Question 1

Consider the following traders who meet.   Which, if any, pairs of traders has a double coincidence of wants?

Accepted Answer

A) Bill with Mike 
B) Tim with Amy 
C) Bill with Mike, and Tim with Amy 
D) Bill with Tim, and Mike with Amy 
A) Bill with Mike 
B) Tim with Amy 
C) Bill with Mike, and Tim with Amy 
D) Bill with Tim, and Mike with Amy

Question 2

The Fed sets the interest that borrowers pay on loans from

Accepted Answer

A) the discount window and the term auction facility 
B) the discount window but not the term auction facility 
C) the term auction facility but not the discount window 
D) neither the discount window nor the term auction facility 
A) the discount window and the term auction facility 
B) the discount window but not the term auction facility 
C) the term auction facility but not the discount window 
D) neither the discount window nor the term auction facility

Question 3

Economists use the word "money" to refer to

Accepted Answer

A) income generated by the production of goods and services. 
B) those assets regularly used to buy goods and services. 
C) financial assets such as stocks and bonds. 
D) any type of wealth. 
A) income generated by the production of goods and services. 
B) those assets regularly used to buy goods and services. 
C) financial assets such as stocks and bonds. 
D) any type of wealth.

Question 4

A bank which must hold 100 percent reserves opens in an economy that had no banks and a currency of $150. If customers deposit $50 into the bank, what is the value of the money supply?

Accepted Answer

A) $50 
B) $100 
C) $150 
D) $200 
A) $50 
B) $100 
C) $150 
D) $200

Question 5

The banking system currently has $10 billion of reserves, none of which are excess. People hold only deposits and no currency, and the reserve requirement is 10 percent. If the Fed raises the reserve requirement to 12.5 percent and at the same time buys $1 billion worth of bonds, then by how much does the money supply change?

Accepted Answer

A) It falls by $12 billion. 
B) It falls by $19 billion. 
C) It falls by $21 billion. 
D) None of the above is correct. 
A) It falls by $12 billion. 
B) It falls by $19 billion. 
C) It falls by $21 billion. 
D) None of the above is correct.

Question 6

In a fractional-reserve banking system, an increase in reserve requirements

Accepted Answer

A) increases both the money multiplier and the money supply. 
B) decreases both the money multiplier and the money supply. 
C) increases the money multiplier, but decreases the money supply. 
D) decreases the money multiplier, but increases the money supply. 
A) increases both the money multiplier and the money supply. 
B) decreases both the money multiplier and the money supply. 
C) increases the money multiplier, but decreases the money supply. 
D) decreases the money multiplier, but increases the money supply.

Question 7

Table 29-9
Metropolis National Bank is currently holding 2% of its deposits as excess reserves.  
-Refer to Table 29-9. Metropolis National Bank is currently holding 2% of deposits as excess reserves. What is the reserve requirement?

Accepted Answer

A) 12 percent 
B) 10 percent 
C) 8 percent 
D) 6 percent 
A) 12 percent 
B) 10 percent 
C) 8 percent 
D) 6 percent

Question 8

The amount of currency per person in the United States is about

Accepted Answer

A) $110. 
B) $300. 
C) $2,450. 
D) $4,490. 
A) $110. 
B) $300. 
C) $2,450. 
D) $4,490.

Question 9

Which tool of monetary policy does the Federal Reserve use most often?

Accepted Answer

A) term auctions 
B) open-market operations 
C) changes in reserve requirements 
D) changes in the discount rate 
A) term auctions 
B) open-market operations 
C) changes in reserve requirements 
D) changes in the discount rate

Question 10

Who was appointed Chair of the Board of Governors in 2014 by President Barack Obama?

Accepted Answer

A) Ben Bernanke 
B) Christina Romer 
C) Larry Summers 
D) Janet Yellen 
A) Ben Bernanke 
B) Christina Romer 
C) Larry Summers 
D) Janet Yellen

Question 11

Monetary policy is determined by a committee whose voting members include all the presidents of the regional Federal Reserve Banks.

Accepted Answer

A) True 
 B)False

Question 12

The interest rate charged by the Fed to member banks is called the _____.

Accepted Answer

The answer of The interest rate charged by the Fed...

Question 13

If a bank desires to hold no excess reserves, the reserve requirement is 8 percent, and it receives a new deposit of $500,

Accepted Answer

A) its required reserves increase by $40. 
B) its total reserves initially increase by $460. 
C) it will be able to make a new loan of up to $492. 
D) All of the above are correct. 
A) its required reserves increase by $40. 
B) its total reserves initially increase by $460. 
C) it will be able to make a new loan of up to $492. 
D) All of the above are correct.

Question 14

Table 29-7.  
-Refer to Table 29-7. If the Fed requires a reserve ratio of 6 percent, then what quantity of excess reserves does the Bank of Springfield now hold?

Accepted Answer

A) $9,600 
B) $10,800 
C) $10,200 
D) $9,000 
A) $9,600 
B) $10,800 
C) $10,200 
D) $9,000

Question 15

The members of the Federal Reserve's Board of Governors

Accepted Answer

A) are elected to office by the public every fourteen years. 
B) are nominated by the U.S. Senate banking committee and confirmed by the U.S. house of representatives. 
C) are elected by bankers in each Federal Reserve Region. 
D) are appointed by the president of the U.S. and confirmed by the U.S. Senate. 
A) are elected to office by the public every fourteen years. 
B) are nominated by the U.S. Senate banking committee and confirmed by the U.S. house of representatives. 
C) are elected by bankers in each Federal Reserve Region. 
D) are appointed by the president of the U.S. and confirmed by the U.S. Senate.

Question 16

The reserve ratio is 10 percent, banks do not hold excess reserves, and people hold only deposits and no currency. When the Fed sells $20 million worth of bonds to the public, bank reserves

Accepted Answer

A) increase by $20 million and the money supply eventually increases by $20 million. 
B) increase by $20 million and the money supply eventually increases by $200 million. 
C) decrease by $2 million and the money supply eventually increases by $20 million. 
D) decrease by $20 million and the money supply eventually decreases by $200 million. 
A) increase by $20 million and the money supply eventually increases by $20 million. 
B) increase by $20 million and the money supply eventually increases by $200 million. 
C) decrease by $2 million and the money supply eventually increases by $20 million. 
D) decrease by $20 million and the money supply eventually decreases by $200 million.

Question 17

Consider five individuals with different occupations.   In a barter system which of the following pairs has a double coincidence of wants?

Accepted Answer

A) Allen and Eric 
B) Diedre and Calvin 
C) Both A and B are correct. 
D) None of the above are correct. 
A) Allen and Eric 
B) Diedre and Calvin 
C) Both A and B are correct. 
D) None of the above are correct.

Question 18

The Fed increases reserves if it conducts open market

Accepted Answer

A) purchases or auctions term credit. 
B) purchases but not if it auctions term credit 
C) sales or auctions term credit 
D) sales but not if it auctions term credit 
A) purchases or auctions term credit. 
B) purchases but not if it auctions term credit 
C) sales or auctions term credit 
D) sales but not if it auctions term credit

Question 19

During recessions, banks typically choose to hold more excess reserves relative to their deposits. This action

Accepted Answer

A) increases the money multiplier and increases the money supply. 
B) decreases the money multiplier and decreases the money supply. 
C) does not change the money multiplier, but increases the money supply. 
D) does not change the money multiplier, but decreases the money supply. 
A) increases the money multiplier and increases the money supply. 
B) decreases the money multiplier and decreases the money supply. 
C) does not change the money multiplier, but increases the money supply. 
D) does not change the money multiplier, but decreases the money supply.

Question 20

Suppose a bank purchases $50 of government securities using funds from reserves. How much do bank assets change as a result of this transaction?

Accepted Answer

In this case, the value of bank assets d

Exam 29: The Monetary System

Consider the following traders who meet. Which, if any, pairs of traders has a double coincidence of wants?

The Fed sets the interest that borrowers pay on loans from

Economists use the word "money" to refer to

A bank which must hold 100 percent reserves opens in an economy that had no banks and a currency of $150. If customers deposit $50 into the bank, what is the value of the money supply?

In a fractional-reserve banking system, an increase in reserve requirements

Table 29-9 Metropolis National Bank is currently holding 2% of its deposits as excess reserves. -Refer to Table 29-9. Metropolis National Bank is currently holding 2% of deposits as excess reserves. What is the reserve requirement?

The amount of currency per person in the United States is about

Which tool of monetary policy does the Federal Reserve use most often?

Who was appointed Chair of the Board of Governors in 2014 by President Barack Obama?

Monetary policy is determined by a committee whose voting members include all the presidents of the regional Federal Reserve Banks.

The interest rate charged by the Fed to member banks is called the _____.

If a bank desires to hold no excess reserves, the reserve requirement is 8 percent, and it receives a new deposit of $500,

Table 29-7. -Refer to Table 29-7. If the Fed requires a reserve ratio of 6 percent, then what quantity of excess reserves does the Bank of Springfield now hold?

The members of the Federal Reserve's Board of Governors

The reserve ratio is 10 percent, banks do not hold excess reserves, and people hold only deposits and no currency. When the Fed sells $20 million worth of bonds to the public, bank reserves

Consider five individuals with different occupations. In a barter system which of the following pairs has a double coincidence of wants?

The Fed increases reserves if it conducts open market

During recessions, banks typically choose to hold more excess reserves relative to their deposits. This action

Suppose a bank purchases $50 of government securities using funds from reserves. How much do bank assets change as a result of this transaction?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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