

Which of the following is included in M1?

A bank reports reserves of $100,000, government securities of $50,000, loans of $750,000, and checkable deposits of $900,000. The desired reserve ratio is 10 percent. What is the amount of excess reserves for this bank? Show your work.

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