Question 1

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

Accepted Answer

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

Question 2

In 2007, interest rates in Germany were 4.7 percent while the inflation rate was 1.7 percent. In 2008, interest rates increased to 5.3 percent and the inflation rate increased to 2.0. As a result, there is

Accepted Answer

A)  a rightward shift in Germanyʹs money supply curve. 
B)  a leftward shift in Germanyʹs demand for money curve. 
C)  an upward movement along Germanyʹs demand for money curve. 
D)  a downward movement along Germanyʹs demand for money curve. 
A)  a rightward shift in Germanyʹs money supply curve. 
B)  a leftward shift in Germanyʹs demand for money curve. 
C)  an upward movement along Germanyʹs demand for money curve. 
D)  a downward movement along Germanyʹs demand for money curve.

Question 3

ʺBecause monetary policy must be approved by the president of the United States, the president is chair of the Federal Open Market Committee.ʺ Analyze the previous statement is it correct or incorrect?

Accepted Answer

The statement is incorrect on several di

Question 4

Monetary policy is conducted

Accepted Answer

A)  by the Federal Reserve, the President of the United States, and Congress. 
B)  by the Federal Reserve with veto power residing with the President of the United States. 
C)  by the Federal Reserve and the President of the United States. 
D)  only by the Federal Reserve. 
A)  by the Federal Reserve, the President of the United States, and Congress. 
B)  by the Federal Reserve with veto power residing with the President of the United States. 
C)  by the Federal Reserve and the President of the United States. 
D)  only by the Federal Reserve.

Question 5

When the Fed sells one million dollars in securities to a commercial bank,

Accepted Answer

A)  there is no change in the total assets of the Fed or the commercial bank. 
B)  the commercial bankʹs total assets decrease by one million dollars. 
C)  the Fedʹs total assets increase by one million dollars. 
D)  None of the above answers is correct. 
A)  there is no change in the total assets of the Fed or the commercial bank. 
B)  the commercial bankʹs total assets decrease by one million dollars. 
C)  the Fedʹs total assets increase by one million dollars. 
D)  None of the above answers is correct.

Question 6

The Federal Open Market Committee

Accepted Answer

A)  always includes the president of the Federal Reserve Bank of New York as a member. 
B)  does not include any members of the Board of Governors. 
C)  meets weekly to set Fed policy. 
D)  has 7 voting members. 
A)  always includes the president of the Federal Reserve Bank of New York as a member. 
B)  does not include any members of the Board of Governors. 
C)  meets weekly to set Fed policy. 
D)  has 7 voting members.

Question 7

Most of the day-to-day power in monetary policy decisions lies with

Accepted Answer

A)  the President of the United States 
B)  large commercial banks 
C)  the Senate Banking Committee 
D)  the chairman of the Board of Governors 
A)  the President of the United States 
B)  large commercial banks 
C)  the Senate Banking Committee 
D)  the chairman of the Board of Governors

Question 8

_____________ in the desired reserve ratio will _____________ the money multiplier.

Accepted Answer

A)  A decrease; will have no effect on 
B)  A decrease; decrease 
C)  An increase; decrease 
D)  An increase; have no effect on 
A)  A decrease; will have no effect on 
B)  A decrease; decrease 
C)  An increase; decrease 
D)  An increase; have no effect on

Question 9

Liquidity is the

Accepted Answer

A)  ease with which an asset can be converted into a means of payment with little loss of value. 
B)  ease with which credit cards are accepted as a means of payment. 
C)  degree to which money can be converted into an asset with little loss of value. 
D)  degree to which an asset acts as money without a loss of value. 
A)  ease with which an asset can be converted into a means of payment with little loss of value. 
B)  ease with which credit cards are accepted as a means of payment. 
C)  degree to which money can be converted into an asset with little loss of value. 
D)  degree to which an asset acts as money without a loss of value.

Question 10

The commercial banks in Fundland have
The banks hold no excess reserves.
 $\begin{array}{ll}
\text { Reserves } & \$ 500 \text { million } \
\text { Loans } & \$ 3,500 \text { million } \
\text { Deposits } & \$ 4,000 \text { million }\
\text { Total assets }& \$ 5,000 \text { million } \
\end{array}$ 
a) Calculate the banksʹ desired reserve ratio.
b) An immigrant arrives in Fundland with $10 million, which she deposits in a bank. How much does the immigrantʹs bank lend initially?

Accepted Answer

a) With no excess reserves, the desired

Question 11

Which part of the Federal Reserve System meets every 6 weeks to determine the nationʹs monetary policy?

Accepted Answer

A)  Federal Open Market Committee 
B)  Board of Governors 
C)  depository institutions such as commercial banks 
D)  the Federal Reserve Banks 
A)  Federal Open Market Committee 
B)  Board of Governors 
C)  depository institutions such as commercial banks 
D)  the Federal Reserve Banks

Question 12

The main policy making group that makes decisions about the nationʹs monetary policy is the

Accepted Answer

A)  federal government. 
B)  Federal Open Market Committee. 
C)  Federal Reserve Banks. 
D)  Board of Governors. 
A)  federal government. 
B)  Federal Open Market Committee. 
C)  Federal Reserve Banks. 
D)  Board of Governors.

Question 13

The Federal Reserve System

Accepted Answer

A)  has officers that are elected, like members of Congress. 
B)  was recently declared unconstitutional by the Supreme Court. 
C)  controls the amount of currency in circulation. 
D)  is headquartered in San Francisco. 
A)  has officers that are elected, like members of Congress. 
B)  was recently declared unconstitutional by the Supreme Court. 
C)  controls the amount of currency in circulation. 
D)  is headquartered in San Francisco.

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

Which of the following is an asset of the Fed?

Accepted Answer

A)  Federal Reserve notes 
B)  banksʹ deposits 
C)  loans to depository institutions 
D)  Both answers B and C are correct. 
A)  Federal Reserve notes 
B)  banksʹ deposits 
C)  loans to depository institutions 
D)  Both answers B and C are correct.

Question 16

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

Accepted Answer

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

Question 17

Which of the following is TRUE regarding the Federal Open Market Committee FOMC)?

Accepted Answer

A)  Representatives from each state control its operation. 
B)  It is the main policy-making group of the Congress. 
C)  It meets about every six weeks to decide on monetary policy. 
D)  Both answers A and C are correct. 
A)  Representatives from each state control its operation. 
B)  It is the main policy-making group of the Congress. 
C)  It meets about every six weeks to decide on monetary policy. 
D)  Both answers A and C are correct.

Question 18

Which of the following measures is NOT included in the M1 definition of money?

Accepted Answer

A)  time deposits 
B)  travelers checks 
C)  checking deposits 
D)  currency held by the public 
A)  time deposits 
B)  travelers checks 
C)  checking deposits 
D)  currency held by the public

Question 19

If the price level doubles, the

Accepted Answer

A)  nominal demand for money decreases. 
B)  real demand for money increases. 
C)  real demand for money decreases. 
D)  nominal demand for money increases. 
A)  nominal demand for money decreases. 
B)  real demand for money increases. 
C)  real demand for money decreases. 
D)  nominal demand for money increases.

Question 20

The interest rate banks charge other banks for overnight loans is

Accepted Answer

A)  higher than interest rates for securities and loans. 
B)  targeted by the FDIC 
C)  the federal funds rate. 
D)  lower than interest rates for loans, but higher than interest rates for securities. 
A)  higher than interest rates for securities and loans. 
B)  targeted by the FDIC 
C)  the federal funds rate. 
D)  lower than interest rates for loans, but higher than interest rates for securities.

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

In 2007, interest rates in Germany were 4.7 percent while the inflation rate was 1.7 percent. In 2008, interest rates increased to 5.3 percent and the inflation rate increased to 2.0. As a result, there is

ʺBecause monetary policy must be approved by the president of the United States, the president is chair of the Federal Open Market Committee.ʺ Analyze the previous statement is it correct or incorrect?

Monetary policy is conducted

When the Fed sells one million dollars in securities to a commercial bank,

The Federal Open Market Committee

Most of the day-to-day power in monetary policy decisions lies with

_ in the desired reserve ratio will _ the money multiplier.

Liquidity is the

Which part of the Federal Reserve System meets every 6 weeks to determine the nationʹs monetary policy?

The main policy making group that makes decisions about the nationʹs monetary policy is the

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.

Which of the following is an asset of the Fed?

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

Which of the following is TRUE regarding the Federal Open Market Committee FOMC)?

Which of the following measures is NOT included in the M1 definition of money?

If the price level doubles, the

The interest rate banks charge other banks for overnight loans 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

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

In 2007, interest rates in Germany were 4.7 percent while the inflation rate was 1.7 percent. In 2008, interest rates increased to 5.3 percent and the inflation rate increased to 2.0. As a result, there is

ʺBecause monetary policy must be approved by the president of the United States, the president is chair of the Federal Open Market Committee.ʺ Analyze the previous statement is it correct or incorrect?

Monetary policy is conducted

When the Fed sells one million dollars in securities to a commercial bank,

The Federal Open Market Committee

Most of the day-to-day power in monetary policy decisions lies with

_____________ in the desired reserve ratio will _____________ the money multiplier.

Liquidity is the

Which part of the Federal Reserve System meets every 6 weeks to determine the nationʹs monetary policy?

The main policy making group that makes decisions about the nationʹs monetary policy is the

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.

Which of the following is an asset of the Fed?

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

Which of the following is TRUE regarding the Federal Open Market Committee FOMC)?

Which of the following measures is NOT included in the M1 definition of money?

If the price level doubles, the

The interest rate banks charge other banks for overnight loans 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

_ in the desired reserve ratio will _ the money multiplier.