Question 1

If you hold $25 in cash, have $150 in a checking account, and have $250 in a savings account, how much of M2 do you have?

Accepted Answer

All of the assets me

Question 2

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

Accepted Answer

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

Question 3

Which of the following is a liability of the Federal Reserve?

Accepted Answer

A)  loans to depository institutions 
B)  U.S. government securities 
C)  Federal Reserve notes 
D)  U.S. coins 
A)  loans to depository institutions 
B)  U.S. government securities 
C)  Federal Reserve notes 
D)  U.S. coins

Question 4

The main policy designer of the Federal Reserve system is the

Accepted Answer

A)  12 district banks. 
B)  Council of Economic Advisors. 
C)  Federal Open Market Committee. 
D)  President and Congress. 
A)  12 district banks. 
B)  Council of Economic Advisors. 
C)  Federal Open Market Committee. 
D)  President and Congress.

Question 5

Depository institutions are good at minimizing

Accepted Answer

A)  liquidity. 
B)  risky borrowers. 
C)  the costs of monitoring borrowers. 
D)  all of the above 
A)  liquidity. 
B)  risky borrowers. 
C)  the costs of monitoring borrowers. 
D)  all of the above

Question 6

Which of the following applies to an object serving as a store of value?
I. If an object can be held and exchanged later for a good or service, it serves as a store of value.
II. The less stable an objectʹs value, the better it serves as a store of value.
III. A work of art can serve as a store of value.

Accepted Answer

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

Question 7

On the Fedʹs balance sheet, assets include

Accepted Answer

A)  Federal Reserve notes and loans to depository institutions. 
B)  depository institutions deposits at the Federal Reserve and loans to depository institutions. 
C)  Federal Reserve notes and depository institutionsʹ deposits at the Federal Reserve. 
D)  U.S. government securities and loans to depository institutions. 
A)  Federal Reserve notes and loans to depository institutions. 
B)  depository institutions deposits at the Federal Reserve and loans to depository institutions. 
C)  Federal Reserve notes and depository institutionsʹ deposits at the Federal Reserve. 
D)  U.S. government securities and loans to depository institutions.

Question 8

The main policy-making body of the Federal Reserve System is the Federal Open Market committee.

Accepted Answer

A) True 
 B)False

Question 9

What is the relationship between money growth and inflation across countries? Does your answer support the quantity theory of money?

Accepted Answer

The international evidence sho

Question 10

$\begin{array}{|c|l|l|}
\hline \begin{array}{c}
\text { Interest rate } \
\text { (percent) }
\end{array} & \begin{array}{l}
\text { lantity of money } \
\text { lllions ofdollars) }
\end{array} & \begin{array}{l}
\text { Money demand } \
\text { billions of dollars) }
\end{array} \\hline 2 & 500 & 575 \
\hline 3 & 500 & 550 \
\hline 4 & 500 & 525 \
\hline 5 & 500 & 500 \
\hline 6 & 500 & 475 \
\hline 7 & 500 & 450 \
\hline
\end{array}$
-The table above gives the quantity of money and money demand schedules. Suppose that the interest rate is equal to 6 percent. The effect of this interest rate in the money market is that

Accepted Answer

A)  people sell bonds and the interest rate falls. 
B)  the money market is in equilibrium. 
C)  people buy bonds and the interest rate falls. 
D)  bond prices fall and so the interest rate falls. 
A)  people sell bonds and the interest rate falls. 
B)  the money market is in equilibrium. 
C)  people buy bonds and the interest rate falls. 
D)  bond prices fall and so the interest rate falls.

Question 11

The initial impact of the Fedʹs open market sale of government securities to banks is

Accepted Answer

A)  an increase in the quantity of money by some multiple of the dollar volume of the sale. 
B)  a decrease of the banking systemʹs reserve deposits at the Fed. 
C)  a decrease in the quantity of money by some multiple of the dollar volume of the sale. 
D)  an increase in bank deposits at the Fed. 
A)  an increase in the quantity of money by some multiple of the dollar volume of the sale. 
B)  a decrease of the banking systemʹs reserve deposits at the Fed. 
C)  a decrease in the quantity of money by some multiple of the dollar volume of the sale. 
D)  an increase in bank deposits at the Fed.

Question 12

Catherine compares the prices of candy bars in order to get the ʺbest buy.ʺ This comparison represents using money as a

Accepted Answer

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

Question 13

A depository institution is a firm that takes deposits from_________ and makes loans to___________ .

Accepted Answer

A)  firms; households 
B)  firms; other firms 
C)  households and firms; other households and firms 
D)  households; firms 
A)  firms; households 
B)  firms; other firms 
C)  households and firms; other households and firms 
D)  households; firms

Question 14

What is the interaction between the Federal Reserve districts and the Board of Governors of the Federal Reserve System?

Accepted Answer

The Federal Reserve System divides the n

Question 15

Are checks and credit cards money? Explain why or why not.

Accepted Answer

Checks are not money. Checks are instruc

Question 16

The table below shows data in millions) for Sun Trust Banks in September 2007 and September 2008.
$$\begin{array} { | c | c | c | } 
\hline & 2007 & 2008 \
\hline \text { Loans } & \$ 83 & \$ 78 \
\hline \text { Reserves } & \$ 4 & \$ 5 \
\hline \text { Deposits } & \$ 114 & \$ 95 \
\hline
\end{array}$$
The data show that Sun Trust

Accepted Answer

A)  has fewer excess reserves in 2008. 
B)  increased its reserve ratio to 6.4 percent over the 12 months. 
C)  faced a higher currency drain ratio in 2008. 
D)  increased its reserve ratio to 5.3 percent over the 12 months. 
A)  has fewer excess reserves in 2008. 
B)  increased its reserve ratio to 6.4 percent over the 12 months. 
C)  faced a higher currency drain ratio in 2008. 
D)  increased its reserve ratio to 5.3 percent over the 12 months.

Question 17

According to the quantity theory of money,

Accepted Answer

A)  V and Y are not affected by the quantity of money. 
B)  V and M are constant. 
C)  V and M are not affected by changes in the price level. 
D)  V and P are not affected by the quantity of money. 
A)  V and Y are not affected by the quantity of money. 
B)  V and M are constant. 
C)  V and M are not affected by changes in the price level. 
D)  V and P are not affected by the quantity of money.

Question 18

The table below shows the data in millions) for Wells Fargo Bank in September 2007 and September 2008. Suppose that the required reserve ratio is 3 percent.
$$\begin{array} { | c | c | c | } 
\hline & 2007 & 2008 \
\hline \text { Loans } & 79 & 100 \
\hline \text { Reserves } & 11 & 11 \
\hline \text { Deposits } & 247 & 266 \
\hline
\end{array}$$
The data show that

Accepted Answer

A)  Wells Fargo was only able to make more loans in 2008 because it gained more deposits. 
B)  the Federal Reserve must have increased the required reserve ratio. 
C)  the currency drain ratio increased. 
D)  Wells Fargo had excess reserves and could create money in 2007. 
A)  Wells Fargo was only able to make more loans in 2008 because it gained more deposits. 
B)  the Federal Reserve must have increased the required reserve ratio. 
C)  the currency drain ratio increased. 
D)  Wells Fargo had excess reserves and could create money in 2007.

Question 19

Which of the following applies to the use of money as a unit of account?
I. A unit of account is an agreed measure for stating the prices of goods and services.
II. Using money as a unit of account creates a simplified pricing system.
III. Economies choose many goods as units of account.

Accepted Answer

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

Question 20

An increase in currency held outside the banks is___________ .

Accepted Answer

A)  a currency surplus 
B)  a currency drain 
C)  wealth 
D)  income 
A)  a currency surplus 
B)  a currency drain 
C)  wealth 
D)  income

If you hold $25 in cash, have $150 in a checking account, and have $250 in a savings account, how much of M2 do you have?

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

Which of the following is a liability of the Federal Reserve?

The main policy designer of the Federal Reserve system is the

Depository institutions are good at minimizing

On the Fedʹs balance sheet, assets include

The main policy-making body of the Federal Reserve System is the Federal Open Market committee.

What is the relationship between money growth and inflation across countries? Does your answer support the quantity theory of money?

The initial impact of the Fedʹs open market sale of government securities to banks is

Catherine compares the prices of candy bars in order to get the ʺbest buy.ʺ This comparison represents using money as a

A depository institution is a firm that takes deposits from_ and makes loans to___ .

What is the interaction between the Federal Reserve districts and the Board of Governors of the Federal Reserve System?

Are checks and credit cards money? Explain why or why not.

The table below shows data in millions) for Sun Trust Banks in September 2007 and September 2008. 2007 2008 Loans \ 83 \ 78 Reserves \ 4 \ 5 Deposits \ 114 \ 95 The data show that Sun Trust

According to the quantity theory of money,

The table below shows the data in millions) for Wells Fargo Bank in September 2007 and September 2008. Suppose that the required reserve ratio is 3 percent. 2007 2008 Loans 79 100 Reserves 11 11 Deposits 247 266 The data show that

Which of the following applies to the use of money as a unit of account? I. A unit of account is an agreed measure for stating the prices of goods and services. II. Using money as a unit of account creates a simplified pricing system. III. Economies choose many goods as units of account.

An increase in currency held outside the banks is___________ .

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

If you hold $25 in cash, have $150 in a checking account, and have $250 in a savings account, how much of M2 do you have?

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

Which of the following is a liability of the Federal Reserve?

The main policy designer of the Federal Reserve system is the

Depository institutions are good at minimizing

On the Fedʹs balance sheet, assets include

The main policy-making body of the Federal Reserve System is the Federal Open Market committee.

What is the relationship between money growth and inflation across countries? Does your answer support the quantity theory of money?

The initial impact of the Fedʹs open market sale of government securities to banks is

Catherine compares the prices of candy bars in order to get the ʺbest buy.ʺ This comparison represents using money as a

A depository institution is a firm that takes deposits from_________ and makes loans to___________ .

What is the interaction between the Federal Reserve districts and the Board of Governors of the Federal Reserve System?

Are checks and credit cards money? Explain why or why not.

The table below shows data in millions) for Sun Trust Banks in September 2007 and September 2008. 2007 2008 Loans \ 83 \ 78 Reserves \ 4 \ 5 Deposits \ 114 \ 95 The data show that Sun Trust

According to the quantity theory of money,

The table below shows the data in millions) for Wells Fargo Bank in September 2007 and September 2008. Suppose that the required reserve ratio is 3 percent. 2007 2008 Loans 79 100 Reserves 11 11 Deposits 247 266 The data show that

Which of the following applies to the use of money as a unit of account? I. A unit of account is an agreed measure for stating the prices of goods and services. II. Using money as a unit of account creates a simplified pricing system. III. Economies choose many goods as units of account.

An increase in currency held outside the banks is___________ .

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

A depository institution is a firm that takes deposits from_ and makes loans to___ .