Question 1

If you transfer $1,000 from your savings account to your checking account:

Accepted Answer

A)  M1 decreases by $1,000, and M2 increases by $1,000. 
B)  M1 increases by $1,000, and M2 decreases by $1,000. 
C)  M1 and M2 don't change. 
D)  M1 increases by $1,000, but M2 doesn't change. 
A)  M1 decreases by $1,000, and M2 increases by $1,000. 
B)  M1 increases by $1,000, and M2 decreases by $1,000. 
C)  M1 and M2 don't change. 
D)  M1 increases by $1,000, but M2 doesn't change. D

Question 2

When a person makes price comparisons among products, money is being used mainly as a(n):

Accepted Answer

A)  unit of account. 
B)  expander of economic activity. 
C)  medium of exchange. 
D)  checkable deposit. 
A)  unit of account. 
B)  expander of economic activity. 
C)  medium of exchange. 
D)  checkable deposit. A

Question 3

Money is any asset that:

Accepted Answer

A)  the government says is money. 
B)  can easily be used to purchase goods and services. 
C)  has a positive value. 
D)  the government says is money and that has a positive value. 
A)  the government says is money. 
B)  can easily be used to purchase goods and services. 
C)  has a positive value. 
D)  the government says is money and that has a positive value. B

Question 4

Which asset is one that most people would consider money?

Accepted Answer

A)  a house 
B)  shares of stock in a company 
C)  a checking account balance 
D)  a car 
A)  a house 
B)  shares of stock in a company 
C)  a checking account balance 
D)  a car

Question 5

Currency in circulation is cash: I. held by the public.
II) in the vaults of commercial banks.
III) in the vault of the Federal Reserve.

Accepted Answer

A)  I only 
B)  II only 
C)  III only 
D)  I, II, and III 
A)  I only 
B)  II only 
C)  III only 
D)  I, II, and III

Question 6

If banks were required to keep 100% of deposits in reserves, they could:

Accepted Answer

A)  make more loans. 
B)  make no loans. 
C)  make more deposits. 
D)  use excess reserves for loans. 
A)  make more loans. 
B)  make no loans. 
C)  make more deposits. 
D)  use excess reserves for loans.

Question 7

Use the following to answer questions:  
-(Scenario: Assets and Liabilities of the Banking System) Refer to Scenario: Assets and Liabilities of the Banking System. If the reserve ratio is 6% and the banking system does NOT want to hold excess reserves, how much more can be added to the money supply?

Accepted Answer

A)  about $667,000 
B)  about $111,000 
C)  $250,000 
D)  $1 million 
A)  about $667,000 
B)  about $111,000 
C)  $250,000 
D)  $1 million

Question 8

Among the liabilities of banks are:

Accepted Answer

A)  customers' deposits. 
B)  loans. 
C)  reserves. 
D)  loans and reserves. 
A)  customers' deposits. 
B)  loans. 
C)  reserves. 
D)  loans and reserves.

Question 9

Which example is NOT a role of money?

Accepted Answer

A)  measure of wealth 
B)  medium of exchange 
C)  unit of account 
D)  store of value 
A)  measure of wealth 
B)  medium of exchange 
C)  unit of account 
D)  store of value

Question 10

Bank reserves are:

Accepted Answer

A)  the fraction of deposits kept in gold with the Federal Reserve. 
B)  the deposits lent to finance illiquid investments. 
C)  the fraction of deposits kept in the form of very liquid assets. 
D)  gold kept in the bank's vault. 
A)  the fraction of deposits kept in gold with the Federal Reserve. 
B)  the deposits lent to finance illiquid investments. 
C)  the fraction of deposits kept in the form of very liquid assets. 
D)  gold kept in the bank's vault.

Question 11

The U.S. dollar is an example of:

Accepted Answer

A)  commodity-backed money. 
B)  fiat money. 
C)  commodity money. 
D)  near-money. 
A)  commodity-backed money. 
B)  fiat money. 
C)  commodity money. 
D)  near-money.

Question 12

Prior to the Civil War:

Accepted Answer

A)  the U.S. government issued paper money but only in small quantities. 
B)  the U.S. government did not allow banks to issue private money. 
C)  the U.S. government did not issue paper money. 
D)  all private money issued by banks was of equal value. 
A)  the U.S. government issued paper money but only in small quantities. 
B)  the U.S. government did not allow banks to issue private money. 
C)  the U.S. government did not issue paper money. 
D)  all private money issued by banks was of equal value.

Question 13

Which entity acts to protect depositors from a bank run by insuring all deposits up to $250,000?

Accepted Answer

A)  the FDIC 
B)  the Department of Justice 
C)  the Federal Reserve 
D)  the Office of Management and Budget 
A)  the FDIC 
B)  the Department of Justice 
C)  the Federal Reserve 
D)  the Office of Management and Budget

Question 14

A bank run occurs when:

Accepted Answer

A)  too many people are trying to borrow more at one time. 
B)  many bank depositors are trying to withdraw their funds from the bank. 
C)  interest rates start to increase. 
D)  interest rates are higher than inflation rates. 
A)  too many people are trying to borrow more at one time. 
B)  many bank depositors are trying to withdraw their funds from the bank. 
C)  interest rates start to increase. 
D)  interest rates are higher than inflation rates.

Question 15

An example of a double coincidence of wants is:

Accepted Answer

A)  a car mechanic who wants a TV finding an owner of an electronics store who wants a car repaired. 
B)  a car dealer who wants a TV finding an electronics store owner who wants money. 
C)  an electronics store owner who wants car repairs finding a car mechanic who wants money. 
D)  a car dealer who wants a new employee finding a car mechanic who wants money. 
A)  a car mechanic who wants a TV finding an owner of an electronics store who wants a car repaired. 
B)  a car dealer who wants a TV finding an electronics store owner who wants money. 
C)  an electronics store owner who wants car repairs finding a car mechanic who wants money. 
D)  a car dealer who wants a new employee finding a car mechanic who wants money.

Question 16

A bond is considered:

Accepted Answer

A)  an asset for the owner and is not part of the money supply. 
B)  M1. 
C)  M2. 
D)  a liability for the owner and is part of the money supply. 
A)  an asset for the owner and is not part of the money supply. 
B)  M1. 
C)  M2. 
D)  a liability for the owner and is part of the money supply.

Question 17

Which asset is part of M1?

Accepted Answer

A)  gold 
B)  shares of corporate stock 
C)  currency in a bank's vault 
D)  traveler's checks 
A)  gold 
B)  shares of corporate stock 
C)  currency in a bank's vault 
D)  traveler's checks

Question 18

Money that the government has ordered to be accepted as money is:

Accepted Answer

A)  fiat money. 
B)  not usable in international transactions. 
C)  convertible paper money. 
D)  commodity money. 
A)  fiat money. 
B)  not usable in international transactions. 
C)  convertible paper money. 
D)  commodity money.

Question 19

Banks don't lend out all of the funds deposited because:

Accepted Answer

A)  it would not be profitable. 
B)  they have to satisfy any depositor who wants to withdraw funds. 
C)  they have to reduce their liquidity position. 
D)  they have to make more money on interest-bearing deposits. 
A)  it would not be profitable. 
B)  they have to satisfy any depositor who wants to withdraw funds. 
C)  they have to reduce their liquidity position. 
D)  they have to make more money on interest-bearing deposits.

Question 20

Money used to buy groceries is a:

Accepted Answer

A)  medium of exchange. 
B)  reserve of wealth. 
C)  unit of account. 
D)  store of value. 
A)  medium of exchange. 
B)  reserve of wealth. 
C)  unit of account. 
D)  store of value.

If you transfer $1,000 from your savings account to your checking account:

When a person makes price comparisons among products, money is being used mainly as a(n):

Money is any asset that:

Which asset is one that most people would consider money?

Currency in circulation is cash: I. held by the public. II) in the vaults of commercial banks. III) in the vault of the Federal Reserve.

If banks were required to keep 100% of deposits in reserves, they could:

Use the following to answer questions: -(Scenario: Assets and Liabilities of the Banking System) Refer to Scenario: Assets and Liabilities of the Banking System. If the reserve ratio is 6% and the banking system does NOT want to hold excess reserves, how much more can be added to the money supply?

Among the liabilities of banks are:

Which example is NOT a role of money?

Bank reserves are:

The U.S. dollar is an example of:

Prior to the Civil War:

Which entity acts to protect depositors from a bank run by insuring all deposits up to $250,000?

A bank run occurs when:

An example of a double coincidence of wants is:

A bond is considered:

Which asset is part of M1?

Money that the government has ordered to be accepted as money is:

Banks don't lend out all of the funds deposited because:

Money used to buy groceries is a:

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

GDP and the CPI: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters

Exam 14: Money, Banking, and the Federal Reserve System

If you transfer $1,000 from your savings account to your checking account:

When a person makes price comparisons among products, money is being used mainly as a(n):

Money is any asset that:

Which asset is one that most people would consider money?

Currency in circulation is cash: I. held by the public. II) in the vaults of commercial banks. III) in the vault of the Federal Reserve.

If banks were required to keep 100% of deposits in reserves, they could:

Use the following to answer questions: -(Scenario: Assets and Liabilities of the Banking System) Refer to Scenario: Assets and Liabilities of the Banking System. If the reserve ratio is 6% and the banking system does NOT want to hold excess reserves, how much more can be added to the money supply?

Among the liabilities of banks are:

Which example is NOT a role of money?

Bank reserves are:

The U.S. dollar is an example of:

Prior to the Civil War:

Which entity acts to protect depositors from a bank run by insuring all deposits up to $250,000?

A bank run occurs when:

An example of a double coincidence of wants is:

A bond is considered:

Which asset is part of M1?

Money that the government has ordered to be accepted as money is:

Banks don't lend out all of the funds deposited because:

Money used to buy groceries is a:

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

GDP and the CPI: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters