Question 1

Other things equal, an excessive increase in the money supply will

Accepted Answer

A)  increase the purchasing power of each dollar. 
B)  decrease the purchasing power of each dollar. 
C)  have no impact on the purchasing power of the dollar. 
D)  reduce the price level. 
A)  increase the purchasing power of each dollar. 
B)  decrease the purchasing power of each dollar. 
C)  have no impact on the purchasing power of the dollar. 
D)  reduce the price level.

Question 2

If a ﬁrm possesses assets whose value exceeds the value of its debts, the ﬁrm is said to be

Accepted Answer

A)  insolvent. 
B)  illiquid. 
C)  solvent. 
D)  liquid. 
A)  insolvent. 
B)  illiquid. 
C)  solvent. 
D)  liquid.

Question 3

The general public can open deposit accounts at their district's Federal Reserve Bank.

Accepted Answer

A) True 
 B)False

Question 4

As of March 2019, the supply of money (M1) in the United States was about

Accepted Answer

A)  $2,472 billion. 
B)  $3,760 billion. 
C)  $1,359 billion. 
D)  $12,479 billion. 
A)  $2,472 billion. 
B)  $3,760 billion. 
C)  $1,359 billion. 
D)  $12,479 billion.

Question 5

Currency and checkable deposits are

Accepted Answer

A)  assets of the Federal Reserve Banks or of ﬁnancial institutions. 
B)  redeemable for gold and silver from the Federal Reserve System. 
C)  of intrinsic value, which determines the relative worth of money. 
D)  the major components of money supply M1. 
A)  assets of the Federal Reserve Banks or of ﬁnancial institutions. 
B)  redeemable for gold and silver from the Federal Reserve System. 
C)  of intrinsic value, which determines the relative worth of money. 
D)  the major components of money supply M1.

Question 6

The M2 money supply is larger than the M1 money supply.

Accepted Answer

A) True 
 B)False

Question 7

The government bailout of large institutions creates the problem of moral hazard, which means that these large ﬁrms will

Accepted Answer

A)  not be able to pay back the bailout money. 
B)  have an incentive to make highly risky investments. 
C)  now have to play it safer to reduce their risks. 
D)  be limited in terms of the securities and services that they get involved in. 
A)  not be able to pay back the bailout money. 
B)  have an incentive to make highly risky investments. 
C)  now have to play it safer to reduce their risks. 
D)  be limited in terms of the securities and services that they get involved in.

Question 8

What is a commercial bank? What kinds of loans do they provide?

Accepted Answer

A commercial bank is a ﬁrm that engages

Question 9

Which of the following ﬁnancial institutions was acquired by Bank of America as a result of the ﬁnancial crisis of 2007- 2008?

Accepted Answer

A)  Merrill Lynch 
B)  Lehman Brothers 
C)  Goldman Sachs 
D)  AIG 
A)  Merrill Lynch 
B)  Lehman Brothers 
C)  Goldman Sachs 
D)  AIG

Question 10

$$\begin{array} { | l | c | } 
\hline \text { Money Market Mutual Fund Balances Held by Businesses } & \$ 100 \
\hline \text { Money Market Mutual Fund Balances Held by Individuals } & 220 \
\hline \text { Currency in Banks } & 10 \
\hline \text { Currency in Circulation } & 60 \
\hline \text { Savings Deposits, Including Money Market Deposit Accounts } & 50 \
\hline \text { Large-denominated (\$100,000 or more) Time Deposits } & 180 \
\hline \text { Small-denominated ( } \$ 100,000 \text { or less) Time Deposits } & 80 \
\hline \text { Checkable Deposits } & 70\
\hline
\end{array}$$ Refer to the table. Money supply M2 for this economy is

Accepted Answer

A)  $480. 
B)  $130. 
C)  $490. 
D)  $630. 
A)  $480. 
B)  $130. 
C)  $490. 
D)  $630.

Question 11

(Last Word) After years of helping terrorist groups launder money, and aiding Iran and North Korea evade sanctions, HSBC bank was:

Accepted Answer

A)  ﬁned about ﬁve weeks' worth of proﬁts. 
B)  taken over and run by the government, pending reorganization. 
C)  dismantled by the government, with different sectors in the bank sold to other banks in the system. 
D)  ﬁned nearly $1 trillion, and key executives were held criminally responsible. 
A)  ﬁned about ﬁve weeks' worth of proﬁts. 
B)  taken over and run by the government, pending reorganization. 
C)  dismantled by the government, with different sectors in the bank sold to other banks in the system. 
D)  ﬁned nearly $1 trillion, and key executives were held criminally responsible.

Question 12

Assuming no other changes, if checkable deposits increase by $40 billion and currency in circulation decreases by $40 billion, the

Accepted Answer

A)  M1 money supply will decline. 
B)  M1 money supply will not change. 
C)  M2 money supply will decline. 
D)  M2 money supply will increase. 
A)  M1 money supply will decline. 
B)  M1 money supply will not change. 
C)  M2 money supply will decline. 
D)  M2 money supply will increase.

Question 13

In the U.S. economy, the money supply is controlled by the

Accepted Answer

A)  U.S. Treasury. 
B)  Federal Reserve System. 
C)  Senate Committee on Banking and Finance. 
D)  Congress. 
A)  U.S. Treasury. 
B)  Federal Reserve System. 
C)  Senate Committee on Banking and Finance. 
D)  Congress.

Question 14

(Consider This) Credit card balances are

Accepted Answer

A)  a component of M1. 
B)  a component of M2 but not of M1. 
C)  a component of M1 but not of M2. 
D)  not a component of M1 or M2. 
A)  a component of M1. 
B)  a component of M2 but not of M1. 
C)  a component of M1 but not of M2. 
D)  not a component of M1 or M2.

Question 15

As of March 2019, M1 accounted for roughly what percentage of M2?

Accepted Answer

A)  10 percent 
B)  25 percent 
C)  50 percent 
D)  75 percent 
A)  10 percent 
B)  25 percent 
C)  50 percent 
D)  75 percent

Question 16

Money supply M1 does not include the currency held by

Accepted Answer

A)  households in their wallets or purses. 
B)  business ﬁrms. 
C)  commercial banks. 
D)  state and local governments. 
A)  households in their wallets or purses. 
B)  business ﬁrms. 
C)  commercial banks. 
D)  state and local governments.

Question 17

How many members can serve on the Board of Governors of the Federal Reserve System?

Accepted Answer

A)  7 
B)  9 
C)  12 
D)  14 
A)  7 
B)  9 
C)  12 
D)  14

Question 18

The value of money in the United States is based on the stock of gold and silver held by the United States government.

Accepted Answer

A) True 
 B)False

Question 19

The paper currencies of the United States are also called

Accepted Answer

A)  Federal Reserve notes. 
B)  Treasury bills. 
C)  U.S. Government notes. 
D)  Treasury bonds. 
A)  Federal Reserve notes. 
B)  Treasury bills. 
C)  U.S. Government notes. 
D)  Treasury bonds.

Question 20

"Subprime mortgage loans" refer to

Accepted Answer

A)  high-interest-rate loans to home buyers with above-average credit risk. 
B)  home-buying loans that charge interest rates below the prime interest rate. 
C)  loans to buyers of homes that are in need of substantial repair. 
D)  loans from the Federal Reserve to home mortgage lenders to support a greater volume of home-buying loans at affordable interest rates. 
A)  high-interest-rate loans to home buyers with above-average credit risk. 
B)  home-buying loans that charge interest rates below the prime interest rate. 
C)  loans to buyers of homes that are in need of substantial repair. 
D)  loans from the Federal Reserve to home mortgage lenders to support a greater volume of home-buying loans at affordable interest rates.

Other things equal, an excessive increase in the money supply will

If a ﬁrm possesses assets whose value exceeds the value of its debts, the ﬁrm is said to be

The general public can open deposit accounts at their district's Federal Reserve Bank.

As of March 2019, the supply of money (M1) in the United States was about

Currency and checkable deposits are

The M2 money supply is larger than the M1 money supply.

The government bailout of large institutions creates the problem of moral hazard, which means that these large ﬁrms will

What is a commercial bank? What kinds of loans do they provide?

Which of the following ﬁnancial institutions was acquired by Bank of America as a result of the ﬁnancial crisis of 2007- 2008?

(Last Word) After years of helping terrorist groups launder money, and aiding Iran and North Korea evade sanctions, HSBC bank was:

Assuming no other changes, if checkable deposits increase by $40 billion and currency in circulation decreases by $40 billion, the

In the U.S. economy, the money supply is controlled by the

(Consider This) Credit card balances are

As of March 2019, M1 accounted for roughly what percentage of M2?

Money supply M1 does not include the currency held by

How many members can serve on the Board of Governors of the Federal Reserve System?

The value of money in the United States is based on the stock of gold and silver held by the United States government.

The paper currencies of the United States are also called

"Subprime mortgage loans" refer to

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters

Exam 14: Money, Banking, and Financial Institutions

Other things equal, an excessive increase in the money supply will

If a ﬁrm possesses assets whose value exceeds the value of its debts, the ﬁrm is said to be

The general public can open deposit accounts at their district's Federal Reserve Bank.

As of March 2019, the supply of money (M1) in the United States was about

Currency and checkable deposits are

The M2 money supply is larger than the M1 money supply.

The government bailout of large institutions creates the problem of moral hazard, which means that these large ﬁrms will

What is a commercial bank? What kinds of loans do they provide?

Which of the following ﬁnancial institutions was acquired by Bank of America as a result of the ﬁnancial crisis of 2007- 2008?

(Last Word) After years of helping terrorist groups launder money, and aiding Iran and North Korea evade sanctions, HSBC bank was:

Assuming no other changes, if checkable deposits increase by $40 billion and currency in circulation decreases by $40 billion, the

In the U.S. economy, the money supply is controlled by the

(Consider This) Credit card balances are

As of March 2019, M1 accounted for roughly what percentage of M2?

Money supply M1 does not include the currency held by

How many members can serve on the Board of Governors of the Federal Reserve System?

The value of money in the United States is based on the stock of gold and silver held by the United States government.

The paper currencies of the United States are also called

"Subprime mortgage loans" refer to

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters