Question 1

In a monetary system,people will exchange a good for

Accepted Answer

A)  another good. 
B)  a service. 
C)  money. 
D)  gold or other precious metals. 
A)  another good. 
B)  a service. 
C)  money. 
D)  gold or other precious metals.

Question 2

The required reserve ratio is 10 percent,but banks actually keep 20 percent on reserve.The actual money multiplier will be

Accepted Answer

A)  10. 
B)  9. 
C)  5. 
D)  2. 
E)  1. 
A)  10. 
B)  9. 
C)  5. 
D)  2. 
E)  1.

Question 3

The oversimplified money multiplier formula,when the required reserve ratio is m,is

Accepted Answer

A)  change in money supply = change in reserves × m. 
B)  change in money supply = (1/m)/change in reserves. 
C)  change in money supply = (1/m)× change in reserves. 
D)  change in money supply = m/change in reserves. 
A)  change in money supply = change in reserves × m. 
B)  change in money supply = (1/m)/change in reserves. 
C)  change in money supply = (1/m)× change in reserves. 
D)  change in money supply = m/change in reserves.

Question 4

Inflation increases the use of money as a store of value.

Accepted Answer

A) True 
 B)False

Question 5

Most observers nowadays see monetary policy as much less important than fiscal policy.

Accepted Answer

A) True 
 B)False

Question 6

Many economists believe that savings accounts should be added to M1 because they

Accepted Answer

A)  are larger in size than conventional checking accounts. 
B)  pay larger interest than checking accounts. 
C)  can be transferred quickly into checkable accounts. 
D)  are also insured by the federal government. 
A)  are larger in size than conventional checking accounts. 
B)  pay larger interest than checking accounts. 
C)  can be transferred quickly into checkable accounts. 
D)  are also insured by the federal government.

Question 7

Price levels rarely remain the same.This implies that

Accepted Answer

A)  money is an excellent medium of exchange. 
B)  money is divisible. 
C)  money is a good medium for measuring value. 
D)  money is an imperfect medium for storing value. 
A)  money is an excellent medium of exchange. 
B)  money is divisible. 
C)  money is a good medium for measuring value. 
D)  money is an imperfect medium for storing value.

Question 8

Although a variety of commodities have been used as money,the most commonly used have been

Accepted Answer

A)  stones and cattle. 
B)  shells and beads. 
C)  gold and silver. 
D)  cigarettes and candy bars. 
A)  stones and cattle. 
B)  shells and beads. 
C)  gold and silver. 
D)  cigarettes and candy bars.

Question 9

Fiat money is money

Accepted Answer

A)  backed by land. 
B)  backed by gold or silver. 
C)  that can be converted to gold or silver. 
D)  because a government says it is. 
A)  backed by land. 
B)  backed by gold or silver. 
C)  that can be converted to gold or silver. 
D)  because a government says it is.

Question 10

Banks in the United States may create new money equal to their amount of required reserves.

Accepted Answer

A) True 
 B)False

Question 11

One intention of deposit insurance is to reduce the danger of

Accepted Answer

A)  excess lending. 
B)  excess profits. 
C)  risky lending. 
D)  bank runs. 
E)  All of the above are correct. 
A)  excess lending. 
B)  excess profits. 
C)  risky lending. 
D)  bank runs. 
E)  All of the above are correct.

Question 12

On which of the following assets are you most likely to earn interest income?

Accepted Answer

A)  cash and currency 
B)  checkable deposits 
C)  money market deposit accounts 
D)  gold and other precious metals 
E)  All of the above are correct. 
A)  cash and currency 
B)  checkable deposits 
C)  money market deposit accounts 
D)  gold and other precious metals 
E)  All of the above are correct.

Question 13

Barter transactions involve a double coincidence of wants.

Accepted Answer

A) True 
 B)False

Question 14

Discuss some of the government regulations designed to ensure depositors' safety and to control the money supply.

Accepted Answer

Deposit insurance: The principal innovat

Question 15

Under fractional banking,when a bank lends to a customer

Accepted Answer

A)  the money supply increases. 
B)  bank profitability is decreased. 
C)  the bank is protected from a run. 
D)  bank credit decreases. 
A)  the money supply increases. 
B)  bank profitability is decreased. 
C)  the bank is protected from a run. 
D)  bank credit decreases.

Question 16

Explain the "too big to fail" doctrine.

Accepted Answer

During a financial crisis,some financial

Question 17

Why are credit cards not considered part of the money supply?

Accepted Answer

Credit cards lengthen the period of time

Question 18

Which of the following are included in the M2 definition of the money supply?

Accepted Answer

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

Question 19

The government regulates the banking industry by

Accepted Answer

A)  conducting frequent audits and examinations. 
B)  limiting the kinds of assets that a bank may own. 
C)  limiting the quantity of some kinds of assets that a bank may own. 
D)  All of the above are correct. 
A)  conducting frequent audits and examinations. 
B)  limiting the kinds of assets that a bank may own. 
C)  limiting the quantity of some kinds of assets that a bank may own. 
D)  All of the above are correct.

Question 20

Most checkable deposits are insured up to $250,000 by

Accepted Answer

A)  state banking commissions. 
B)  the Federal Reserve Board. 
C)  U.S.Department of the Treasury. 
D)  the Federal Deposit Insurance Corporation. 
A)  state banking commissions. 
B)  the Federal Reserve Board. 
C)  U.S.Department of the Treasury. 
D)  the Federal Deposit Insurance Corporation.

In a monetary system,people will exchange a good for

The required reserve ratio is 10 percent,but banks actually keep 20 percent on reserve.The actual money multiplier will be

The oversimplified money multiplier formula,when the required reserve ratio is m,is

Inflation increases the use of money as a store of value.

Most observers nowadays see monetary policy as much less important than fiscal policy.

Many economists believe that savings accounts should be added to M1 because they

Price levels rarely remain the same.This implies that

Although a variety of commodities have been used as money,the most commonly used have been

Fiat money is money

Banks in the United States may create new money equal to their amount of required reserves.

One intention of deposit insurance is to reduce the danger of

On which of the following assets are you most likely to earn interest income?

Barter transactions involve a double coincidence of wants.

Discuss some of the government regulations designed to ensure depositors' safety and to control the money supply.

Under fractional banking,when a bank lends to a customer

Explain the "too big to fail" doctrine.

Why are credit cards not considered part of the money supply?

Which of the following are included in the M2 definition of the money supply?

The government regulates the banking industry by

Most checkable deposits are insured up to $250,000 by

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

Exam 12: Money and The Banking System

In a monetary system,people will exchange a good for

The required reserve ratio is 10 percent,but banks actually keep 20 percent on reserve.The actual money multiplier will be

The oversimplified money multiplier formula,when the required reserve ratio is m,is

Inflation increases the use of money as a store of value.

Most observers nowadays see monetary policy as much less important than fiscal policy.

Many economists believe that savings accounts should be added to M1 because they

Price levels rarely remain the same.This implies that

Although a variety of commodities have been used as money,the most commonly used have been

Fiat money is money

Banks in the United States may create new money equal to their amount of required reserves.

One intention of deposit insurance is to reduce the danger of

On which of the following assets are you most likely to earn interest income?

Barter transactions involve a double coincidence of wants.

Discuss some of the government regulations designed to ensure depositors' safety and to control the money supply.

Under fractional banking,when a bank lends to a customer

Explain the "too big to fail" doctrine.

Why are credit cards not considered part of the money supply?

Which of the following are included in the M2 definition of the money supply?

The government regulates the banking industry by

Most checkable deposits are insured up to $250,000 by

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