Question 1

-Refer to Table 13.1. First Commercial Bank's excess reserves equal $ _______.

Accepted Answer

A)  150,000 
B)  100,000 
C)  50,000 
D)  250,000 
A)  150,000 
B)  100,000 
C)  50,000 
D)  250,000

Question 2

Recall Application 2, "The Growth in Excess Reserves" to answer the following questions:
-Based on what you learned from the application, the Fed can induce banks to lend more and increase the money supply by:

Accepted Answer

A)  lowering the interest rate for excess reserves. 
B)  requiring banks to hold on to more excess reserves. 
C)  raising the interest rate for excess reserves. 
D)  raising the reserve requirement. 
A)  lowering the interest rate for excess reserves. 
B)  requiring banks to hold on to more excess reserves. 
C)  raising the interest rate for excess reserves. 
D)  raising the reserve requirement.

Question 3

Which of the following assets is easiest to make transactions with?

Accepted Answer

A)  money market mutual funds 
B)  checking deposits 
C)  currency 
D)  time deposits 
A)  money market mutual funds 
B)  checking deposits 
C)  currency 
D)  time deposits

Question 4

Recall Application 4, "Coping with the Financial Chaos Caused by the Mortgage Crisis," to answer the following
questions:
-According to Application 4, the reason why the FED allowed large currency swaps with other central banks was to:

Accepted Answer

A)  provide foreign banks with dollars to lend when needed. 
B)  provide a system of check collection and clearing. 
C)  increase the value of the US dollar. 
D)  pay down the US Federal government's total debt. 
A)  provide foreign banks with dollars to lend when needed. 
B)  provide a system of check collection and clearing. 
C)  increase the value of the US dollar. 
D)  pay down the US Federal government's total debt.

Question 5

In a traditional gold standard, an individual can present money to the government and receive its stated value in gold.

Accepted Answer

A) True 
 B)False

Question 6

A key result in accounting practices is that:

Accepted Answer

A)  assets - liabilities = owner's equity. 
B)  assets + liabilities = owners' equity. 
C)  liabilities - owners' equity = assets. 
D)  assets + owners' equity = liabilities. 
A)  assets - liabilities = owner's equity. 
B)  assets + liabilities = owners' equity. 
C)  liabilities - owners' equity = assets. 
D)  assets + owners' equity = liabilities.

Question 7

Which of the following is included in M1, but not included in M2?

Accepted Answer

A)  travelers checks 
B)  currency 
C)  checking deposits 
D)  All assets in M1 are included in M2. 
A)  travelers checks 
B)  currency 
C)  checking deposits 
D)  All assets in M1 are included in M2.

Question 8

What is a unit of account? Why is it useful for an economy to have a unit of account?

Accepted Answer

A unit of account is a measuring rod by

Question 9

Money is an imperfect store of value because of:

Accepted Answer

A)  double coincidence of wants. 
B)  currency devaluations. 
C)  tax fraud. 
D)  inflation. 
A)  double coincidence of wants. 
B)  currency devaluations. 
C)  tax fraud. 
D)  inflation.

Question 10

Which of the following is an example of a commodity money?

Accepted Answer

A)  a $20 bill 
B)  bonds 
C)  stocks 
D)  gold 
A)  a $20 bill 
B)  bonds 
C)  stocks 
D)  gold

Question 11

Inflation increases the future purchasing power of money when money is used as a store of value.

Accepted Answer

A) True 
 B)False

Question 12

If the total assets of the bank is less than the banks total liabilities, then:

Accepted Answer

A)  owner's equity is negative. 
B)  owner;s equity is larger than the bank's total assets. 
C)  owner's equity equals the total assets. 
D)  owner's equity is positive. 
A)  owner's equity is negative. 
B)  owner;s equity is larger than the bank's total assets. 
C)  owner's equity equals the total assets. 
D)  owner's equity is positive.

Question 13

There are 19 voting members at the every FOMC meeting.

Accepted Answer

A) True 
 B)False

Question 14

-Refer to Table 13.2. First Charter Bank's total assets:

Accepted Answer

A)  are $700. 
B)  are $500. 
C)  are $900. 
D)  cannot be determined from this information 
A)  are $700. 
B)  are $500. 
C)  are $900. 
D)  cannot be determined from this information

Question 15

When some item on a bank's balance sheet changes, there must be at least one other change somewhere else to maintain balance.

Accepted Answer

A) True 
 B)False

Question 16

The required reserve ratio is 15%. The money multiplier is:

Accepted Answer

A)  5.54. 
B)  8.12. 
C)  5.67. 
D)  6.67. 
A)  5.54. 
B)  8.12. 
C)  5.67. 
D)  6.67.

Question 17

Which of the following is an example of a fiat money?

Accepted Answer

A)  cigarettes 
B)  gold 
C)  jewelry 
D)  a$20 bill 
A)  cigarettes 
B)  gold 
C)  jewelry 
D)  a$20 bill

Question 18

-Refer to Table 13.3. Total loans of People's Bank equal $ _______.

Accepted Answer

A)  640,000 
B)  680,000 
C)  560,000 
D)  440,000 
A)  640,000 
B)  680,000 
C)  560,000 
D)  440,000

Question 19

A country with a central bank that is not independent of external political pressure is a country that tends to have higher inflation.

Accepted Answer

A) True 
 B)False

Question 20

Currency held by the public is included in:

Accepted Answer

A)  neither M1 nor M2. 
B)  M2 only. 
C)  M1 only. 
D)  both M1 and M2. 
A)  neither M1 nor M2. 
B)  M2 only. 
C)  M1 only. 
D)  both M1 and M2.

-Refer to Table 13.1. First Commercial Bank's excess reserves equal $ _______.

Recall Application 2, "The Growth in Excess Reserves" to answer the following questions: -Based on what you learned from the application, the Fed can induce banks to lend more and increase the money supply by:

Which of the following assets is easiest to make transactions with?

Recall Application 4, "Coping with the Financial Chaos Caused by the Mortgage Crisis," to answer the following questions: -According to Application 4, the reason why the FED allowed large currency swaps with other central banks was to:

In a traditional gold standard, an individual can present money to the government and receive its stated value in gold.

A key result in accounting practices is that:

Which of the following is included in M1, but not included in M2?

What is a unit of account? Why is it useful for an economy to have a unit of account?

Money is an imperfect store of value because of:

Which of the following is an example of a commodity money?

Inflation increases the future purchasing power of money when money is used as a store of value.

If the total assets of the bank is less than the banks total liabilities, then:

There are 19 voting members at the every FOMC meeting.

-Refer to Table 13.2. First Charter Bank's total assets:

When some item on a bank's balance sheet changes, there must be at least one other change somewhere else to maintain balance.

The required reserve ratio is 15%. The money multiplier is:

Which of the following is an example of a fiat money?

-Refer to Table 13.3. Total loans of People's Bank equal $ _______.

A country with a central bank that is not independent of external political pressure is a country that tends to have higher inflation.

Currency held by the public is included in:

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

-Refer to Table 13.1. First Commercial Bank's excess reserves equal $ _______.

Recall Application 2, "The Growth in Excess Reserves" to answer the following questions: -Based on what you learned from the application, the Fed can induce banks to lend more and increase the money supply by:

Which of the following assets is easiest to make transactions with?

Recall Application 4, "Coping with the Financial Chaos Caused by the Mortgage Crisis," to answer the following questions: -According to Application 4, the reason why the FED allowed large currency swaps with other central banks was to:

In a traditional gold standard, an individual can present money to the government and receive its stated value in gold.

A key result in accounting practices is that:

Which of the following is included in M1, but not included in M2?

What is a unit of account? Why is it useful for an economy to have a unit of account?

Money is an imperfect store of value because of:

Which of the following is an example of a commodity money?

Inflation increases the future purchasing power of money when money is used as a store of value.

If the total assets of the bank is less than the banks total liabilities, then:

There are 19 voting members at the every FOMC meeting.

-Refer to Table 13.2. First Charter Bank's total assets:

When some item on a bank's balance sheet changes, there must be at least one other change somewhere else to maintain balance.

The required reserve ratio is 15%. The money multiplier is:

Which of the following is an example of a fiat money?

-Refer to Table 13.3. Total loans of People's Bank equal $ _______.

A country with a central bank that is not independent of external political pressure is a country that tends to have higher inflation.

Currency held by the public is included in:

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