Question 1

A decrease in the money supply might indicate that the Fed had

Accepted Answer

A) purchased bonds in an attempt to increase the federal funds rate. 
B) purchased bonds in an attempt to reduce the federal funds rate. 
C) sold bonds in an attempt to increase the federal funds rate. 
D) sold bonds in an attempt to reduce the federal funds rate. 
A) purchased bonds in an attempt to increase the federal funds rate. 
B) purchased bonds in an attempt to reduce the federal funds rate. 
C) sold bonds in an attempt to increase the federal funds rate. 
D) sold bonds in an attempt to reduce the federal funds rate.

Question 2

Which of the following does the Federal Reserve not do?

Accepted Answer

A) It controls the supply of money. 
B) It acts as a lender of last resort to banks. 
C) It makes loans to any qualified business that requests one. 
D) It tries to ensure the health of the banking system. 
A) It controls the supply of money. 
B) It acts as a lender of last resort to banks. 
C) It makes loans to any qualified business that requests one. 
D) It tries to ensure the health of the banking system.

Question 3

Bank runs and the accompanying increase in the money multiplier caused the U.S. money supply to rise by 28 percent from 1929 to 1933.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following defer payments?

Accepted Answer

A) credit cards and debit cards 
B) neither credit cards nor debit cards 
C) credit cards but not debit cards 
D) debit cards but not credit cards 
A) credit cards and debit cards 
B) neither credit cards nor debit cards 
C) credit cards but not debit cards 
D) debit cards but not credit cards

Question 5

A bank has $8,000 in deposits and $6,000 in loans. It has loaned out all it can given the reserve requirement. It follows that the reserve requirement is

Accepted Answer

A) 2.5 percent. 
B) 33.3 percent. 
C) 25 percent. 
D) 75 percent. 
A) 2.5 percent. 
B) 33.3 percent. 
C) 25 percent. 
D) 75 percent.

Question 6

Mia puts money into a piggy bank so she can spend it later. What function of money does this illustrate?

Accepted Answer

A) store of value 
B) medium of exchange 
C) unit of account 
D) None of the above is correct. 
A) store of value 
B) medium of exchange 
C) unit of account 
D) None of the above is correct.

Question 7

Bank capital is

Accepted Answer

A) the machinery, structures, and equipment of the bank. 
B) the resources that owners have put into the bank. 
C) the reserves of the bank. 
D) the bank's total assets. 
A) the machinery, structures, and equipment of the bank. 
B) the resources that owners have put into the bank. 
C) the reserves of the bank. 
D) the bank's total assets.

Question 8

Traveler's checks are included in

Accepted Answer

A) M1 but not M2. 
B) M2 but not M1. 
C) M1 and M2. 
D) neither M1 nor M2. 
A) M1 but not M2. 
B) M2 but not M1. 
C) M1 and M2. 
D) neither M1 nor M2.

Question 9

The ease with which an asset can be

Accepted Answer

A) traded for another asset determines whether or not that asset is a unit of account. 
B) transported from one place to another determines whether or not that asset could serve as fiat money. 
C) converted into a store of value determines the liquidity of that asset. 
D) converted into the economy's medium of exchange determines the liquidity of that asset. 
A) traded for another asset determines whether or not that asset is a unit of account. 
B) transported from one place to another determines whether or not that asset could serve as fiat money. 
C) converted into a store of value determines the liquidity of that asset. 
D) converted into the economy's medium of exchange determines the liquidity of that asset.

Question 10

List the two main functions performed by the Fed?

Accepted Answer

The Fed performs two main func

Question 11

Demand deposits are included in

Accepted Answer

A) M1 but not M2. 
B) M2 but not M1. 
C) M1 and M2. 
D) neither M1 nor M2. 
A) M1 but not M2. 
B) M2 but not M1. 
C) M1 and M2. 
D) neither M1 nor M2.

Question 12

Table 29-8  
-Refer to Table 29-8. The required reserve ratio is 12 percent. Which of the following is true?

Accepted Answer

A) This banks reserve ratio is 12 percent. Its excess reserves are $0. 
B) This banks reserve ratio is 13.3 percent. Its excess reserves are $120. 
C) This banks reserve ratio is 15 percent. Its excess reserves are $240. 
D) This banks reserve ratio is 10 percent. Its excess reserves are $300. 
A) This banks reserve ratio is 12 percent. Its excess reserves are $0. 
B) This banks reserve ratio is 13.3 percent. Its excess reserves are $120. 
C) This banks reserve ratio is 15 percent. Its excess reserves are $240. 
D) This banks reserve ratio is 10 percent. Its excess reserves are $300.

Question 13

You saved $500 in currency in your piggy bank to purchase a new laptop. The $500 you kept in your piggy bank illustrates money's function as a _______. The laptop's price is posted as $500. The $500 price illustrates money's function as a _____. You use the $500 to purchase the laptop. This transaction illustrates money's function as a ______.

Accepted Answer

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

Question 14

The Fed can reduce the federal funds rate by

Accepted Answer

A) decreasing the money supply. To decrease the money supply it could sell bonds. 
B) decreasing the money supply. To decrease the money supply it could buy bonds. 
C) increasing the money supply. To increase the money supply it could sell bonds. 
D) increasing the money supply. To increase the money supply it could buy bonds. 
A) decreasing the money supply. To decrease the money supply it could sell bonds. 
B) decreasing the money supply. To decrease the money supply it could buy bonds. 
C) increasing the money supply. To increase the money supply it could sell bonds. 
D) increasing the money supply. To increase the money supply it could buy bonds.

Question 15

​You write a check to your landlord to pay the rent on your apartment. To your landlord, your check represents

Accepted Answer

A) ​a claim to goods and services in the future. 
B) ​a good with intrinsic value. 
C) ​a double coincidence of wants. 
D) ​a good with immediate value. 
A) ​a claim to goods and services in the future. 
B) ​a good with intrinsic value. 
C) ​a double coincidence of wants. 
D) ​a good with immediate value.

Question 16

The federal funds rate is the interest rate

Accepted Answer

A) the Federal Reserve charges for loans it makes to the federal government. 
B) the Federal Reserve charges banks for short-term loans. 
C) banks charge each other for short-term loans of reserves. 
D) on newly issued one-year Treasury bonds. 
A) the Federal Reserve charges for loans it makes to the federal government. 
B) the Federal Reserve charges banks for short-term loans. 
C) banks charge each other for short-term loans of reserves. 
D) on newly issued one-year Treasury bonds.

Question 17

A bank has $30,000 in deposits and has $5,400 in reserves. What is its reserve ratio?

Accepted Answer

The answer of A bank has $30,000 in deposits and...

Question 18

The Federal Reserve is a privately operated commercial bank.

Accepted Answer

A) True 
 B)False

Question 19

Consider five individuals with different occupations.   Which of the following pairs of individuals has a double coincidence of wants?

Accepted Answer

A) Mary and Clark 
B) Clark and Nathan 
C) Nathan and Polly 
D) Polly and Paul 
A) Mary and Clark 
B) Clark and Nathan 
C) Nathan and Polly 
D) Polly and Paul

Question 20

Describe how the use of leverage affects the impact of bank investments.

Accepted Answer

Leverage amplifies the impact from chang

Exam 29: The Monetary System

A decrease in the money supply might indicate that the Fed had

Which of the following does the Federal Reserve not do?

Bank runs and the accompanying increase in the money multiplier caused the U.S. money supply to rise by 28 percent from 1929 to 1933.

Which of the following defer payments?

A bank has $8,000 in deposits and $6,000 in loans. It has loaned out all it can given the reserve requirement. It follows that the reserve requirement is

Mia puts money into a piggy bank so she can spend it later. What function of money does this illustrate?

Bank capital is

Traveler's checks are included in

The ease with which an asset can be

List the two main functions performed by the Fed?

Demand deposits are included in

Table 29-8 -Refer to Table 29-8. The required reserve ratio is 12 percent. Which of the following is true?

The Fed can reduce the federal funds rate by

​You write a check to your landlord to pay the rent on your apartment. To your landlord, your check represents

The federal funds rate is the interest rate

A bank has $30,000 in deposits and has $5,400 in reserves. What is its reserve ratio?

The Federal Reserve is a privately operated commercial bank.

Consider five individuals with different occupations. Which of the following pairs of individuals has a double coincidence of wants?

Describe how the use of leverage affects the impact of bank investments.

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

Filters

You write a check to your landlord to pay the rent on your apartment. To your landlord, your check represents