Question 1

Net worth increases in the same proportion as liabilities increase.

Accepted Answer

A) True 
 B)False

Question 2

During the financial crisis of 2007-2009,the U.S.government determined that

Accepted Answer

A)  AIG was too big to fail but Lehman Brothers was not. 
B)  Lehman Brothers was too big to fail but AIG was not. 
C)  both Lehman Brothers and AIG were too big to fail. 
D)  neither Lehman Brothers nor AIG were too big to fail. 
A)  AIG was too big to fail but Lehman Brothers was not. 
B)  Lehman Brothers was too big to fail but AIG was not. 
C)  both Lehman Brothers and AIG were too big to fail. 
D)  neither Lehman Brothers nor AIG were too big to fail.

Question 3

If the reserve requirement is 20 percent and a new deposit of $10,000 in cash is made by a customer to their checking account,by how much are excess reserves increased?

Accepted Answer

A)  $10,000 
B)  $8,000 
C)  $4,000 
D)  $2,000 
A)  $10,000 
B)  $8,000 
C)  $4,000 
D)  $2,000

Question 4

One inconvenience of commodity money is the need for

Accepted Answer

A)  money to be divisible. 
B)  uniform quality. 
C)  portability. 
D)  All of the above are correct. 
A)  money to be divisible. 
B)  uniform quality. 
C)  portability. 
D)  All of the above are correct.

Question 5

Paper money in the United States is

Accepted Answer

A)  backed by gold in Fort Knox. 
B)  partially backed by gold and silver. 
C)  entirely fiat money. 
D)  fully convertible into gold at fixed prices. 
A)  backed by gold in Fort Knox. 
B)  partially backed by gold and silver. 
C)  entirely fiat money. 
D)  fully convertible into gold at fixed prices.

Question 6

In addition to fiscal policy,the other main tool used to affect aggregate demand is

Accepted Answer

A)  trade policy. 
B)  industrial policy. 
C)  planning policy. 
D)  monetary policy. 
A)  trade policy. 
B)  industrial policy. 
C)  planning policy. 
D)  monetary policy.

Question 7

Modern paper money is fiat money because it is backed only by the faith the holder has in the government that issued it.

Accepted Answer

A) True 
 B)False

Question 8

A principal disadvantage of conventional checking accounts compared to money market mutual funds is that checking accounts

Accepted Answer

A)  are less liquid. 
B)  often do not pay interest. 
C)  cannot be used as a store of value. 
D)  are not insured by deposit insurance. 
A)  are less liquid. 
B)  often do not pay interest. 
C)  cannot be used as a store of value. 
D)  are not insured by deposit insurance.

Question 9

In an economic system with privately owned,profit-maximizing banks,there will always be a difference between

Accepted Answer

A)  private profits and social profits. 
B)  bank profits and other corporate profits. 
C)  bank profits and macroeconomic objectives. 
D)  bank profits and government profits. 
A)  private profits and social profits. 
B)  bank profits and other corporate profits. 
C)  bank profits and macroeconomic objectives. 
D)  bank profits and government profits.

Question 10

The initial development of paper money began when people used ____ as payment for goods and services.

Accepted Answer

A)  credit cards 
B)  commodity money 
C)  goldsmith receipts 
D)  gold bullion 
E)  gold coins 
A)  credit cards 
B)  commodity money 
C)  goldsmith receipts 
D)  gold bullion 
E)  gold coins

Question 11

The net worth of a bank is

Accepted Answer

A)  equal to the value of assets. 
B)  equal to the value of deposits. 
C)  equal to the value of liabilities. 
D)  the value of assets less liabilities. 
E)  the value of loans and securities. 
A)  equal to the value of assets. 
B)  equal to the value of deposits. 
C)  equal to the value of liabilities. 
D)  the value of assets less liabilities. 
E)  the value of loans and securities.

Question 12

Bankers' business decisions effect the money supply because bankers

Accepted Answer

A)  are respected men and women. 
B)  have the ability to create money. 
C)  use a special accounting system developed by the Federal Reserve Board. 
D)  All of the above are correct. 
A)  are respected men and women. 
B)  have the ability to create money. 
C)  use a special accounting system developed by the Federal Reserve Board. 
D)  All of the above are correct.

Question 13

As of December 31,2010,the assets listed on the balance sheet of Bank A were: $1.5 million in cash reserves,and $6 million in outstanding loans to its customers.Its liabilities totaled $6.5 million in checking deposits.What was the bank's net worth on that date?

Accepted Answer

A)  $1 million 
B)  $4.5 million 
C)  $5 million. 
D)  $14 million. 
E)  Zero 
A)  $1 million 
B)  $4.5 million 
C)  $5 million. 
D)  $14 million. 
E)  Zero

Question 14

Why are checking account balances included in the M1 definition of the money supply?

Accepted Answer

A)  They are a traditional form of money that pre-dates paper money. 
B)  They are used to make so many payments. 
C)  They are backed by gold and silver. 
D)  They pay interest. 
A)  They are a traditional form of money that pre-dates paper money. 
B)  They are used to make so many payments. 
C)  They are backed by gold and silver. 
D)  They pay interest.

Question 15

With the invention of banking,one important aspect of money was that

Accepted Answer

A)  banks have some discretion over the money supply. 
B)  banks have complete control over the money supply. 
C)  governments lost all control over the money supply. 
D)  individuals have no discretion over the money supply. 
A)  banks have some discretion over the money supply. 
B)  banks have complete control over the money supply. 
C)  governments lost all control over the money supply. 
D)  individuals have no discretion over the money supply.

Question 16

In what sense can it be said that money is a social invention? How does a barter system of trade compare to the invention of money?

Accepted Answer

Money is a social invention in the sense

Question 17

Currently in the United States,money is backed by

Accepted Answer

A)  silver in the IMF vaults. 
B)  Federal Reserve notes in banks. 
C)  gold in Fort Knox. 
D)  everyone's willingness to accept it. 
A)  silver in the IMF vaults. 
B)  Federal Reserve notes in banks. 
C)  gold in Fort Knox. 
D)  everyone's willingness to accept it.

Question 18

Define the following terms and explain their importance to the study of macroeconomics:
a.
money
b.
M1
c.
near money
d.
bank run

Accepted Answer

a. Money is the standard object used in

Question 19

The type of currency in circulation in the modern U.S.economy is almost entirely

Accepted Answer

A)  commodity money. 
B)  metallic money. 
C)  fiat money. 
D)  silver certificates. 
A)  commodity money. 
B)  metallic money. 
C)  fiat money. 
D)  silver certificates.

Question 20

When people trade goods for money,money is being used as a medium of exchange.

Accepted Answer

A) True 
 B)False

Net worth increases in the same proportion as liabilities increase.

During the financial crisis of 2007-2009,the U.S.government determined that

If the reserve requirement is 20 percent and a new deposit of $10,000 in cash is made by a customer to their checking account,by how much are excess reserves increased?

One inconvenience of commodity money is the need for

Paper money in the United States is

In addition to fiscal policy,the other main tool used to affect aggregate demand is

Modern paper money is fiat money because it is backed only by the faith the holder has in the government that issued it.

A principal disadvantage of conventional checking accounts compared to money market mutual funds is that checking accounts

In an economic system with privately owned,profit-maximizing banks,there will always be a difference between

The initial development of paper money began when people used ____ as payment for goods and services.

The net worth of a bank is

Bankers' business decisions effect the money supply because bankers

As of December 31,2010,the assets listed on the balance sheet of Bank A were: $1.5 million in cash reserves,and $6 million in outstanding loans to its customers.Its liabilities totaled $6.5 million in checking deposits.What was the bank's net worth on that date?

Why are checking account balances included in the M1 definition of the money supply?

With the invention of banking,one important aspect of money was that

In what sense can it be said that money is a social invention? How does a barter system of trade compare to the invention of money?

Currently in the United States,money is backed by

Define the following terms and explain their importance to the study of macroeconomics: a. money b. M1 c. near money d. bank run

The type of currency in circulation in the modern U.S.economy is almost entirely

When people trade goods for money,money is being used as a medium of exchange.

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

Net worth increases in the same proportion as liabilities increase.

During the financial crisis of 2007-2009,the U.S.government determined that

If the reserve requirement is 20 percent and a new deposit of $10,000 in cash is made by a customer to their checking account,by how much are excess reserves increased?

One inconvenience of commodity money is the need for

Paper money in the United States is

In addition to fiscal policy,the other main tool used to affect aggregate demand is

Modern paper money is fiat money because it is backed only by the faith the holder has in the government that issued it.

A principal disadvantage of conventional checking accounts compared to money market mutual funds is that checking accounts

In an economic system with privately owned,profit-maximizing banks,there will always be a difference between

The initial development of paper money began when people used ____ as payment for goods and services.

The net worth of a bank is

Bankers' business decisions effect the money supply because bankers

As of December 31,2010,the assets listed on the balance sheet of Bank A were: $1.5 million in cash reserves,and $6 million in outstanding loans to its customers.Its liabilities totaled $6.5 million in checking deposits.What was the bank's net worth on that date?

Why are checking account balances included in the M1 definition of the money supply?

With the invention of banking,one important aspect of money was that

In what sense can it be said that money is a social invention? How does a barter system of trade compare to the invention of money?

Currently in the United States,money is backed by

Define the following terms and explain their importance to the study of macroeconomics: a. money b. M1 c. near money d. bank run

The type of currency in circulation in the modern U.S.economy is almost entirely

When people trade goods for money,money is being used as a medium of exchange.

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