Question 1

The Federal Open Market Committee

Accepted Answer

A)  is headed by the president of the New York Federal Reserve Bank. 
B)  consists of the Fed chairman and the 12 regional bank presidents. 
C)  meets every week to review the state of the economy. 
D)  is the main policy- making organ of the Federal Reserve. 
A)  is headed by the president of the New York Federal Reserve Bank. 
B)  consists of the Fed chairman and the 12 regional bank presidents. 
C)  meets every week to review the state of the economy. 
D)  is the main policy- making organ of the Federal Reserve.

Question 2

Nicholas is saving money collected from his paper route in order to purchase a new bicycle. His saving represents using money as

Accepted Answer

A)  a store of value. 
B)  an unit of account. 
C)  a medium of exchange. 
D)  none of the above 
A)  a store of value. 
B)  an unit of account. 
C)  a medium of exchange. 
D)  none of the above

Question 3

In 2006, the price level in the United States. was 202. By 2007, it had increased to 207. As a result, the real demand for money and the demand for money curve over the 12 months.

Accepted Answer

A)  decreased; shifted leftward 
B)  increased; shifted rightward 
C)  increased; shifted leftward 
D)  did not change; did not shift 
A)  decreased; shifted leftward 
B)  increased; shifted rightward 
C)  increased; shifted leftward 
D)  did not change; did not shift

Question 4

The U.S. historical evidence

Accepted Answer

A)  shows that a higher inflation rate causes an increase in the money growth rate. 
B)  does not support the quantity theory of money. 
C)  demonstrates that there is no correlation between the money growth rate and inflation. 
D)  generally supports the quantity theory of money in the long run. 
A)  shows that a higher inflation rate causes an increase in the money growth rate. 
B)  does not support the quantity theory of money. 
C)  demonstrates that there is no correlation between the money growth rate and inflation. 
D)  generally supports the quantity theory of money in the long run.

Question 5

If M = $100, Y = $500 and P = $2, then V is equal to

Accepted Answer

A)  50. 
B)  10. 
C) .10. 
D)  1.0. 
A)  50. 
B)  10. 
C) .10. 
D)  1.0.

Question 6

"Banks make a profit by paying depositors a high rate to attract funds and making loans at a low rate to encourage borrowing." Is the previous statement correct or not?

Accepted Answer

The statement is incorrect. Ba

Question 7

Which of the following statements is correct about the commercial banks' reserves kept as deposits at the Federal Reserve?

Accepted Answer

A)  Commercial banks don't have access to their reserves at the Fed. 
B)  Commercial banks write checks to other banks on their reserve accounts at the Fed. 
C)  Commercial banks can make loans to commercial customers out of these reserves. 
D)  The reserves are the banks' only assets. 
A)  Commercial banks don't have access to their reserves at the Fed. 
B)  Commercial banks write checks to other banks on their reserve accounts at the Fed. 
C)  Commercial banks can make loans to commercial customers out of these reserves. 
D)  The reserves are the banks' only assets.

Question 8

When the Fed conducts an open market operation by purchasing securities from a bank, .

Accepted Answer

A)  the bank's deposits increase but its reserves do not change 
B)  the bank's reserves increase 
C)  public holdings of securities increase 
D)  the bank's deposits increase but its reserves decrease 
A)  the bank's deposits increase but its reserves do not change 
B)  the bank's reserves increase 
C)  public holdings of securities increase 
D)  the bank's deposits increase but its reserves decrease

Question 9

The Federal Open Market Committee (FOMC) is composed of

Accepted Answer

A)  representatives from the governors of all 50 states. 
B)  the Board of Governors, the Vice- President of the United States, and the Secretary of Treasury for the United States. 
C)  the 12 Presidents of the Federal Reserve regional banks. 
D)  Presidents of 5 Federal Reserve regional banks and the Board of Governors. 
A)  representatives from the governors of all 50 states. 
B)  the Board of Governors, the Vice- President of the United States, and the Secretary of Treasury for the United States. 
C)  the 12 Presidents of the Federal Reserve regional banks. 
D)  Presidents of 5 Federal Reserve regional banks and the Board of Governors.

Question 10

What is the discount rate?

Accepted Answer

The discount rate is the inter

Question 11

-The figure above illustrates the effect of

Accepted Answer

A)  a decrease in real GDP. 
B)  an increase in the monetary base. 
C)  an increase in real GDP. 
D)  a decrease in the monetary base. 
A)  a decrease in real GDP. 
B)  an increase in the monetary base. 
C)  an increase in real GDP. 
D)  a decrease in the monetary base.

Question 12

In the United States today, money consists of

Accepted Answer

A)  currency and deposits at banks. 
B)  currency only. 
C)  deposits at banks only. 
D)  coins only. 
A)  currency and deposits at banks. 
B)  currency only. 
C)  deposits at banks only. 
D)  coins only.

Question 13

What factors lead to changes in the real quantity demanded of money and what factors lead to changes in the real demand for money?

Accepted Answer

Changes in the interest rate c

Question 14

Credit cards are

Accepted Answer

A)  money and are the largest part of the money supply. 
B)  not money. 
C)  not money because they are not made of paper. 
D)  money but are not a large part of the money supply. 
A)  money and are the largest part of the money supply. 
B)  not money. 
C)  not money because they are not made of paper. 
D)  money but are not a large part of the money supply.

Question 15

In 2006, real GDP in Belgium grew at a 3 percent rate and inflation was 1.8 percent while the population did not change. As a result, there was the demand for money curve in Belgium.

Accepted Answer

A)  a movement up along 
B)  a leftward shift of the 
C)  a rightward shift of the 
D)  no change in 
A)  a movement up along 
B)  a leftward shift of the 
C)  a rightward shift of the 
D)  no change in

Question 16

According to the quantity theory of money, money growth and inflation are

Accepted Answer

A)  negatively correlated. 
B)  positively if the inflation rate is positive and negatively correlated if the inflation rate is negative. 
C)  positively correlated. 
D)  independent, that is, not correlated. 
A)  negatively correlated. 
B)  positively if the inflation rate is positive and negatively correlated if the inflation rate is negative. 
C)  positively correlated. 
D)  independent, that is, not correlated.

Question 17

-The table shows the balance sheet for Ralph's Bank. If the desired reserve ratio is 15 percent, the maximum additional amount that Ralph's Bank can loan is equal to _ _.

Accepted Answer

A)  $50 
B)  $500 
C)  $2,500 
D)  $3,000 
A)  $50 
B)  $500 
C)  $2,500 
D)  $3,000

Question 18

List and discuss the three tools available to the Federal Reserve System.

Accepted Answer

The three tools are the required reserve

Question 19

Nominal GDP, PY, is $7.5 trillion. The quantity of money is $3 trillion. The velocity of circulation is

Accepted Answer

A)  22.5. 
B)  3. 
C)  2.5. 
D)  10.5. 
A)  22.5. 
B)  3. 
C)  2.5. 
D)  10.5.

Question 20

After you finish your degree, suppose your salary is $52,000 per year. This is an example of using the function of money known as

Accepted Answer

A)  a store of value. 
B)  a unit of account. 
C)  M1. 
D)  medium of exchange. 
A)  a store of value. 
B)  a unit of account. 
C)  M1. 
D)  medium of exchange.

The Federal Open Market Committee

Nicholas is saving money collected from his paper route in order to purchase a new bicycle. His saving represents using money as

In 2006, the price level in the United States. was 202. By 2007, it had increased to 207. As a result, the real demand for money and the demand for money curve over the 12 months.

The U.S. historical evidence

If M = $100, Y = $500 and P = $2, then V is equal to

"Banks make a profit by paying depositors a high rate to attract funds and making loans at a low rate to encourage borrowing." Is the previous statement correct or not?

Which of the following statements is correct about the commercial banks' reserves kept as deposits at the Federal Reserve?

When the Fed conducts an open market operation by purchasing securities from a bank, .

The Federal Open Market Committee (FOMC) is composed of

What is the discount rate?

-The figure above illustrates the effect of

In the United States today, money consists of

What factors lead to changes in the real quantity demanded of money and what factors lead to changes in the real demand for money?

Credit cards are

In 2006, real GDP in Belgium grew at a 3 percent rate and inflation was 1.8 percent while the population did not change. As a result, there was the demand for money curve in Belgium.

According to the quantity theory of money, money growth and inflation are

-The table shows the balance sheet for Ralph's Bank. If the desired reserve ratio is 15 percent, the maximum additional amount that Ralph's Bank can loan is equal to _ _.

List and discuss the three tools available to the Federal Reserve System.

Nominal GDP, PY, is $7.5 trillion. The quantity of money is $3 trillion. The velocity of circulation is

After you finish your degree, suppose your salary is $52,000 per year. This is an example of using the function of money known as

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 Federal Open Market Committee

Nicholas is saving money collected from his paper route in order to purchase a new bicycle. His saving represents using money as

In 2006, the price level in the United States. was 202. By 2007, it had increased to 207. As a result, the real demand for money and the demand for money curve over the 12 months.

The U.S. historical evidence

If M = $100, Y = $500 and P = $2, then V is equal to

"Banks make a profit by paying depositors a high rate to attract funds and making loans at a low rate to encourage borrowing." Is the previous statement correct or not?

Which of the following statements is correct about the commercial banks' reserves kept as deposits at the Federal Reserve?

When the Fed conducts an open market operation by purchasing securities from a bank, .

The Federal Open Market Committee (FOMC) is composed of

What is the discount rate?

-The figure above illustrates the effect of

In the United States today, money consists of

What factors lead to changes in the real quantity demanded of money and what factors lead to changes in the real demand for money?

Credit cards are

In 2006, real GDP in Belgium grew at a 3 percent rate and inflation was 1.8 percent while the population did not change. As a result, there was the demand for money curve in Belgium.

According to the quantity theory of money, money growth and inflation are

-The table shows the balance sheet for Ralph's Bank. If the desired reserve ratio is 15 percent, the maximum additional amount that Ralph's Bank can loan is equal to _ _.

List and discuss the three tools available to the Federal Reserve System.

Nominal GDP, PY, is $7.5 trillion. The quantity of money is $3 trillion. The velocity of circulation is

After you finish your degree, suppose your salary is $52,000 per year. This is an example of using the function of money known as

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