Question 1

Currency held by the public + demand deposits + travelers checks + other checkable deposits =:

Accepted Answer

A)  M3. 
B)  M3 - M1. 
C)  M2 - M1. 
D)  M1. 
A)  M3. 
B)  M3 - M1. 
C)  M2 - M1. 
D)  M1. D

Question 2

A store of value transfers purchasing power to the future.

Accepted Answer

A) True 
 B)False  True

Question 3

Recall Application 4, "Coping with the Financial Chaos Caused by the Mortgage Crisis," to answer the following
questions:
-According to Application 4, which investment company was in danger of collapse in March 2008 because the market believed that the company made a lot of investment mistakes?

Accepted Answer

A)  Geico 
B)  AIG 
C)  Bank of America 
D)  Bear Stearns 
A)  Geico 
B)  AIG 
C)  Bank of America 
D)  Bear Stearns D

Question 4

The Republic Bank has $2 million in deposits and $250,000 in reserves. If the required reserve ratio is 10%, excess reserves are equal to:

Accepted Answer

A)  $200,000. 
B)  zero. 
C)  $450,000 
D)  $50,000. 
A)  $200,000. 
B)  zero. 
C)  $450,000 
D)  $50,000.

Question 5

Excess reserves in a bank are the difference between required reserves and the bank's total net worth.

Accepted Answer

A) True 
 B)False

Question 6

If a bank chooses to keep reserves more than what is required by law, then these are called:

Accepted Answer

A)  bank equity. 
B)  required reserves. 
C)  excess reserves. 
D)  supplemental reserves. 
A)  bank equity. 
B)  required reserves. 
C)  excess reserves. 
D)  supplemental reserves.

Question 7

Third National Bank has $750 million in deposits. The required reserve ratio is 15%. Third National Bank must keep _______ in reserves.

Accepted Answer

A)  $60.5 million 
B)  $160.5 million 
C)  $112..5 million 
D)  $150.5 million 
A)  $60.5 million 
B)  $160.5 million 
C)  $112..5 million 
D)  $150.5 million

Question 8

Explain what is meant by "barter" and discuss what role the double coincidence of wants plays in a barter economy.

Accepted Answer

Barter represents an economic system whe

Question 9

Commercial banks:

Accepted Answer

A)  are nonprofit organizations that lend and borrow funds. 
B)  print all the money used in the US. 
C)  are financial intermediaries that lend funds and accept deposits. 
D)  conducts monetary policy. 
A)  are nonprofit organizations that lend and borrow funds. 
B)  print all the money used in the US. 
C)  are financial intermediaries that lend funds and accept deposits. 
D)  conducts monetary policy.

Question 10

Best Buy, a retailer of electronics, has 500 different products in inventory. Best Buy reports its inventory is worth $10 million. This is an example of using money as a:

Accepted Answer

A)  store of value. 
B)  medium of exchange. 
C)  standard of deferred payment. 
D)  unit of account. 
A)  store of value. 
B)  medium of exchange. 
C)  standard of deferred payment. 
D)  unit of account.

Question 11

-Refer to Table 13.3. The required reserve ratio is:

Accepted Answer

A)  5%. 
B)  7%. 
C)  6%. 
D)  8%. 
A)  5%. 
B)  7%. 
C)  6%. 
D)  8%.

Question 12

Recall Application 4, "Coping with the Financial Chaos Caused by the Mortgage Crisis," to answer the following
questions:
-According to Application 4, the purchase of short term commercial paper from nonfinancial corporations is a function of the Fed that was outlined in the Federal Reserve Act of 1913.

Accepted Answer

A) True 
 B)False

Question 13

-Refer to Table 13.4. First Charter Bank will have zero excess reserves if the required reserve ratio is:

Accepted Answer

A)  10%. 
B)  20%. 
C)  30%. 
D)  15%. 
A)  10%. 
B)  20%. 
C)  30%. 
D)  15%.

Question 14

There are 12 members of the FOMC.

Accepted Answer

A) True 
 B)False

Question 15

If Bob withdraws $100 from his checking account and the reserve requirement is 10 percent, then:

Accepted Answer

A)  the money supply will decrease by exactly $100. 
B)  the money supply can increase by as much as $1000. 
C)  the money supply will decrease by less than $10. 
D)  the money supply can decrease by as much as $1000. 
A)  the money supply will decrease by exactly $100. 
B)  the money supply can increase by as much as $1000. 
C)  the money supply will decrease by less than $10. 
D)  the money supply can decrease by as much as $1000.

Question 16

ecall Application 3, "The Financial System Under Stress: September 11, 2001," to answer the following questions:
-The Federal Reserve Float is:

Accepted Answer

A)  the difference between the assets and the liabilities of the Federal Reserve. 
B)  the difference between the assets and the liabilities of all banks. 
C)  the difference between the debits and credits extended by the Fed to the US treasury. 
D)  the difference between debits and credits extended by the Federal Reserve. 
A)  the difference between the assets and the liabilities of the Federal Reserve. 
B)  the difference between the assets and the liabilities of all banks. 
C)  the difference between the debits and credits extended by the Fed to the US treasury. 
D)  the difference between debits and credits extended by the Federal Reserve.

Question 17

Mary wants to trade piano lessons for ice- skating lessons. Sarah wants to trade ice- skating lessons for piano lessons. Mary and Sarah have:

Accepted Answer

A)  a double incidence of demand. 
B)  a double coincidence of wants. 
C)  the basis for a double fiat exchange. 
D)  the basis for a liquidity exchange. 
A)  a double incidence of demand. 
B)  a double coincidence of wants. 
C)  the basis for a double fiat exchange. 
D)  the basis for a liquidity exchange.

Question 18

The Federal Reserve is supervised by Congress.

Accepted Answer

A) True 
 B)False

Question 19

From the perspective of a commercial bank, are the following assets or liabilities?
(a) deposits
(b) loans
(c) reserves

Accepted Answer

(a) liabil

Question 20

The Bank of New York has $4 million in deposits and $350,000 in reserves. If the required reserve ratio is 5%, excess reserves are equal to:

Accepted Answer

A)  $350,000. 
B)  $50,000. 
C)  $150,000. 
D)  $200,000. 
A)  $350,000. 
B)  $50,000. 
C)  $150,000. 
D)  $200,000.

Currency held by the public + demand deposits + travelers checks + other checkable deposits =:

A store of value transfers purchasing power to the future.

Recall Application 4, "Coping with the Financial Chaos Caused by the Mortgage Crisis," to answer the following questions: -According to Application 4, which investment company was in danger of collapse in March 2008 because the market believed that the company made a lot of investment mistakes?

The Republic Bank has $2 million in deposits and $250,000 in reserves. If the required reserve ratio is 10%, excess reserves are equal to:

Excess reserves in a bank are the difference between required reserves and the bank's total net worth.

If a bank chooses to keep reserves more than what is required by law, then these are called:

Third National Bank has $750 million in deposits. The required reserve ratio is 15%. Third National Bank must keep _______ in reserves.

Explain what is meant by "barter" and discuss what role the double coincidence of wants plays in a barter economy.

Commercial banks:

Best Buy, a retailer of electronics, has 500 different products in inventory. Best Buy reports its inventory is worth $10 million. This is an example of using money as a:

-Refer to Table 13.3. The required reserve ratio is:

-Refer to Table 13.4. First Charter Bank will have zero excess reserves if the required reserve ratio is:

There are 12 members of the FOMC.

If Bob withdraws $100 from his checking account and the reserve requirement is 10 percent, then:

ecall Application 3, "The Financial System Under Stress: September 11, 2001," to answer the following questions: -The Federal Reserve Float is:

Mary wants to trade piano lessons for ice- skating lessons. Sarah wants to trade ice- skating lessons for piano lessons. Mary and Sarah have:

The Federal Reserve is supervised by Congress.

From the perspective of a commercial bank, are the following assets or liabilities? (a) deposits (b) loans (c) reserves

The Bank of New York has $4 million in deposits and $350,000 in reserves. If the required reserve ratio is 5%, excess reserves are equal to:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nations Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

Exam 13: Money and the Banking System

Currency held by the public + demand deposits + travelers checks + other checkable deposits =:

A store of value transfers purchasing power to the future.

Recall Application 4, "Coping with the Financial Chaos Caused by the Mortgage Crisis," to answer the following questions: -According to Application 4, which investment company was in danger of collapse in March 2008 because the market believed that the company made a lot of investment mistakes?

The Republic Bank has $2 million in deposits and $250,000 in reserves. If the required reserve ratio is 10%, excess reserves are equal to:

Excess reserves in a bank are the difference between required reserves and the bank's total net worth.

If a bank chooses to keep reserves more than what is required by law, then these are called:

Third National Bank has $750 million in deposits. The required reserve ratio is 15%. Third National Bank must keep _______ in reserves.

Explain what is meant by "barter" and discuss what role the double coincidence of wants plays in a barter economy.

Commercial banks:

Best Buy, a retailer of electronics, has 500 different products in inventory. Best Buy reports its inventory is worth $10 million. This is an example of using money as a:

-Refer to Table 13.3. The required reserve ratio is:

-Refer to Table 13.4. First Charter Bank will have zero excess reserves if the required reserve ratio is:

There are 12 members of the FOMC.

If Bob withdraws $100 from his checking account and the reserve requirement is 10 percent, then:

ecall Application 3, "The Financial System Under Stress: September 11, 2001," to answer the following questions: -The Federal Reserve Float is:

Mary wants to trade piano lessons for ice- skating lessons. Sarah wants to trade ice- skating lessons for piano lessons. Mary and Sarah have:

The Federal Reserve is supervised by Congress.

From the perspective of a commercial bank, are the following assets or liabilities? (a) deposits (b) loans (c) reserves

The Bank of New York has $4 million in deposits and $350,000 in reserves. If the required reserve ratio is 5%, excess reserves are equal to:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nations Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters