Question 1

The real quantity of money is

Accepted Answer

A)  measured in current dollars. 
B)  inversely related to the price level. 
C)  inversely related to GDP. 
D)  measured in constant dollars. 
A)  measured in current dollars. 
B)  inversely related to the price level. 
C)  inversely related to GDP. 
D)  measured in constant dollars.

Question 2

Checking deposits at banks are

Accepted Answer

A)  money. 
B)  money only because they are insured by the FDIC. 
C)  not money because they are an intangible. 
D)  not money until they are converted into currency. 
A)  money. 
B)  money only because they are insured by the FDIC. 
C)  not money because they are an intangible. 
D)  not money until they are converted into currency.

Question 3

Which of the following is an asset of the Federal Reserve?

Accepted Answer

A)  the monetary base 
B)  Federal Reserve notes 
C)  loans to depository institutions 
D)  commercial bank deposits 
A)  the monetary base 
B)  Federal Reserve notes 
C)  loans to depository institutions 
D)  commercial bank deposits

Question 4

If the currency drain increases, how can the Fed adjust the monetary base to offset the effect on the quantity of money?

Accepted Answer

If the currency drain increases, the siz

Question 5

-In the above figure, suppose the economy is initially at point a. If the nominal interest rate increases, there is a movement to point such as

Accepted Answer

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

Question 6

Liquidity .

Accepted Answer

A)  increases when a consumer has more credit cards 
B)  increases when a country owns gold 
C)  is how quickly an asset loses its worth 
D)  is the property of being instantly convertible into money 
A)  increases when a consumer has more credit cards 
B)  increases when a country owns gold 
C)  is how quickly an asset loses its worth 
D)  is the property of being instantly convertible into money

Question 7

Which of the following tools is NOT a policy tool of the Fed?

Accepted Answer

A)  the reserve ratio 
B)  last resort loans 
C)  open market operations 
D)  the tax rate on interest income 
A)  the reserve ratio 
B)  last resort loans 
C)  open market operations 
D)  the tax rate on interest income

Question 8

A bank creates money by

Accepted Answer

A)  lending its excess reserves 
B)  buying bonds from the Federal Reserve 
C)  purchasing currency from the Federal Reserve 
D)  printing more checks 
A)  lending its excess reserves 
B)  buying bonds from the Federal Reserve 
C)  purchasing currency from the Federal Reserve 
D)  printing more checks

Question 9

In the United States today, money consists of

Accepted Answer

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

Question 10

Sarah buys shares from a financial institution that uses her funds together with other funds to purchase U.S. treasury bills. Sarah has deposited her money into a ____________.

Accepted Answer

A)  savings and loan association 
B)  credit union 
C)  savings bank 
D)  money market mutual fund 
A)  savings and loan association 
B)  credit union 
C)  savings bank 
D)  money market mutual fund

Question 11

$\text { Assets }\quad\quad\quad\quad\quad\quad\quad \text { Liabilities }$
$\begin{array}{|lc|lc|}
\hline \text { Reserves } & \$ 100 &\text { Deposits }&\$400\
\text { Loans } & 600 &\text { Net worth }&\$300\
\text { Total assets } & \$ 700&\text { Total assets }&\$700 \
\hline
\end{array}$
-The above table gives the initial balance sheet for Mini Bank. Mini Bank?s balance sheet is such that it will make

Accepted Answer

A)  you cannot predict what the bank will do from this balance sheet. 
B)  more loans. 
C)  no change in its lending. 
D)  fewer loans. 
A)  you cannot predict what the bank will do from this balance sheet. 
B)  more loans. 
C)  no change in its lending. 
D)  fewer loans.

Question 12

Sam has $500 in travelerʹs checks. He cashes a $100 traveler check, deposits $150 into his checking account at a Savings and Loan Association, and deposits the remaining $250 into a savings account at a credit union. Immediately,_______________ .

Accepted Answer

A)  M1 decreases by $400 and M2 increases by $250 
B)  M1 decreases by $250 and M2 does not change 
C)  M1 does not change and M2 increases by $250 
D)  M1 and M2 do not change 
A)  M1 decreases by $400 and M2 increases by $250 
B)  M1 decreases by $250 and M2 does not change 
C)  M1 does not change and M2 increases by $250 
D)  M1 and M2 do not change

Question 13

The demand for money curve is the relationship between __________and _________, other things remaining the same.

Accepted Answer

A)  the money demanded; the money supplied 
B)  the quantity of real money demanded; the nominal interest rate 
C)  the quantity of real money demanded; the quantity of real money supplied 
D)  the quantity of money demanded; the real interest rate 
A)  the money demanded; the money supplied 
B)  the quantity of real money demanded; the nominal interest rate 
C)  the quantity of real money demanded; the quantity of real money supplied 
D)  the quantity of money demanded; the real interest rate

Question 14

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 bankʹs de

Question 15

Which of the following functions are performed by depository institutions?
I. They make long-term loans using short-term deposits, thereby creating liquidity.
II. They efficiently gather funds from a large base of depositors.
III. They concentrate risk.

Accepted Answer

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

Question 16

If required reserves are $150 and deposits are $1000, what is the required reserve ratio?

Accepted Answer

A)  5 percent 
B)  85 percent 
C)  10 percent 
D)  15 percent 
A)  5 percent 
B)  85 percent 
C)  10 percent 
D)  15 percent

Question 17

When the Federal Reserve lends reserves to depository institutions, it charges them interest. That interest rate is called the

Accepted Answer

A)  prime rate. 
B)  federal funds rate. 
C)  loan rate. 
D)  discount rate. 
A)  prime rate. 
B)  federal funds rate. 
C)  loan rate. 
D)  discount rate.

Question 18

Which of the following is NOT an economic benefit of depository institutions?

Accepted Answer

A)  They pool risk 
B)  They borrow long and lend short 
C)  They create liquidity 
D)  They reduce the cost of monitoring borrowers 
A)  They pool risk 
B)  They borrow long and lend short 
C)  They create liquidity 
D)  They reduce the cost of monitoring borrowers

Question 19

When real GDP increases, the demand for money

Accepted Answer

A)  stays the same. 
B)  we cannot make a prediction without additional information. 
C)  decreases. 
D)  increases. 
A)  stays the same. 
B)  we cannot make a prediction without additional information. 
C)  decreases. 
D)  increases.

Question 20

If real GDP is $10 trillion and the velocity of circulation is 2, the quantity of money

Accepted Answer

A)  is $20 trillion. 
B)  is $2 trillion. 
C)  is $5 trillion. 
D)  cannot be determined from the information given. 
A)  is $20 trillion. 
B)  is $2 trillion. 
C)  is $5 trillion. 
D)  cannot be determined from the information given.

The real quantity of money is

Checking deposits at banks are

Which of the following is an asset of the Federal Reserve?

If the currency drain increases, how can the Fed adjust the monetary base to offset the effect on the quantity of money?

-In the above figure, suppose the economy is initially at point a. If the nominal interest rate increases, there is a movement to point such as

Liquidity .

Which of the following tools is NOT a policy tool of the Fed?

A bank creates money by

In the United States today, money consists of

Sarah buys shares from a financial institution that uses her funds together with other funds to purchase U.S. treasury bills. Sarah has deposited her money into a ____________.

$\text { Assets }\quad\quad\quad\quad\quad\quad\quad \text { Liabilities }$ Reserves \ 100 Deposits \4 00 Loans 600 Net worth \3 00 Total assets \ 700 Total assets \7 00 -The above table gives the initial balance sheet for Mini Bank. Mini Bank?s balance sheet is such that it will make

Sam has $500 in travelerʹs checks. He cashes a $100 traveler check, deposits $150 into his checking account at a Savings and Loan Association, and deposits the remaining $250 into a savings account at a credit union. Immediately,_______________ .

The demand for money curve is the relationship between __and _, other things remaining the same.

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?

Which of the following functions are performed by depository institutions? I. They make long-term loans using short-term deposits, thereby creating liquidity. II. They efficiently gather funds from a large base of depositors. III. They concentrate risk.

If required reserves are $150 and deposits are $1000, what is the required reserve ratio?

When the Federal Reserve lends reserves to depository institutions, it charges them interest. That interest rate is called the

Which of the following is NOT an economic benefit of depository institutions?

When real GDP increases, the demand for money

If real GDP is $10 trillion and the velocity of circulation is 2, the quantity of money

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: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

Exam 8: Money, the Price Level, and Inflation

The real quantity of money is

Checking deposits at banks are

Which of the following is an asset of the Federal Reserve?

If the currency drain increases, how can the Fed adjust the monetary base to offset the effect on the quantity of money?

-In the above figure, suppose the economy is initially at point a. If the nominal interest rate increases, there is a movement to point such as

Liquidity .

Which of the following tools is NOT a policy tool of the Fed?

A bank creates money by

In the United States today, money consists of

Sarah buys shares from a financial institution that uses her funds together with other funds to purchase U.S. treasury bills. Sarah has deposited her money into a ____________.

Sam has $500 in travelerʹs checks. He cashes a $100 traveler check, deposits $150 into his checking account at a Savings and Loan Association, and deposits the remaining $250 into a savings account at a credit union. Immediately,_______________ .

The demand for money curve is the relationship between __________and _________, other things remaining the same.

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?

Which of the following functions are performed by depository institutions? I. They make long-term loans using short-term deposits, thereby creating liquidity. II. They efficiently gather funds from a large base of depositors. III. They concentrate risk.

If required reserves are $150 and deposits are $1000, what is the required reserve ratio?

When the Federal Reserve lends reserves to depository institutions, it charges them interest. That interest rate is called the

Which of the following is NOT an economic benefit of depository institutions?

When real GDP increases, the demand for money

If real GDP is $10 trillion and the velocity of circulation is 2, the quantity of money

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: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

The demand for money curve is the relationship between __and _, other things remaining the same.