Question 1

If an economy uses diamonds as money, then that economy's money

Accepted Answer

A) was commodity money. 
B) had no intrinsic value. 
C) was fiat money. 
D) had no store of value. 
A) was commodity money. 
B) had no intrinsic value. 
C) was fiat money. 
D) had no store of value.

Question 2

When the Fed purchases government bonds the money supply _____ and the federal funds rate _____.

Accepted Answer

increases,

Question 3

Table 29-4
   ​
-Refer to Table 29-4. If the Fed's reserve requirement is 6 percent, then what quantity of excess reserves does the Bank of Cheerton now hold?

Accepted Answer

A) $1,800 
B) $900 
C) $2,890 
D) $5,400 
A) $1,800 
B) $900 
C) $2,890 
D) $5,400

Question 4

The manager of the bank where you work tells you that the bank has $200 million in deposits and $24.5 million dollars in loans. If the reserve requirement is 6 percent, how much is the bank holding in excess reserves?

Accepted Answer

A) $9.5 million 
B) $12.5 million 
C) $12 million 
D) $0 million 
A) $9.5 million 
B) $12.5 million 
C) $12 million 
D) $0 million

Question 5

If the reserve requirement is 7 percent, a bank desires to hold no excess reserves, and it receives a new deposit of $300, it

Accepted Answer

A) must increase required reserves by $42. 
B) will initially see reserves decrease by $300. 
C) will be able to use this deposit to make new loans amounting to $300. 
D) must increase required reserves by $21. 
A) must increase required reserves by $42. 
B) will initially see reserves decrease by $300. 
C) will be able to use this deposit to make new loans amounting to $300. 
D) must increase required reserves by $21.

Question 6

The primary tool used by the Federal Reserve to change the money supply is _____.

Accepted Answer

open-marke

Question 7

A bank has $1000 in deposits and maintains a 12 percent reserve ratio. Its reserves are $_____.

Accepted Answer

The answer of A bank has $1000 in deposits and...

Question 8

Money is

Accepted Answer

A) the most liquid asset and a perfect store of value. 
B) the most liquid asset but an imperfect store of value. 
C) not the most liquid asset but a perfect store of value. 
D) neither the most liquid asset and nor a perfect store of value. 
A) the most liquid asset and a perfect store of value. 
B) the most liquid asset but an imperfect store of value. 
C) not the most liquid asset but a perfect store of value. 
D) neither the most liquid asset and nor a perfect store of value.

Question 9

What is the difference between money and wealth?

Accepted Answer

Money is defined as the set of

Question 10

The Fed ____ bonds when it conducts an open-market purchase. This action _____ the money supply.

Accepted Answer

The answer of The Fed ____ bonds when it conducts...

Question 11

In the nation of Wiknam, the money supply is $80,000 and reserves are $19,000. Assuming that people hold only deposits and no currency, and that banks hold no excess reserves, then the reserve requirement is

Accepted Answer

A) 25.7 percent. 
B) 23.8 percent. 
C) 22.7 percent. 
D) 26.5 percent. 
A) 25.7 percent. 
B) 23.8 percent. 
C) 22.7 percent. 
D) 26.5 percent.

Question 12

What is the Term Auction Facility?

Accepted Answer

The Term Auction Facility is the market

Question 13

What is the change in the money supply when the Fed purchases $100 worth of bonds in a 100-percent-reserve banking system?

Accepted Answer

The answer of What is the change in the money...

Question 14

Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 8 percent, and excess reserves amount to $5 billion. What is the level of deposits?

Accepted Answer

A) $5,000 billion 
B) $4,937.5 billion 
C) $5,062.5 billion 
D) $4,995 billion 
A) $5,000 billion 
B) $4,937.5 billion 
C) $5,062.5 billion 
D) $4,995 billion

Question 15

Which of the three functions of money are commonly met by each of the following assets in the U.S. economy?
a.paper dollar
b.precious metals
c.collectibles such as baseball cards, stamps, and antiques

Accepted Answer

The answer of Which of the three functions of money...

Question 16

Table 29-1
The following table describes what traders in a small economy want versus what they have.
​
​
 $$\begin{array} { | c | c | c | } 
\hline \text { Trader } & \text { Has } & \text { Wants } \
\hline \text { Alexis } & \text { an apple } & \text { a grapefruit } \
\hline \text { Jelani } & \text { a carrot } & \text { a banana } \
\hline \text { Kacey } & \text { a grapefruit } & \text { an apple } \
\hline \text { Malika } & \text { a zucchini } & \text { a carrot } \
\hline
\end{array}$$ ​
-Refer to Table 29-1. Which, if any, pairs of traders has a double coincidence of wants?

Accepted Answer

A) Only Jelani with Malika 
B) Only Alexis with Kacey 
C) Jelani with Malika, and Alexis with Kacey 
D) Jelani with Alexis, and Malika with Kacey 
A) Only Jelani with Malika 
B) Only Alexis with Kacey 
C) Jelani with Malika, and Alexis with Kacey 
D) Jelani with Alexis, and Malika with Kacey

Question 17

The manager of the bank where you work tells you that your bank has $6 million in excess reserves. She also tells you that the bank has $800 million in deposits and $738 million in loans. Given this information you find that the reserve requirement must be

Accepted Answer

A) 7.8 percent. 
B) 0.8 percent. 
C) 10.8 percent. 
D) 7.0 percent. 
A) 7.8 percent. 
B) 0.8 percent. 
C) 10.8 percent. 
D) 7.0 percent.

Question 18

When the Fed makes open-market purchases bank

Accepted Answer

A) deposits and lending increase. 
B) withdrawals and lending increase. 
C) withdrawals increase and lending decreases. 
D) deposits increase and lending decreases. 
A) deposits and lending increase. 
B) withdrawals and lending increase. 
C) withdrawals increase and lending decreases. 
D) deposits increase and lending decreases.

Question 19

If the public decides to hold more currency and fewer deposits in banks, bank reserves

Accepted Answer

A) decrease and the money supply eventually decreases. 
B) decrease but the money supply does not change. 
C) increase and the money supply eventually increases. 
D) increase but the money supply does not change. 
A) decrease and the money supply eventually decreases. 
B) decrease but the money supply does not change. 
C) increase and the money supply eventually increases. 
D) increase but the money supply does not change.

Question 20

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.

Exam 29: The Monetary System

If an economy uses diamonds as money, then that economy's money

When the Fed purchases government bonds the money supply _____ and the federal funds rate _____.

Table 29-4 ​ -Refer to Table 29-4. If the Fed's reserve requirement is 6 percent, then what quantity of excess reserves does the Bank of Cheerton now hold?

The manager of the bank where you work tells you that the bank has $200 million in deposits and $24.5 million dollars in loans. If the reserve requirement is 6 percent, how much is the bank holding in excess reserves?

If the reserve requirement is 7 percent, a bank desires to hold no excess reserves, and it receives a new deposit of $300, it

The primary tool used by the Federal Reserve to change the money supply is _____.

A bank has $1000 in deposits and maintains a 12 percent reserve ratio. Its reserves are $_____.

Money is

What is the difference between money and wealth?

The Fed ____ bonds when it conducts an open-market purchase. This action _____ the money supply.

In the nation of Wiknam, the money supply is $80,000 and reserves are $19,000. Assuming that people hold only deposits and no currency, and that banks hold no excess reserves, then the reserve requirement is

What is the Term Auction Facility?

What is the change in the money supply when the Fed purchases $100 worth of bonds in a 100-percent-reserve banking system?

Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 8 percent, and excess reserves amount to $5 billion. What is the level of deposits?

Which of the three functions of money are commonly met by each of the following assets in the U.S. economy? a.paper dollar b.precious metals c.collectibles such as baseball cards, stamps, and antiques

The manager of the bank where you work tells you that your bank has $6 million in excess reserves. She also tells you that the bank has $800 million in deposits and $738 million in loans. Given this information you find that the reserve requirement must be

When the Fed makes open-market purchases bank

If the public decides to hold more currency and fewer deposits in banks, bank reserves

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

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 Nations 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

When the Fed purchases government bonds the money supply _ and the federal funds rate _.

Table 29-4 -Refer to Table 29-4. If the Fed's reserve requirement is 6 percent, then what quantity of excess reserves does the Bank of Cheerton now hold?

The Fed bonds when it conducts an open-market purchase. This action _ the money supply.