Question 1

In the United States economy, what is the basic measure of money?

Accepted Answer

A)  wealth 
B)  M1 
C)  disposable income 
D)  commodities 
A)  wealth 
B)  M1 
C)  disposable income 
D)  commodities

Question 2

Which of the following can be used as money?

Accepted Answer

A)  checks 
B)  cigarettes 
C)  precious stones 
D)  all of the above 
A)  checks 
B)  cigarettes 
C)  precious stones 
D)  all of the above

Question 3

Table 13.1
  
-According to the information in Table 13.1, M1 is equal to

Accepted Answer

A)  $620 billion. 
B)  $672 billion. 
C)  $842 billion. 
D)  $1,012 billion. 
A)  $620 billion. 
B)  $672 billion. 
C)  $842 billion. 
D)  $1,012 billion.

Question 4

In the ________ increases in the supply of money will ________.

Accepted Answer

A)  short run; raise total demand and output 
B)  long run; raise total demand and output 
C)  long run; lead to lower prices 
D)  short run; decrease total demand and output 
A)  short run; raise total demand and output 
B)  long run; raise total demand and output 
C)  long run; lead to lower prices 
D)  short run; decrease total demand and output

Question 5

Assuming that banks have loaned all excess reserves, then an increase in checking account balances brought about by an increase in deposits is equal to

Accepted Answer

A)  (the initial deposit) x (the reserve ratio). 
B)  (the initial deposit) x (1 / reserve ratio). 
C)  (total reserves) x (1 / reserve ratio). 
D)  (total reserves) x ( the reserve ratio). 
A)  (the initial deposit) x (the reserve ratio). 
B)  (the initial deposit) x (1 / reserve ratio). 
C)  (total reserves) x (1 / reserve ratio). 
D)  (total reserves) x ( the reserve ratio).

Question 6

Small time deposits of $100,000 or less are classified as

Accepted Answer

A)  part of M1. 
B)  part of M2. 
C)  FDIC insured. 
D)  highly liquid. 
A)  part of M1. 
B)  part of M2. 
C)  FDIC insured. 
D)  highly liquid.

Question 7

The Federal Reserve System was created by the

Accepted Answer

A)  U.S. Treasury. 
B)  President. 
C)  Congress. 
D)  Supreme Court. 
A)  U.S. Treasury. 
B)  President. 
C)  Congress. 
D)  Supreme Court.

Question 8

The Federal Reserve was created in

Accepted Answer

A)  1893. 
B)  1913. 
C)  1921. 
D)  1933. 
A)  1893. 
B)  1913. 
C)  1921. 
D)  1933.

Question 9

What are the components of M2?

Accepted Answer

money market mutual

Question 10

Suppose Diego deposits $4,000 in his bank. If the reserve ratio is 10 percent, this will lead to a maximum increase of ________ in checking account balances throughout all banks..

Accepted Answer

A)  $0 
B)  $4,000 
C)  $10,000 
D)  $40,000 
A)  $0 
B)  $4,000 
C)  $10,000 
D)  $40,000

Question 11

M1

Accepted Answer

A)  is the sum of currency plus traveler's checks. 
B)  is the narrowest definition of the money supply. 
C)  includes small time deposits. 
D)  includes credit cards. 
A)  is the sum of currency plus traveler's checks. 
B)  is the narrowest definition of the money supply. 
C)  includes small time deposits. 
D)  includes credit cards.

Question 12

What gives money value under a fiat system?

Accepted Answer

A)  Fiat money is backed by gold. 
B)  The supply of fiat money is controlled by the government. 
C)  Fiat money is also a commodity. 
D)  Fiat money is the same as Treasury bonds. 
A)  Fiat money is backed by gold. 
B)  The supply of fiat money is controlled by the government. 
C)  Fiat money is also a commodity. 
D)  Fiat money is the same as Treasury bonds.

Question 13

If the reserve ratio is designated by "r," the amount of deposits a bank can lend out is equal to [D x (1 - r)].

Accepted Answer

A) True 
 B)False

Question 14

If money is used as a mechanism to hold purchasing power for a period of time it is functioning as a

Accepted Answer

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

Question 15

Describe the relationship between the Federal Reserve and the legislative and executive branches of the U.S. government.

Accepted Answer

Although the Fed operates with independe

Question 16

Banks prefer to make loans than keep reserves because they earn interest on loans and must pay interest on reserves.

Accepted Answer

A) True 
 B)False

Question 17

Distinguish M1 from M2.

Accepted Answer

M2 is a broader definition of money that

Question 18

What are the four components of M1?

Accepted Answer

currency held by the

Question 19

Money market mutual funds are included in

Accepted Answer

A)  M1. 
B)  M2. 
C)  both M1 and M2. 
D)  neither M1 nor M2. 
A)  M1. 
B)  M2. 
C)  both M1 and M2. 
D)  neither M1 nor M2.

Question 20

Banks will never hold any additional reserves beyond what is required.

Accepted Answer

A) True 
 B)False

In the United States economy, what is the basic measure of money?

Which of the following can be used as money?

Table 13.1 -According to the information in Table 13.1, M1 is equal to

In the increases in the supply of money will .

Assuming that banks have loaned all excess reserves, then an increase in checking account balances brought about by an increase in deposits is equal to

Small time deposits of $100,000 or less are classified as

The Federal Reserve System was created by the

The Federal Reserve was created in

What are the components of M2?

Suppose Diego deposits $4,000 in his bank. If the reserve ratio is 10 percent, this will lead to a maximum increase of ________ in checking account balances throughout all banks..

M1

What gives money value under a fiat system?

If the reserve ratio is designated by "r," the amount of deposits a bank can lend out is equal to [D x (1 - r)].

If money is used as a mechanism to hold purchasing power for a period of time it is functioning as a

Describe the relationship between the Federal Reserve and the legislative and executive branches of the U.S. government.

Banks prefer to make loans than keep reserves because they earn interest on loans and must pay interest on reserves.

Distinguish M1 from M2.

What are the four components of M1?

Money market mutual funds are included in

Banks will never hold any additional reserves beyond what is required.

Introduction: What Is Economics?

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nation's Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow?

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

Exam 13: Money and the Banking System

In the United States economy, what is the basic measure of money?

Which of the following can be used as money?

Table 13.1 -According to the information in Table 13.1, M1 is equal to

In the ________ increases in the supply of money will ________.

Assuming that banks have loaned all excess reserves, then an increase in checking account balances brought about by an increase in deposits is equal to

Small time deposits of $100,000 or less are classified as

The Federal Reserve System was created by the

The Federal Reserve was created in

What are the components of M2?

Suppose Diego deposits $4,000 in his bank. If the reserve ratio is 10 percent, this will lead to a maximum increase of ________ in checking account balances throughout all banks..

M1

What gives money value under a fiat system?

If the reserve ratio is designated by "r," the amount of deposits a bank can lend out is equal to [D x (1 - r)].

If money is used as a mechanism to hold purchasing power for a period of time it is functioning as a

Describe the relationship between the Federal Reserve and the legislative and executive branches of the U.S. government.

Banks prefer to make loans than keep reserves because they earn interest on loans and must pay interest on reserves.

Distinguish M1 from M2.

What are the four components of M1?

Money market mutual funds are included in

Banks will never hold any additional reserves beyond what is required.

Introduction: What Is Economics?

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nation's Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow?

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

In the increases in the supply of money will .