Question 1

Are the members of the Board of Governors of the Federal Reserve System elected officials?

Accepted Answer

No, the members are not electe

Question 2

-The above table gives the initial balance sheet for Mega Bank. Mega Bank's desired reserves equal its required reserves. Based on the initial balance sheet, what is the required reserve ratio for Mega Bank?

Accepted Answer

A)  3 percent 
B)  30 percent 
C)  1.4 percent 
D)  10 percent 
A)  3 percent 
B)  30 percent 
C)  1.4 percent 
D)  10 percent

Question 3

If an increase in the monetary base of $8 billion increases the quantity of money by $64 billion, then the money multiplier is equal to .

Accepted Answer

A)  1/8 
B)  $8 billion 
C)  8 
D)  $64 billion 
A)  1/8 
B)  $8 billion 
C)  8 
D)  $64 billion

Question 4

Of the following, the riskiest assets held by commercial banks are

Accepted Answer

A)  U.S. government bonds. 
B)  reserves. 
C)  U.S. government Treasury bills. 
D)  commercial loans. 
A)  U.S. government bonds. 
B)  reserves. 
C)  U.S. government Treasury bills. 
D)  commercial loans.

Question 5

Which of the following is an example of using money as a store of value?

Accepted Answer

A)  keeping $200 on hand for an emergency 
B)  paying cash for a new automobile 
C)  paying for a new dress with a credit card 
D)  paying rent with a check on a demand deposit 
A)  keeping $200 on hand for an emergency 
B)  paying cash for a new automobile 
C)  paying for a new dress with a credit card 
D)  paying rent with a check on a demand deposit

Question 6

The quantity theory asserts that real GDP is

Accepted Answer

A)  not influenced by the quantity of money. 
B)  never different from potential GDP. 
C)  equal to nominal GDP divided by the quantity of money. 
D)  equal to nominal GDP multiplied by the quantity of money. 
A)  not influenced by the quantity of money. 
B)  never different from potential GDP. 
C)  equal to nominal GDP divided by the quantity of money. 
D)  equal to nominal GDP multiplied by the quantity of money.

Question 7

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

Accepted Answer

A)  the Board of Governors. 
B)  the Federal Open Market Committee. 
C)  the Federal Reserve branch banks. 
D)  the Federal Reserve chairman and the Federal Reserve branch bank presidents. 
A)  the Board of Governors. 
B)  the Federal Open Market Committee. 
C)  the Federal Reserve branch banks. 
D)  the Federal Reserve chairman and the Federal Reserve branch bank presidents.

Question 8

A bank's reserves include

Accepted Answer

A)  the cash in its vault plus any gold held for the bank at Fort Knox. 
B)  the cash in its vault plus the value of its depositors' accounts. 
C)  its common stock holdings, the cash in its vault, and any deposits at a Federal Reserve bank. 
D)  the cash in its vault plus its deposits held at a Federal Reserve bank. 
A)  the cash in its vault plus any gold held for the bank at Fort Knox. 
B)  the cash in its vault plus the value of its depositors' accounts. 
C)  its common stock holdings, the cash in its vault, and any deposits at a Federal Reserve bank. 
D)  the cash in its vault plus its deposits held at a Federal Reserve bank.

Question 9

Which of the following is an example of money functioning as a store of value?

Accepted Answer

A)  Your saving your spare change in a jar in order to afford an end- of- term party. 
B)  Amazon.com charging $9.95 for shipping. 
C)  Comcast charging $99 for internet, phone and cable service. 
D)  McDonalds charging 99 cents for a burger. 
A)  Your saving your spare change in a jar in order to afford an end- of- term party. 
B)  Amazon.com charging $9.95 for shipping. 
C)  Comcast charging $99 for internet, phone and cable service. 
D)  McDonalds charging 99 cents for a burger.

Question 10

-In the figure above, if the interest rate is 8 percent, people demand $0.1 trillion

Accepted Answer

A)  more money than the quantity supplied and bond prices will rise. 
B)  less money than the quantity supplied and bond prices will fall. 
C)  more money than the quantity supplied and bond prices will fall. 
D)  less money than the quantity supplied and bond prices will rise. 
A)  more money than the quantity supplied and bond prices will rise. 
B)  less money than the quantity supplied and bond prices will fall. 
C)  more money than the quantity supplied and bond prices will fall. 
D)  less money than the quantity supplied and bond prices will rise.

Question 11

The most powerful individual in the Federal Reserve is the Chairman of the Board of Governors.

Accepted Answer

A) True 
 B)False

Question 12

The table below shows data for Indonesia between 2005 and 2006.
 
Assume the rate of velocity change is constant. According to the quantity theory of money, Indones inflation rate

Accepted Answer

A)  is 27.1 percent in 2005. 
B)  is higher in 2005 than in 2006. 
C)  was 17.5 percent in 2006. 
D)  will increase over the 12 months. 
A)  is 27.1 percent in 2005. 
B)  is higher in 2005 than in 2006. 
C)  was 17.5 percent in 2006. 
D)  will increase over the 12 months.

Question 13

Which of the following is a liability on the balance sheet of the Federal Reserve System?

Accepted Answer

A)  Federal Reserve notes 
B)  Loans to depository institutions 
C)  U.S. government securities 
D)  None of the above are correct because they are all liabilities of the Federal Reserve 
A)  Federal Reserve notes 
B)  Loans to depository institutions 
C)  U.S. government securities 
D)  None of the above are correct because they are all liabilities of the Federal Reserve

Question 14

The most direct way in which money eliminates the need for a double coincidence of wants is through its use as a medium of exchange.

Accepted Answer

A) True 
 B)False

Question 15

Money is created by

Accepted Answer

A)  banks paying for depositor's insurance. 
B)  banks taking in deposits. 
C)  government taxation. 
D)  banks making loans. 
A)  banks paying for depositor's insurance. 
B)  banks taking in deposits. 
C)  government taxation. 
D)  banks making loans.

Question 16

The quantity theory of money asserts that an increase in the quantity of money

Accepted Answer

A)  will lead to an equal percentage increase in the price level. 
B)  will lead to an equal percentage increase in real GDP. 
C)  by n percent will lead to an increase in the price level by n + 1 percent. 
D)  will decrease the price level by an offsetting amount. 
A)  will lead to an equal percentage increase in the price level. 
B)  will lead to an equal percentage increase in real GDP. 
C)  by n percent will lead to an increase in the price level by n + 1 percent. 
D)  will decrease the price level by an offsetting amount.

Question 17

Which of the following is NOT an asset of the Federal Reserve?

Accepted Answer

A)  loans to depository institutions 
B)  Federal Reserve notes 
C)  government securities 
D)  None of the above are correct because they are all assets of the Federal Reserve 
A)  loans to depository institutions 
B)  Federal Reserve notes 
C)  government securities 
D)  None of the above are correct because they are all assets of the Federal Reserve

Question 18

Money as a medium of exchange
I. facilitates the exchange of goods.
II. reduces or eliminates the need for barter.

Accepted Answer

A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II 
A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II

Question 19

A bank with $100 million in deposits has $15 million of cash in the bank, $10 million in deposits with the Fed, and $15 million in government securities in its vault. Its total reserves equal

Accepted Answer

A)  $40 million. 
B)  $15 million. 
C)  $10 million. 
D)  $25 million. 
A)  $40 million. 
B)  $15 million. 
C)  $10 million. 
D)  $25 million.

Question 20

Federal Reserve policy tools include all of the following EXCEPT

Accepted Answer

A)  open market operations. 
B)  desired reserve ratios. 
C)  the discount rate. 
D)  required reserve ratios. 
A)  open market operations. 
B)  desired reserve ratios. 
C)  the discount rate. 
D)  required reserve ratios.

Are the members of the Board of Governors of the Federal Reserve System elected officials?

-The above table gives the initial balance sheet for Mega Bank. Mega Bank's desired reserves equal its required reserves. Based on the initial balance sheet, what is the required reserve ratio for Mega Bank?

If an increase in the monetary base of $8 billion increases the quantity of money by $64 billion, then the money multiplier is equal to .

Of the following, the riskiest assets held by commercial banks are

Which of the following is an example of using money as a store of value?

The quantity theory asserts that real GDP is

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

A bank's reserves include

Which of the following is an example of money functioning as a store of value?

-In the figure above, if the interest rate is 8 percent, people demand $0.1 trillion

The most powerful individual in the Federal Reserve is the Chairman of the Board of Governors.

The table below shows data for Indonesia between 2005 and 2006. Assume the rate of velocity change is constant. According to the quantity theory of money, Indones inflation rate

Which of the following is a liability on the balance sheet of the Federal Reserve System?

The most direct way in which money eliminates the need for a double coincidence of wants is through its use as a medium of exchange.

Money is created by

The quantity theory of money asserts that an increase in the quantity of money

Which of the following is NOT an asset of the Federal Reserve?

Money as a medium of exchange I. facilitates the exchange of goods. II. reduces or eliminates the need for barter.

A bank with $100 million in deposits has $15 million of cash in the bank, $10 million in deposits with the Fed, and $15 million in government securities in its vault. Its total reserves equal

Federal Reserve policy tools include all of the following EXCEPT

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

Are the members of the Board of Governors of the Federal Reserve System elected officials?

-The above table gives the initial balance sheet for Mega Bank. Mega Bank's desired reserves equal its required reserves. Based on the initial balance sheet, what is the required reserve ratio for Mega Bank?

If an increase in the monetary base of $8 billion increases the quantity of money by $64 billion, then the money multiplier is equal to .

Of the following, the riskiest assets held by commercial banks are

Which of the following is an example of using money as a store of value?

The quantity theory asserts that real GDP is

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

A bank's reserves include

Which of the following is an example of money functioning as a store of value?

-In the figure above, if the interest rate is 8 percent, people demand $0.1 trillion

The most powerful individual in the Federal Reserve is the Chairman of the Board of Governors.

The table below shows data for Indonesia between 2005 and 2006. Assume the rate of velocity change is constant. According to the quantity theory of money, Indones inflation rate

Which of the following is a liability on the balance sheet of the Federal Reserve System?

The most direct way in which money eliminates the need for a double coincidence of wants is through its use as a medium of exchange.

Money is created by

The quantity theory of money asserts that an increase in the quantity of money

Which of the following is NOT an asset of the Federal Reserve?

Money as a medium of exchange I. facilitates the exchange of goods. II. reduces or eliminates the need for barter.

A bank with $100 million in deposits has $15 million of cash in the bank, $10 million in deposits with the Fed, and $15 million in government securities in its vault. Its total reserves equal

Federal Reserve policy tools include all of the following EXCEPT

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