Question 1

A medium of exchange is

Accepted Answer

A)  a measure by which prices are expressed. 
B)  an object that sellers will accept as payment. 
C)  an asset that is used to settle future debts. 
D)  the thing traded when barter takes place. 
A)  a measure by which prices are expressed. 
B)  an object that sellers will accept as payment. 
C)  an asset that is used to settle future debts. 
D)  the thing traded when barter takes place.

Question 2

Give an example of how money functions as a unit of account.

Accepted Answer

Money functions as a unit of a

Question 3

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 Wells Fargo

Accepted Answer

A)  the reserve ratio did not change. 
B)  had fewer excess reserves in 2007. 
C)  had fewer excess reserves in 2008. 
D)  the reserve ratio increased as loans increased. 
A)  the reserve ratio did not change. 
B)  had fewer excess reserves in 2007. 
C)  had fewer excess reserves in 2008. 
D)  the reserve ratio increased as loans increased.

Question 4

Suppose the Fed buys government securities from a commercial bank. Why is there a multiplier effect on the quantity of money?

Accepted Answer

When the Fed buys government securities

Question 5

The functions of money are

Accepted Answer

A)  medium of exchange, unit of account, and store of value. 
B)  interest rates, prices and output. 
C)  M1, M2 or currency. 
D)  currency, deposits, and travelerʹs checks. 
A)  medium of exchange, unit of account, and store of value. 
B)  interest rates, prices and output. 
C)  M1, M2 or currency. 
D)  currency, deposits, and travelerʹs checks.

Question 6

M1 includes all the following items except .

Accepted Answer

A)  checking deposits owned by individuals and businesses 
B)  currency owned by individuals and businesses 
C)  deposits in money market mutual funds 
D)  travelerʹs checks 
A)  checking deposits owned by individuals and businesses 
B)  currency owned by individuals and businesses 
C)  deposits in money market mutual funds 
D)  travelerʹs checks

Question 7

Define the quantity theory of money and show how it is related to the equation of exchange.

Accepted Answer

The quantity theory of money is the prop

Question 8

Control of the nationʹs quantity of money is handled by

Accepted Answer

A)  Congress, the Federal Reserve System, and all commercial banks. 
B)  Congress. 
C)  the Federal Reserve System. 
D)  the President of the United States. 
A)  Congress, the Federal Reserve System, and all commercial banks. 
B)  Congress. 
C)  the Federal Reserve System. 
D)  the President of the United States.

Question 9

According to the quantity theory of money, what is the effect of an increase in the quantity of money?

Accepted Answer

According to the quantity theo

Question 10

If nominal GDP is $12 trillion, the price level is 120, and the quantity of money is $4 trillion, what is the velocity of circulation?

Accepted Answer

A)  3 
B)  30 
C)  2.5 
D)  25 
A)  3 
B)  30 
C)  2.5 
D)  25

Question 11

A money market mutual fund is

Accepted Answer

A)  a time deposit of $100,000 or less. 
B)  a time deposit of more than $100,000. 
C)  a depository institution that sells shares and buys securities such as U.S. Treasury bills. 
D)  essentially the same as a demand deposit account. 
A)  a time deposit of $100,000 or less. 
B)  a time deposit of more than $100,000. 
C)  a depository institution that sells shares and buys securities such as U.S. Treasury bills. 
D)  essentially the same as a demand deposit account.

Question 12

The Federal Reserve has ___________ regional Federal Reserve banks and  ___________members of the Board of Governors.

Accepted Answer

A)  12; 7 
B)  7; 12 
C)  12; 12 
D)  7; 7 
A)  12; 7 
B)  7; 12 
C)  12; 12 
D)  7; 7

Question 13

The quantity of money people want to hold increases if

Accepted Answer

A)  the nominal interest rate rises. 
B)  the price level falls. 
C)  real GDP increases. 
D)  All of the above answers are correct. 
A)  the nominal interest rate rises. 
B)  the price level falls. 
C)  real GDP increases. 
D)  All of the above answers are correct.

Question 14

M1 is usually larger than than M2.

Accepted Answer

A) True 
 B)False

Question 15

The required reserve ratio ranges from

Accepted Answer

A)  0 to 7 percent. 
B)  0 to 3 percent. 
C)  3 to 30 percent. 
D)  0 to 10 percent. 
A)  0 to 7 percent. 
B)  0 to 3 percent. 
C)  3 to 30 percent. 
D)  0 to 10 percent.

Question 16

The equation of exchange

Accepted Answer

A)  cannot be used in an economy with inflation. 
B)  is MV = PY. 
C)  becomes the quantity theory if velocity and the price level are constant. 
D)  All of the above answers are correct. 
A)  cannot be used in an economy with inflation. 
B)  is MV = PY. 
C)  becomes the quantity theory if velocity and the price level are constant. 
D)  All of the above answers are correct.

Question 17

Money market mutual funds

Accepted Answer

A)  allow shareholders to write check on their funds. 
B)  are provided by the Federal Reserve as liquidity for private banks. 
C)  have no restrictions on shareholder withdrawals. 
D)  do not provide any checking services to their owners. 
A)  allow shareholders to write check on their funds. 
B)  are provided by the Federal Reserve as liquidity for private banks. 
C)  have no restrictions on shareholder withdrawals. 
D)  do not provide any checking services to their owners.

Question 18

Members of the Federal Reserve Systemʹs Board of Governors

Accepted Answer

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

Question 19

The quantity theory of money addresses the

Accepted Answer

A)  determinants of potential GDP. 
B)  short-run effect the quantity of money has on the price level. 
C)  determinants of the equilibrium unemployment rate. 
D)  long-run effect the quantity of money has on the price level. 
A)  determinants of potential GDP. 
B)  short-run effect the quantity of money has on the price level. 
C)  determinants of the equilibrium unemployment rate. 
D)  long-run effect the quantity of money has on the price level.

Question 20

The opportunity cost of holding money balances rather than other assets is

Accepted Answer

A)  the nominal interest rate. 
B)  forgone consumption. 
C)  the price level. 
D)  forgone liquidity. 
A)  the nominal interest rate. 
B)  forgone consumption. 
C)  the price level. 
D)  forgone liquidity.

A medium of exchange is

Give an example of how money functions as a unit of account.

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 Wells Fargo

Suppose the Fed buys government securities from a commercial bank. Why is there a multiplier effect on the quantity of money?

The functions of money are

M1 includes all the following items except .

Define the quantity theory of money and show how it is related to the equation of exchange.

Control of the nationʹs quantity of money is handled by

According to the quantity theory of money, what is the effect of an increase in the quantity of money?

If nominal GDP is $12 trillion, the price level is 120, and the quantity of money is $4 trillion, what is the velocity of circulation?

A money market mutual fund is

The Federal Reserve has _ regional Federal Reserve banks and _members of the Board of Governors.

The quantity of money people want to hold increases if

M1 is usually larger than than M2.

The required reserve ratio ranges from

The equation of exchange

Money market mutual funds

Members of the Federal Reserve Systemʹs Board of Governors

The quantity theory of money addresses the

The opportunity cost of holding money balances rather than other assets 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

A medium of exchange is

Give an example of how money functions as a unit of account.

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 Wells Fargo

Suppose the Fed buys government securities from a commercial bank. Why is there a multiplier effect on the quantity of money?

The functions of money are

M1 includes all the following items except .

Define the quantity theory of money and show how it is related to the equation of exchange.

Control of the nationʹs quantity of money is handled by

According to the quantity theory of money, what is the effect of an increase in the quantity of money?

If nominal GDP is $12 trillion, the price level is 120, and the quantity of money is $4 trillion, what is the velocity of circulation?

A money market mutual fund is

The Federal Reserve has ___________ regional Federal Reserve banks and ___________members of the Board of Governors.

The quantity of money people want to hold increases if

M1 is usually larger than than M2.

The required reserve ratio ranges from

The equation of exchange

Money market mutual funds

Members of the Federal Reserve Systemʹs Board of Governors

The quantity theory of money addresses the

The opportunity cost of holding money balances rather than other assets 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

The Federal Reserve has _ regional Federal Reserve banks and _members of the Board of Governors.