Question 1

One principle that nearly all economists agree on when defining money is that it should be

Accepted Answer

A)  spendable. 
B)  liquid. 
C)  accepted as payment. 
D)  easily transferable. 
E)  All of the above are correct. 
A)  spendable. 
B)  liquid. 
C)  accepted as payment. 
D)  easily transferable. 
E)  All of the above are correct.

Question 2

What is the criticism leveled against deposit insurance by the FDIC?

Accepted Answer

Depositors who are freed from any risk o

Question 3

Most bank deposits in the United States are insured by the Federal Deposit Insurance Corporation (FDIC).

Accepted Answer

A) True 
 B)False

Question 4

If the banking system has $5 million in excess reserves,and the required reserve ratio is 25 percent,what is the maximum amount by which the money supply can be increased?

Accepted Answer

A)  $25 million 
B)  $20 million 
C)  $5 million 
D)  $2.5 million 
A)  $25 million 
B)  $20 million 
C)  $5 million 
D)  $2.5 million

Question 5

Barter transactions typically take place between two individuals with the same goods to supply.

Accepted Answer

A) True 
 B)False

Question 6

Agraria sends wheat to Cyberia in exchange for computers and technology goods.This is an example of

Accepted Answer

A)  unidirectional trade. 
B)  joint venture. 
C)  barter. 
D)  monetary exchange. 
A)  unidirectional trade. 
B)  joint venture. 
C)  barter. 
D)  monetary exchange.

Question 7

Some bank regulation limits the types of assets that banks may own.The intent of this regulation is to

Accepted Answer

A)  protect banks from competition. 
B)  provide banks with a minimum level of profits. 
C)  limit the level of bank profits. 
D)  maintain bank safety. 
E)  All of the above are correct. 
A)  protect banks from competition. 
B)  provide banks with a minimum level of profits. 
C)  limit the level of bank profits. 
D)  maintain bank safety. 
E)  All of the above are correct.

Question 8

If people begin to hold more cash,the money multiplier process will

Accepted Answer

A)  increase in intensity. 
B)  remain the same. 
C)  decrease in actual size. 
D)  cause larger amounts of excess reserves. 
A)  increase in intensity. 
B)  remain the same. 
C)  decrease in actual size. 
D)  cause larger amounts of excess reserves.

Question 9

Which of the following are not included in the M1 definition of the money supply?

Accepted Answer

A)  cash and currency 
B)  checkable deposits 
C)  money market deposit accounts 
D)  All of the above are included. 
A)  cash and currency 
B)  checkable deposits 
C)  money market deposit accounts 
D)  All of the above are included.

Question 10

In comparison to commodity money,paper money

Accepted Answer

A)  is not portable. 
B)  has no intrinsic value. 
C)  is not divisible. 
D)  cannot be stored. 
E)  All of the above are correct. 
A)  is not portable. 
B)  has no intrinsic value. 
C)  is not divisible. 
D)  cannot be stored. 
E)  All of the above are correct.

Question 11

Which of the following was true regarding sub-prime mortgages that were popular in 2005-2006?

Accepted Answer

A)  More than 90% of these loans were made by regulated banks. 
B)  Bankers expected higher default rates on these loans. 
C)  They were generally fixed rate loans. 
D)  all of the above 
A)  More than 90% of these loans were made by regulated banks. 
B)  Bankers expected higher default rates on these loans. 
C)  They were generally fixed rate loans. 
D)  all of the above

Question 12

Milly Miser removes $250,000 from her mattress and opens a checking account.This single transaction immediately increases the money supply by

Accepted Answer

A)  $250,000. 
B)  $50,000. 
C)  $0. 
D)  −$250,000. 
A)  $250,000. 
B)  $50,000. 
C)  $0. 
D)  −$250,000.

Question 13

If you have a checking account at a local bank,your bank account there is a(n)

Accepted Answer

A)  asset to the bank and an asset to you. 
B)  liability of the bank and a liability of yours. 
C)  liability of the bank and an asset to you. 
D)  asset to the bank and a liability of yours. 
A)  asset to the bank and an asset to you. 
B)  liability of the bank and a liability of yours. 
C)  liability of the bank and an asset to you. 
D)  asset to the bank and a liability of yours.

Question 14

Money that is backed solely by a government decree is referred to as fiat money.

Accepted Answer

A) True 
 B)False

Question 15

The largest portion of the M1 money supply consists of

Accepted Answer

A)  coins in circulation. 
B)  paper currency in circulation. 
C)  savings deposits at credit unions. 
D)  checkable deposits. 
A)  coins in circulation. 
B)  paper currency in circulation. 
C)  savings deposits at credit unions. 
D)  checkable deposits.

Question 16

The concept of money as a "unit of account" involves the use of money to

Accepted Answer

A)  speed transactions. 
B)  reduce shopping time. 
C)  protect against inflation. 
D)  quote prices. 
A)  speed transactions. 
B)  reduce shopping time. 
C)  protect against inflation. 
D)  quote prices.

Question 17

Which of the following assets is most liquid?

Accepted Answer

A)  short-term government bonds 
B)  savings accounts 
C)  checking accounts 
D)  currency and coins 
A)  short-term government bonds 
B)  savings accounts 
C)  checking accounts 
D)  currency and coins

Question 18

As a general rule,you would be unwise to keep a deposit at an FDIC-insured bank in an amount greater than

Accepted Answer

A)  20 percent of the bank's reserves. 
B)  $1,000,000. 
C)  $250,000. 
D)  an infinite amount; there is no limit. 
A)  20 percent of the bank's reserves. 
B)  $1,000,000. 
C)  $250,000. 
D)  an infinite amount; there is no limit.

Question 19

Explain why monetary policy is needed specifically with regard to the existence of excess reserves.Compare and contrast the effectiveness of monetary policy during the Great Depression and the Great Recession?

Accepted Answer

During a recession,banks will maintain e

Question 20

The occurrence of bank failures in the United States

Accepted Answer

A)  ended after 1933 and the creation of the FDIC. 
B)  increased dramatically during the Clinton administration. 
C)  reappeared in intensity in the late 1990s and early 2000s. 
D)  reappeared in the 1980s and early 1990s and again in 2006. 
A)  ended after 1933 and the creation of the FDIC. 
B)  increased dramatically during the Clinton administration. 
C)  reappeared in intensity in the late 1990s and early 2000s. 
D)  reappeared in the 1980s and early 1990s and again in 2006.

One principle that nearly all economists agree on when defining money is that it should be

What is the criticism leveled against deposit insurance by the FDIC?

Most bank deposits in the United States are insured by the Federal Deposit Insurance Corporation (FDIC).

If the banking system has $5 million in excess reserves,and the required reserve ratio is 25 percent,what is the maximum amount by which the money supply can be increased?

Barter transactions typically take place between two individuals with the same goods to supply.

Agraria sends wheat to Cyberia in exchange for computers and technology goods.This is an example of

Some bank regulation limits the types of assets that banks may own.The intent of this regulation is to

If people begin to hold more cash,the money multiplier process will

Which of the following are not included in the M1 definition of the money supply?

In comparison to commodity money,paper money

Which of the following was true regarding sub-prime mortgages that were popular in 2005-2006?

Milly Miser removes $250,000 from her mattress and opens a checking account.This single transaction immediately increases the money supply by

If you have a checking account at a local bank,your bank account there is a(n)

Money that is backed solely by a government decree is referred to as fiat money.

The largest portion of the M1 money supply consists of

The concept of money as a "unit of account" involves the use of money to

Which of the following assets is most liquid?

As a general rule,you would be unwise to keep a deposit at an FDIC-insured bank in an amount greater than

Explain why monetary policy is needed specifically with regard to the existence of excess reserves.Compare and contrast the effectiveness of monetary policy during the Great Depression and the Great Recession?

The occurrence of bank failures in the United States

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

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Exam 12: Money and The Banking System

One principle that nearly all economists agree on when defining money is that it should be

What is the criticism leveled against deposit insurance by the FDIC?

Most bank deposits in the United States are insured by the Federal Deposit Insurance Corporation (FDIC).

If the banking system has $5 million in excess reserves,and the required reserve ratio is 25 percent,what is the maximum amount by which the money supply can be increased?

Barter transactions typically take place between two individuals with the same goods to supply.

Agraria sends wheat to Cyberia in exchange for computers and technology goods.This is an example of

Some bank regulation limits the types of assets that banks may own.The intent of this regulation is to

If people begin to hold more cash,the money multiplier process will

Which of the following are not included in the M1 definition of the money supply?

In comparison to commodity money,paper money

Which of the following was true regarding sub-prime mortgages that were popular in 2005-2006?

Milly Miser removes $250,000 from her mattress and opens a checking account.This single transaction immediately increases the money supply by

If you have a checking account at a local bank,your bank account there is a(n)

Money that is backed solely by a government decree is referred to as fiat money.

The largest portion of the M1 money supply consists of

The concept of money as a "unit of account" involves the use of money to

Which of the following assets is most liquid?

As a general rule,you would be unwise to keep a deposit at an FDIC-insured bank in an amount greater than

Explain why monetary policy is needed specifically with regard to the existence of excess reserves.Compare and contrast the effectiveness of monetary policy during the Great Depression and the Great Recession?

The occurrence of bank failures in the United States

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters