Question 1

The monetary base is the sum of

Accepted Answer

A)  coins, currency, and checkable deposits. 
B)  Federal Reserve notes, coins, and deposits of depository institutions. 
C)  U.S. Treasury notes and other government securities. 
D)  foreign and domestic deposits at the Fed. 
A)  coins, currency, and checkable deposits. 
B)  Federal Reserve notes, coins, and deposits of depository institutions. 
C)  U.S. Treasury notes and other government securities. 
D)  foreign and domestic deposits at the Fed.

Question 2

An increase in the opportunity cost of holding money creates a the money demand curve and an increase in real GDP creates a _ the money demand curve.

Accepted Answer

A)  movement up along; leftward shift of 
B)  rightward shift of; movement down along 
C)  movement up along; rightward shift of 
D)  leftward shift of; movement down along 
A)  movement up along; leftward shift of 
B)  rightward shift of; movement down along 
C)  movement up along; rightward shift of 
D)  leftward shift of; movement down along

Question 3

An open market operation occurs when the buys or sells government securities .

Accepted Answer

A)  a commercial bank; from or to the public 
B)  a commercial bank; from or to the federal government 
C)  Federal Reserve System; from or to the federal government 
D)  Federal Reserve System; in the open market 
A)  a commercial bank; from or to the public 
B)  a commercial bank; from or to the federal government 
C)  Federal Reserve System; from or to the federal government 
D)  Federal Reserve System; in the open market

Question 4

Suppose prices are quoted in dollars and transactions are conducted in pesos. The peso serves as a

Accepted Answer

A)  medium of exchange. 
B)  unit of account. 
C)  store of value. 
D)  all of the above 
A)  medium of exchange. 
B)  unit of account. 
C)  store of value. 
D)  all of the above

Question 5

A $25,000 price tag on a new car is an example of money as

Accepted Answer

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

Question 6

What is the FOMC? Who are the members of the FOMC? What policy does the FOMC decide?

Accepted Answer

The FOMC is the Federal Open Market Comm

Question 7

In the long run, an increase in the quantity of money does not change real GDP but it does raise the price level.

Accepted Answer

A) True 
 B)False

Question 8

If Bank A holds $200 in reserves, deposits are $1000, and the desired reserve ratio is 15 percent, how much are excess reserves?

Accepted Answer

A)  zero, because banks never hold excess reserves 
B)  $200 
C)  $150 
D)  $50 
A)  zero, because banks never hold excess reserves 
B)  $200 
C)  $150 
D)  $50

Question 9

Looking at historical evidence from 1990 to 2005 for the United States and other countries, which of following are true?
I. There is a correlation between the growth rate of the quantity theory of money and the growth r of real GDP.
II. There is a correlation between the growth rate of the quantity theory of money and the inflation

Accepted Answer

A)  Only II is true. 
B)  Only I is true. 
C)  Both I and II are true. 
D)  Neither I or II is true. 
A)  Only II is true. 
B)  Only I is true. 
C)  Both I and II are true. 
D)  Neither I or II is true.

Question 10

Members of the Federal Reserve System's Board of Governors

Accepted Answer

A)  are elected at large by district banks. 
B)  are elected for life. 
C)  are a special subcommittee of the Senate. 
D)  hold 14- year staggered terms. 
A)  are elected at large by district banks. 
B)  are elected for life. 
C)  are a special subcommittee of the Senate. 
D)  hold 14- year staggered terms.

Question 11

Why is the nominal interest rate the opportunity cost of holding money?

Accepted Answer

The nominal interest rate is the opportu

Question 12

If a customer deposits $10,000 in currency into a checking account, the bank's total reserves
)

Accepted Answer

A)  increase 
B)  decrease 
C)  are greater than 100 percent 
D)  do not change 
A)  increase 
B)  decrease 
C)  are greater than 100 percent 
D)  do not change

Question 13

Suppose that the money multiplier is 3. If the monetary base increases by $1 million, the quantity of money will

Accepted Answer

A)  decrease by $3 million. 
B)  increase by $3 million. 
C)  decrease by $300,000. 
D)  increase by $300,000. 
A)  decrease by $3 million. 
B)  increase by $3 million. 
C)  decrease by $300,000. 
D)  increase by $300,000.

Question 14

An increase in the quantity of money leads to a proportional increase in the price level according to the

Accepted Answer

A)  short- run velocity model. 
B)  equation of exchange. 
C)  quantity theory of money. 
D)  short- run theory of inflation. 
A)  short- run velocity model. 
B)  equation of exchange. 
C)  quantity theory of money. 
D)  short- run theory of inflation.

Question 15

According to the quantity theory of money, a 25 percent change in M, the quantity of money, leads to a 25 percent change in

Accepted Answer

A)  V, the velocity of circulation. 
B)  Y, real GDP. 
C)  P, the price level. 
D)  R, the interest rate. 
A)  V, the velocity of circulation. 
B)  Y, real GDP. 
C)  P, the price level. 
D)  R, the interest rate.

Question 16

-Based on the data in the table above, what is the value of M2?

Accepted Answer

A)  $2,950 billion 
B)  $8,587 billion 
C)  $4,400 billion 
D)  $4,187 billion 
A)  $2,950 billion 
B)  $8,587 billion 
C)  $4,400 billion 
D)  $4,187 billion

Question 17

Liquidity is

Accepted Answer

A)  the same thing as a checking deposit. 
B)  the net flow of gold into the U.S. Treasury. 
C)  the property of an asset being instantly convertible into a means of payment with little loss in value. 
D)  the degree of movement in an asset's interest rate. 
A)  the same thing as a checking deposit. 
B)  the net flow of gold into the U.S. Treasury. 
C)  the property of an asset being instantly convertible into a means of payment with little loss in value. 
D)  the degree of movement in an asset's interest rate.

Question 18

Which part of the Federal Reserve System meets every 6 weeks to determine the nation's monetary policy?

Accepted Answer

A)  Board of Governors 
B)  depository institutions such as commercial banks 
C)  Federal Open Market Committee 
D)  the Federal Reserve Banks 
A)  Board of Governors 
B)  depository institutions such as commercial banks 
C)  Federal Open Market Committee 
D)  the Federal Reserve Banks

Question 19

Barter is

Accepted Answer

A)  printing too much money. 
B)  the exchange of goods and services directly for other goods and services. 
C)  another type of money. 
D)  the exchange of goods and services for any type of money. 
A)  printing too much money. 
B)  the exchange of goods and services directly for other goods and services. 
C)  another type of money. 
D)  the exchange of goods and services for any type of money.

Question 20

The money supply, as measured by M1, consists almost entirely of currency.

Accepted Answer

A) True 
 B)False

The monetary base is the sum of

An increase in the opportunity cost of holding money creates a the money demand curve and an increase in real GDP creates a _ the money demand curve.

An open market operation occurs when the buys or sells government securities .

Suppose prices are quoted in dollars and transactions are conducted in pesos. The peso serves as a

A $25,000 price tag on a new car is an example of money as

What is the FOMC? Who are the members of the FOMC? What policy does the FOMC decide?

In the long run, an increase in the quantity of money does not change real GDP but it does raise the price level.

If Bank A holds $200 in reserves, deposits are $1000, and the desired reserve ratio is 15 percent, how much are excess reserves?

Members of the Federal Reserve System's Board of Governors

Why is the nominal interest rate the opportunity cost of holding money?

If a customer deposits $10,000 in currency into a checking account, the bank's total reserves )

Suppose that the money multiplier is 3. If the monetary base increases by $1 million, the quantity of money will

An increase in the quantity of money leads to a proportional increase in the price level according to the

According to the quantity theory of money, a 25 percent change in M, the quantity of money, leads to a 25 percent change in

-Based on the data in the table above, what is the value of M2?

Liquidity is

Which part of the Federal Reserve System meets every 6 weeks to determine the nation's monetary policy?

Barter is

The money supply, as measured by M1, consists almost entirely of currency.

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 monetary base is the sum of

An increase in the opportunity cost of holding money creates a the money demand curve and an increase in real GDP creates a _ the money demand curve.

An open market operation occurs when the buys or sells government securities .

Suppose prices are quoted in dollars and transactions are conducted in pesos. The peso serves as a

A $25,000 price tag on a new car is an example of money as

What is the FOMC? Who are the members of the FOMC? What policy does the FOMC decide?

In the long run, an increase in the quantity of money does not change real GDP but it does raise the price level.

If Bank A holds $200 in reserves, deposits are $1000, and the desired reserve ratio is 15 percent, how much are excess reserves?

Members of the Federal Reserve System's Board of Governors

Why is the nominal interest rate the opportunity cost of holding money?

If a customer deposits $10,000 in currency into a checking account, the bank's total reserves )

Suppose that the money multiplier is 3. If the monetary base increases by $1 million, the quantity of money will

An increase in the quantity of money leads to a proportional increase in the price level according to the

According to the quantity theory of money, a 25 percent change in M, the quantity of money, leads to a 25 percent change in

-Based on the data in the table above, what is the value of M2?

Liquidity is

Which part of the Federal Reserve System meets every 6 weeks to determine the nation's monetary policy?

Barter is

The money supply, as measured by M1, consists almost entirely of currency.

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