Question 1

If the money supply is $200 million,the reserve requirement is 20%,and currency holding $10 million,then reserves are

Accepted Answer

A) $10 million. 
B) $40 million. 
C) $30 million. 
D) $40 million 
E) none of the above 
A) $10 million. 
B) $40 million. 
C) $30 million. 
D) $40 million 
E) none of the above C

Question 2

Which would be a liability on a balance sheet of a commercial bank?

Accepted Answer

A) An outstanding commercial loan 
B) A U.S.Treasury bond 
C) A certificate of deposit issued by the bank 
D) Vault cash 
E) None of the above 
A) An outstanding commercial loan 
B) A U.S.Treasury bond 
C) A certificate of deposit issued by the bank 
D) Vault cash 
E) None of the above C

Question 3

In the Keynesian model,a Federal Reserve sale of government securities in the open market will

Accepted Answer

A) raise the level of income and lower the interest rate. 
B) raise the level of income and raise the interest rate. 
C) lower the level of income and the interest rate. 
D) lower the level of income and raise the interest rate. 
A) raise the level of income and lower the interest rate. 
B) raise the level of income and raise the interest rate. 
C) lower the level of income and the interest rate. 
D) lower the level of income and raise the interest rate. D

Question 4

During the Great Depression,the money supply fell 28%.During that same time,the monetary base ____ and the currency-to-deposit ratio and reserve-to-deposit ratios both _____.

Accepted Answer

A) rose; fell 
B) rose; rose 
C) fell; rose 
D) fell; fell 
A) rose; fell 
B) rose; rose 
C) fell; rose 
D) fell; fell

Question 5

Suppose that the balance sheet of Local State Bank is as follows:

Accepted Answer

ASSETS LIABILITIES Reserves $15,000 Chec

Question 6

Assuming a decrease in money demand,then to keep interest rates constant the Fed must

Accepted Answer

A) keep the money supply constant. 
B) conduct an open market sale of bonds. 
C) accommodate the decreased demand for money by the public by increasing the money supply. 
D) All of the above 
E) None of the above 
A) keep the money supply constant. 
B) conduct an open market sale of bonds. 
C) accommodate the decreased demand for money by the public by increasing the money supply. 
D) All of the above 
E) None of the above

Question 7

Assume the Federal Reserve increases the required reserve ratio from 10 to 20 percent and reserves are $80 billion.Then the change in the money supply will be

Accepted Answer

A) $80 billion. 
B) $20 billion. 
C) $400 billion. 
D) $800 billion. 
E) none of the above 
A) $80 billion. 
B) $20 billion. 
C) $400 billion. 
D) $800 billion. 
E) none of the above

Question 8

Which of the following variables that affect the money stock are outside the direct control of the Federal Reserve?

Accepted Answer

A) Currency/deposit ratio 
B) Excess reserve/deposit ratio 
C) Required reserve/deposit ratio 
D) The speed of the money creation process. 
E) Both a and b 
A) Currency/deposit ratio 
B) Excess reserve/deposit ratio 
C) Required reserve/deposit ratio 
D) The speed of the money creation process. 
E) Both a and b

Question 9

Which of the following is not a function of the Fed?

Accepted Answer

A) control the required reserve ratio. 
B) control the amount of commercial lending in the banking system. 
C) serve as a lender to commercial banks. 
D) conduct purchases and sales of government bonds. 
E) regulate commercial banks. 
A) control the required reserve ratio. 
B) control the amount of commercial lending in the banking system. 
C) serve as a lender to commercial banks. 
D) conduct purchases and sales of government bonds. 
E) regulate commercial banks.

Question 10

Why did the money supply fall during the Great Depression?

Accepted Answer

A) The monetary base fell throughout the Great Depression. 
B) The amount of currency fell during the Great Depression. 
C) The ratio of currency/deposits fell during the Great Depression. 
D) The money multipier rose during the Great Depression. 
E) None of the above. 
A) The monetary base fell throughout the Great Depression. 
B) The amount of currency fell during the Great Depression. 
C) The ratio of currency/deposits fell during the Great Depression. 
D) The money multipier rose during the Great Depression. 
E) None of the above.

Question 11

Primary assets held by the Federal Reserve are

Accepted Answer

A) loans to commercial banks. 
B) U.S.government securities. 
C) Federal Reserve notes. 
D) reserve deposits by banks. 
A) loans to commercial banks. 
B) U.S.government securities. 
C) Federal Reserve notes. 
D) reserve deposits by banks.

Question 12

The monetary base consists of

Accepted Answer

A) government securities held by the Federal Reserve. 
B) the money supply. 
C) currency and bank deposits at the Federal Reserve. 
D) currency and bank reserve deposits at the Federal Reserve. 
E) currency and bank deposits. 
A) government securities held by the Federal Reserve. 
B) the money supply. 
C) currency and bank deposits at the Federal Reserve. 
D) currency and bank reserve deposits at the Federal Reserve. 
E) currency and bank deposits.

Question 13

What is the effect of a Federal Reserve open market sale? What happens to interest rates in the money market and federal funds market as a result? Provide a graph of the money market and federal funds market to illustrate.

Accepted Answer

An open market sale reduces bank reserve

Question 14

If the Federal Reserve simultaneously sells government bonds in the open market and raises reserve requirements,the

Accepted Answer

A) money supply will increase. 
B) money supply will decrease. 
C) money supply will stay the same. 
D) two tools will work against one another and the net effect on the money supply is uncertain. 
A) money supply will increase. 
B) money supply will decrease. 
C) money supply will stay the same. 
D) two tools will work against one another and the net effect on the money supply is uncertain.

Question 15

Which of the following functions express the money multiplier (m)for the narrowly defined money stock (M1)?

Accepted Answer

A) m = ΔMs/Δ(M
B) = m(rrd) 
B) m = ΔMs/Δ(M
B) = m(rrd,CU/D,ER/
D)  
C) m = ΔMs/Δ(M
B) = m(rrd + CU/
D)  
D) m = ΔMs/Δ(M
B) = m(rr/D,CU/D,RR/
D)  
A) m = ΔMs/Δ(M
B) = m(rrd) 
B) m = ΔMs/Δ(M
B) = m(rrd,CU/D,ER/
D)  
C) m = ΔMs/Δ(M
B) = m(rrd + CU/
D)  
D) m = ΔMs/Δ(M
B) = m(rr/D,CU/D,RR/
D)

Question 16

If the monetary base doubles but the ratios of currency/deposit and reserves/deposits remain the same,then:

Accepted Answer

A) The money supply doubles. 
B) The money supply quandrouples. 
C) The money supply changes by two times the money multiplier. 
D) The money supply remains unchanged. 
A) The money supply doubles. 
B) The money supply quandrouples. 
C) The money supply changes by two times the money multiplier. 
D) The money supply remains unchanged.

Question 17

If the Fed follows a policy of fixed exchange rates,an undervalued dollar will force the Fed to

Accepted Answer

A) conduct open market purchases. 
B) raise the discount rate. 
C) raise the required reserve ratio. 
D) cut taxes or raise government spending. 
A) conduct open market purchases. 
B) raise the discount rate. 
C) raise the required reserve ratio. 
D) cut taxes or raise government spending.

Question 18

The most commonly used tool by the Federal Reserve to control the monetary base is

Accepted Answer

A) changes in the discount rate. 
B) changes in tax rates on commercial banks. 
C) changes in legal required reserve ratios. 
D) open market operations. 
A) changes in the discount rate. 
B) changes in tax rates on commercial banks. 
C) changes in legal required reserve ratios. 
D) open market operations.

Question 19

If you write a check for $100 to your roommate who immediately deposits it,what is the maximum amount of change in the money supply?

Accepted Answer

There is no change i

Question 20

The Open Market Committee is composed of

Accepted Answer

A) the 7 members of the Board of Governors. 
B) the 7 members of the Board of Governors and the president of the Federal Reserve Bank in New York. 
C) 12 voting members,and of these,5 are presidents of regional Federal Reserve banks and the other 7 are the members of the Board of Governors. 
D) the presidents of each of the 12 Federal Reserve banks. 
A) the 7 members of the Board of Governors. 
B) the 7 members of the Board of Governors and the president of the Federal Reserve Bank in New York. 
C) 12 voting members,and of these,5 are presidents of regional Federal Reserve banks and the other 7 are the members of the Board of Governors. 
D) the presidents of each of the 12 Federal Reserve banks.

If the money supply is $200 million,the reserve requirement is 20%,and currency holding $10 million,then reserves are

Which would be a liability on a balance sheet of a commercial bank?

In the Keynesian model,a Federal Reserve sale of government securities in the open market will

During the Great Depression,the money supply fell 28%.During that same time,the monetary base and the currency-to-deposit ratio and reserve-to-deposit ratios both _.

Suppose that the balance sheet of Local State Bank is as follows:

Assuming a decrease in money demand,then to keep interest rates constant the Fed must

Assume the Federal Reserve increases the required reserve ratio from 10 to 20 percent and reserves are $80 billion.Then the change in the money supply will be

Which of the following variables that affect the money stock are outside the direct control of the Federal Reserve?

Which of the following is not a function of the Fed?

Why did the money supply fall during the Great Depression?

Primary assets held by the Federal Reserve are

The monetary base consists of

What is the effect of a Federal Reserve open market sale? What happens to interest rates in the money market and federal funds market as a result? Provide a graph of the money market and federal funds market to illustrate.

If the Federal Reserve simultaneously sells government bonds in the open market and raises reserve requirements,the

Which of the following functions express the money multiplier (m)for the narrowly defined money stock (M1)?

If the monetary base doubles but the ratios of currency/deposit and reserves/deposits remain the same,then:

If the Fed follows a policy of fixed exchange rates,an undervalued dollar will force the Fed to

The most commonly used tool by the Federal Reserve to control the monetary base is

If you write a check for $100 to your roommate who immediately deposits it,what is the maximum amount of change in the money supply?

The Open Market Committee is composed of

Introduction

Measurement of Macroeconomic Variables

Classical Macroeconomics I: Output and Employment

Classical Macroeconomics II: Money,prices,and Interest

Keynesian System I: the Role of Aggregate Demand

Keynesian System II: Money,interest,and Income

Keynesian System III: Policy Effects in the Is-Lm Model

Keynesian System Iv: Aggregate Supply and Demand

The Monetarist Counterrevolution

Output,inflation,and Unemployment: Alternative Views

New Classical Economics

Real Business Cycles and New Keynesian Economics

Macroeconomic Models:a Summary

Exchange Rates and the International Monetary System

Monetary and Fiscal Policy in the Open Economy

Optimal Monetary Policy

Fiscal Policy

Policies for Intermediate-Run Growth

Long-Run Economic Growth: Origins of the Wealth of Nations

Filters

Exam 16: Money,the Banking System,and Interest Rates

If the money supply is $200 million,the reserve requirement is 20%,and currency holding $10 million,then reserves are

Which would be a liability on a balance sheet of a commercial bank?

In the Keynesian model,a Federal Reserve sale of government securities in the open market will

During the Great Depression,the money supply fell 28%.During that same time,the monetary base ____ and the currency-to-deposit ratio and reserve-to-deposit ratios both _____.

Suppose that the balance sheet of Local State Bank is as follows:

Assuming a decrease in money demand,then to keep interest rates constant the Fed must

Assume the Federal Reserve increases the required reserve ratio from 10 to 20 percent and reserves are $80 billion.Then the change in the money supply will be

Which of the following variables that affect the money stock are outside the direct control of the Federal Reserve?

Which of the following is not a function of the Fed?

Why did the money supply fall during the Great Depression?

Primary assets held by the Federal Reserve are

The monetary base consists of

What is the effect of a Federal Reserve open market sale? What happens to interest rates in the money market and federal funds market as a result? Provide a graph of the money market and federal funds market to illustrate.

If the Federal Reserve simultaneously sells government bonds in the open market and raises reserve requirements,the

Which of the following functions express the money multiplier (m)for the narrowly defined money stock (M1)?

If the monetary base doubles but the ratios of currency/deposit and reserves/deposits remain the same,then:

If the Fed follows a policy of fixed exchange rates,an undervalued dollar will force the Fed to

The most commonly used tool by the Federal Reserve to control the monetary base is

If you write a check for $100 to your roommate who immediately deposits it,what is the maximum amount of change in the money supply?

The Open Market Committee is composed of

Introduction

Measurement of Macroeconomic Variables

Classical Macroeconomics I: Output and Employment

Classical Macroeconomics II: Money,prices,and Interest

Keynesian System I: the Role of Aggregate Demand

Keynesian System II: Money,interest,and Income

Keynesian System III: Policy Effects in the Is-Lm Model

Keynesian System Iv: Aggregate Supply and Demand

The Monetarist Counterrevolution

Output,inflation,and Unemployment: Alternative Views

New Classical Economics

Real Business Cycles and New Keynesian Economics

Macroeconomic Models:a Summary

Exchange Rates and the International Monetary System

Monetary and Fiscal Policy in the Open Economy

Optimal Monetary Policy

Fiscal Policy

Policies for Intermediate-Run Growth

Long-Run Economic Growth: Origins of the Wealth of Nations

Filters

During the Great Depression,the money supply fell 28%.During that same time,the monetary base and the currency-to-deposit ratio and reserve-to-deposit ratios both _.