Question 1

Which of the following institutions is NOT a depository institution?

Accepted Answer

A)  a thrift institution, such as a savings and loan association 
B)  a commercial bank 
C)  a money market mutual fund 
D)  the U.S. Treasury 
A)  a thrift institution, such as a savings and loan association 
B)  a commercial bank 
C)  a money market mutual fund 
D)  the U.S. Treasury

Question 2

Are credit cards or debit cards money? Explain your answer.

Accepted Answer

Neither credit cards nor debit cards are

Question 3

A bank can only make a loan if it has

Accepted Answer

A)  reserves equal to its deposits. 
B)  permission from the Federal Reserve. 
C)  excess reserves. 
D)  a creditworthy customer willing to pay a high interest rate. 
A)  reserves equal to its deposits. 
B)  permission from the Federal Reserve. 
C)  excess reserves. 
D)  a creditworthy customer willing to pay a high interest rate.

Question 4

Explain the process by which the banking system creates money.

Accepted Answer

When a bank gains excess reserves, it us

Question 5

The velocity of circulation is

Accepted Answer

A)  constant. 
B)  the average number of times a dollar of money is used in a year to buy goods and services in GDP. 
C)  the changes in the purchasing power of money over a given time period. 
D)  the rate of change of the GDP deflator. 
A)  constant. 
B)  the average number of times a dollar of money is used in a year to buy goods and services in GDP. 
C)  the changes in the purchasing power of money over a given time period. 
D)  the rate of change of the GDP deflator.

Question 6

In September 2007, Regions Bank held $3 million in reserves against M1 deposits and made $83 million in loans. Between September 2007 and September 2008, deposits decreased from $114 million to $95 million. If Regions Bank wants to maintain its desired reserve ratio in 2008, it will

Accepted Answer

A)  definitely make more loans. 
B)  cannot make more loans. 
C)  decrease its reserves. 
D)  increase its reserves. 
A)  definitely make more loans. 
B)  cannot make more loans. 
C)  decrease its reserves. 
D)  increase its reserves.

Question 7

The Chairman of the Fed is appointed by .

Accepted Answer

A)  the President of the United States 
B)  Congress 
C)  the U.S. Senate 
D)  the Board of Governors of the Federal Reserve System 
A)  the President of the United States 
B)  Congress 
C)  the U.S. Senate 
D)  the Board of Governors of the Federal Reserve System

Question 8

Define money and list its functions.

Accepted Answer

Money is any commodity or toke

Question 9

If people are holding more money than they would willingly hold, they will _ bonds. The price of a bond will and the interest rate will .

Accepted Answer

A)  sell; rise; fall 
B)  sell; fall; rise 
C)  purchase; fall; rise 
D)  purchase; rise; fall 
A)  sell; rise; fall 
B)  sell; fall; rise 
C)  purchase; fall; rise 
D)  purchase; rise; fall

Question 10

The main policy- making organ of the Federal Reserve System is the

Accepted Answer

A)  Federal Open Market Committee. 
B)  Joint Congressional Committee on Monetary Policy. 
C)  Federal Reserve bank presidents. 
D)  Board of Governors. 
A)  Federal Open Market Committee. 
B)  Joint Congressional Committee on Monetary Policy. 
C)  Federal Reserve bank presidents. 
D)  Board of Governors.

Question 11

The quantity of money that people choose to hold depends on which of the following?
I. The price level.
II. Financial innovation.
III. The exchange rate.

Accepted Answer

A)  I and III 
B)  I, II, and III 
C)  I and II 
D)  I only 
A)  I and III 
B)  I, II, and III 
C)  I and II 
D)  I only

Question 12

A bank's required reserves are calculated by multiplying .

Accepted Answer

A)  the sum of its deposits and cash in its vault by the reserve ratio 
B)  the gold in its vault by the reserve ratio 
C)  its deposits by the required reserve ratio 
D)  cash in its vault by the required reserve ratio 
A)  the sum of its deposits and cash in its vault by the reserve ratio 
B)  the gold in its vault by the reserve ratio 
C)  its deposits by the required reserve ratio 
D)  cash in its vault by the required reserve ratio

Question 13

During periods of inflation, which function of money is most severely affected?

Accepted Answer

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

Question 14

Which of the following is NOT a monetary policy tool?

Accepted Answer

A)  last resort loans 
B)  open market operations 
C)  federal funds rate 
D)  required reserve ratio 
A)  last resort loans 
B)  open market operations 
C)  federal funds rate 
D)  required reserve ratio

Question 15

How does a currency drain affect the money multiplier?

Accepted Answer

If the currency drain is zero so that al

Question 16

Pat easily compares the prices of several vacuum cleaners to find the best value. This comparison represents the use of money as

Accepted Answer

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

Question 17

When the interest rate is above the equilibrium interest rate there is an

Accepted Answer

A)  excess demand for money and people will sell bonds. 
B)  excess quantity of money and people will buy bonds. 
C)  excess demand for money and people will buy bonds. 
D)  excess quantity of money and people will sell bonds. 
A)  excess demand for money and people will sell bonds. 
B)  excess quantity of money and people will buy bonds. 
C)  excess demand for money and people will buy bonds. 
D)  excess quantity of money and people will sell bonds.

Question 18

Suppose a bank has $1,500,000 in deposits and the desired reserve ratio is 12 percent. If the bank is currently holding $200,000 in reserves, the excess reserves are equal to

Accepted Answer

A)  zero. 
B)  $20,000. 
C)  $40,000. 
D)  $120,000. 
A)  zero. 
B)  $20,000. 
C)  $40,000. 
D)  $120,000.

Question 19

The table below shows data for Brazil.
 
Assuming the rate of velocity change is constant, the money growth rate in Brazil was

Accepted Answer

A)  9.2 percent in 2007. 
B)  1.7 percent in 2007. 
C)  0.4 percent in 2006. 
D)  8 percent in 2006. 
A)  9.2 percent in 2007. 
B)  1.7 percent in 2007. 
C)  0.4 percent in 2006. 
D)  8 percent in 2006.

Question 20

"By definition, all parts of M2 are money." Is the previous statement correct or not? Explain your answer.

Accepted Answer

The statement is incorrect. Many of the

Which of the following institutions is NOT a depository institution?

Are credit cards or debit cards money? Explain your answer.

A bank can only make a loan if it has

Explain the process by which the banking system creates money.

The velocity of circulation is

In September 2007, Regions Bank held $3 million in reserves against M1 deposits and made $83 million in loans. Between September 2007 and September 2008, deposits decreased from $114 million to $95 million. If Regions Bank wants to maintain its desired reserve ratio in 2008, it will

The Chairman of the Fed is appointed by .

Define money and list its functions.

If people are holding more money than they would willingly hold, they will _ bonds. The price of a bond will and the interest rate will .

The main policy- making organ of the Federal Reserve System is the

The quantity of money that people choose to hold depends on which of the following? I. The price level. II. Financial innovation. III. The exchange rate.

A bank's required reserves are calculated by multiplying .

During periods of inflation, which function of money is most severely affected?

Which of the following is NOT a monetary policy tool?

How does a currency drain affect the money multiplier?

Pat easily compares the prices of several vacuum cleaners to find the best value. This comparison represents the use of money as

When the interest rate is above the equilibrium interest rate there is an

Suppose a bank has $1,500,000 in deposits and the desired reserve ratio is 12 percent. If the bank is currently holding $200,000 in reserves, the excess reserves are equal to

The table below shows data for Brazil. Assuming the rate of velocity change is constant, the money growth rate in Brazil was

"By definition, all parts of M2 are money." Is the previous statement correct or not? Explain your answer.

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

Which of the following institutions is NOT a depository institution?

Are credit cards or debit cards money? Explain your answer.

A bank can only make a loan if it has

Explain the process by which the banking system creates money.

The velocity of circulation is

In September 2007, Regions Bank held $3 million in reserves against M1 deposits and made $83 million in loans. Between September 2007 and September 2008, deposits decreased from $114 million to $95 million. If Regions Bank wants to maintain its desired reserve ratio in 2008, it will

The Chairman of the Fed is appointed by .

Define money and list its functions.

If people are holding more money than they would willingly hold, they will _ bonds. The price of a bond will and the interest rate will .

The main policy- making organ of the Federal Reserve System is the

The quantity of money that people choose to hold depends on which of the following? I. The price level. II. Financial innovation. III. The exchange rate.

A bank's required reserves are calculated by multiplying .

During periods of inflation, which function of money is most severely affected?

Which of the following is NOT a monetary policy tool?

How does a currency drain affect the money multiplier?

Pat easily compares the prices of several vacuum cleaners to find the best value. This comparison represents the use of money as

When the interest rate is above the equilibrium interest rate there is an

Suppose a bank has $1,500,000 in deposits and the desired reserve ratio is 12 percent. If the bank is currently holding $200,000 in reserves, the excess reserves are equal to

The table below shows data for Brazil. Assuming the rate of velocity change is constant, the money growth rate in Brazil was

"By definition, all parts of M2 are money." Is the previous statement correct or not? Explain your answer.

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