Question 1

Savings and loan associations are not a financial intermediary.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following represent the Federal Reserve's most important responsibilities?

Accepted Answer

A)  Supervise and regulate banks. 
B)  Issuing paper currency. 
C)  Printing paper currency. 
D)  Both (a)and (b) 
E)  Deciding the maximum rate banks can charge for loans. 
A)  Supervise and regulate banks. 
B)  Issuing paper currency. 
C)  Printing paper currency. 
D)  Both (a)and (b) 
E)  Deciding the maximum rate banks can charge for loans.

Question 3

Why do financial intermediaries aid in the efficient operation of the economy?

Accepted Answer

A)  Without them it would be difficult for small savers to lend to large borrowers. 
B)  They lend funds to businesses at a zero interest rate. 
C)  They print currency. 
D)  They regulate the money supply. 
E)  They engage in open market operations. 
A)  Without them it would be difficult for small savers to lend to large borrowers. 
B)  They lend funds to businesses at a zero interest rate. 
C)  They print currency. 
D)  They regulate the money supply. 
E)  They engage in open market operations.

Question 4

Given the following information,what would be the value of M1?

Accepted Answer

A)  $400 billion 
B)  $100 billion 
C)  $425 billion 
D)  $1,175 billion 
A)  $400 billion 
B)  $100 billion 
C)  $425 billion 
D)  $1,175 billion

Question 5

The Fed sometimes acts as a lender of last resort.This means that

Accepted Answer

A)  individuals can borrow from the Fed when the President declares a national disaster 
B)  individuals can try to borrow money from the Fed if they are unable to borrow from a bank 
C)  banks can always go to the Fed for reserves in order to purchase more government bonds 
D)  banks can always go to the Fed for reserves to meet their obligations to depositors 
E)  business firms can try to borrow money from the Fed they are unable to borrow from a bank 
A)  individuals can borrow from the Fed when the President declares a national disaster 
B)  individuals can try to borrow money from the Fed if they are unable to borrow from a bank 
C)  banks can always go to the Fed for reserves in order to purchase more government bonds 
D)  banks can always go to the Fed for reserves to meet their obligations to depositors 
E)  business firms can try to borrow money from the Fed they are unable to borrow from a bank

Question 6

The president of the Federal Reserve Bank of which district has a permanent vote in the Federal Open Market Committee?.

Accepted Answer

A)  San Francisco. 
B)  New York. 
C)  Chicago. 
D)  Atlanta 
E)  Boston. 
A)  San Francisco. 
B)  New York. 
C)  Chicago. 
D)  Atlanta 
E)  Boston.

Question 7

Which of the following is the proper order of assets ranked from most to least liquid?

Accepted Answer

A)  Demand deposits,cash in the hands of the public,large time deposits 
B)  Travelers' checks,small time deposits,savings-type accounts 
C)  Small time deposits,large time deposits,demand deposits 
D)  Cash in the hands of the public,savings-type accounts,demand deposits 
E)  Cash in the hands of the public,money market mutual funds,small time deposits. 
A)  Demand deposits,cash in the hands of the public,large time deposits 
B)  Travelers' checks,small time deposits,savings-type accounts 
C)  Small time deposits,large time deposits,demand deposits 
D)  Cash in the hands of the public,savings-type accounts,demand deposits 
E)  Cash in the hands of the public,money market mutual funds,small time deposits.

Question 8

When was the first U.S.paper currency,the greenback,created?

Accepted Answer

A)  During the Revolutionary War 
B)  During World War I 
C)  During World War II 
D)  During the Civil War 
E)  During the war of 1812. 
A)  During the Revolutionary War 
B)  During World War I 
C)  During World War II 
D)  During the Civil War 
E)  During the war of 1812.

Question 9

Because of the history of banking panics in the U.S. ,one of the Fed's primary functions is to

Accepted Answer

A)  dispel rumors about bank problems 
B)  act as a lender of last resort 
C)  hold banks accountable for their actions 
D)  call in loans 
E)  increase the profit that each bank makes 
A)  dispel rumors about bank problems 
B)  act as a lender of last resort 
C)  hold banks accountable for their actions 
D)  call in loans 
E)  increase the profit that each bank makes

Question 10

If a bank receives a deposit of $3,000 and loans out $2,000,what changes will occur on the bank's balance sheet (after all checks involved with the loan are cleared)?

Accepted Answer

A)  Reserves decrease by $3,000,total assets decrease by $1,000,and total liabilities increase by $3,000. 
B)  Reserves increase by $1,000,total assets increase by $2,000,and total liabilities increase by $3,000. 
C)  Reserves increase by $3,000,total assets by increase $3,000,and total liabilities increase by $3,000. 
D)  Reserves increase by $3,000,total assets by increase $2,000,and total liabilities decrease by $3,000. 
E)  Reserves increase by $1,000,total assets increase by $3,000,and total liabilities increase by $3,000. 
A)  Reserves decrease by $3,000,total assets decrease by $1,000,and total liabilities increase by $3,000. 
B)  Reserves increase by $1,000,total assets increase by $2,000,and total liabilities increase by $3,000. 
C)  Reserves increase by $3,000,total assets by increase $3,000,and total liabilities increase by $3,000. 
D)  Reserves increase by $3,000,total assets by increase $2,000,and total liabilities decrease by $3,000. 
E)  Reserves increase by $1,000,total assets increase by $3,000,and total liabilities increase by $3,000.

Question 11

Which of the following will the Federal Reserve do to decrease the money supply?

Accepted Answer

A)  Decrease the salaries of government employees. 
B)  Sell government bonds. 
C)  Buy government bonds. 
D)  Raise taxes. 
E)  Sell corporate bonds. 
A)  Decrease the salaries of government employees. 
B)  Sell government bonds. 
C)  Buy government bonds. 
D)  Raise taxes. 
E)  Sell corporate bonds.

Question 12

An increase in the discount rate will lead to a decrease in the money supply.

Accepted Answer

A) True 
 B)False

Question 13

The deposit-creation process can continue as long as

Accepted Answer

A)  banks have required reserves 
B)  banks have excess reserves 
C)  the Fed sells bonds 
D)  banks sell bonds to the public 
E)  the required reserve ratio does not change 
A)  banks have required reserves 
B)  banks have excess reserves 
C)  the Fed sells bonds 
D)  banks sell bonds to the public 
E)  the required reserve ratio does not change

Question 14

If the required reserve ratio is 0.25 and the First National Bank holds $10 million in demand deposits and $5 million in reserves,how much more in demand deposits is this bank capable of creating?

Accepted Answer

A)  $0 
B)  $0.625 million 
C)  $1.875 million 
D)  $2.5 million 
E)  $10 million 
A)  $0 
B)  $0.625 million 
C)  $1.875 million 
D)  $2.5 million 
E)  $10 million

Question 15

The most powerful person at the Fed is

Accepted Answer

A)  a director of a Federal Reserve bank 
B)  a member of the Board of Governors 
C)  a district bank president 
D)  the president of the U.S. 
E)  the chairman of the Board of Governors 
A)  a director of a Federal Reserve bank 
B)  a member of the Board of Governors 
C)  a district bank president 
D)  the president of the U.S. 
E)  the chairman of the Board of Governors

Question 16

One reason a bank keeps vault cash is because it

Accepted Answer

A)  may be required to provide cash to customers who are withdrawing their funds 
B)  wants to earn more interest income 
C)  wants to offer more loans 
D)  may need to make transactions with other banks 
E)  may need to pay more interest on its savings accounts 
A)  may be required to provide cash to customers who are withdrawing their funds 
B)  wants to earn more interest income 
C)  wants to offer more loans 
D)  may need to make transactions with other banks 
E)  may need to pay more interest on its savings accounts

Question 17

Which of the following statements is true?

Accepted Answer

A)  The U.S.Treasury deals in newly issued bonds and the Fed deals in previously issued (second-hand)bonds. 
B)  The U.S.Treasury deals in previously issued bonds and the Fed deals in newly issued bonds. 
C)  The U.S.Treasury deals in only newly issued bonds and the Fed deals in both new and second-hand bonds. 
D)  The U.S.Treasury deals in both new and second-hand bonds and the Fed only deals in second-hand bonds. 
E)  Both the U.S.Treasury and the Fed deal in both new and second-hand bonds. 
A)  The U.S.Treasury deals in newly issued bonds and the Fed deals in previously issued (second-hand)bonds. 
B)  The U.S.Treasury deals in previously issued bonds and the Fed deals in newly issued bonds. 
C)  The U.S.Treasury deals in only newly issued bonds and the Fed deals in both new and second-hand bonds. 
D)  The U.S.Treasury deals in both new and second-hand bonds and the Fed only deals in second-hand bonds. 
E)  Both the U.S.Treasury and the Fed deal in both new and second-hand bonds.

Question 18

A bank's balance sheet can show a negative net worth and yet its income statement can show a profit for the year.

Accepted Answer

A) True 
 B)False

Question 19

M1 and M2 are

Accepted Answer

A)  usually equal 
B)  aggregates that,when added together,encompass all methods of payment 
C)  nonofficial measures of the U.S.money supply 
D)  both measures of the U.S.money supply 
E)  the best way to measure the U.S.money supply 
A)  usually equal 
B)  aggregates that,when added together,encompass all methods of payment 
C)  nonofficial measures of the U.S.money supply 
D)  both measures of the U.S.money supply 
E)  the best way to measure the U.S.money supply

Question 20

When the Federal Reserve increases the money supply,it has the immediate effect of creating wealth.

Accepted Answer

A) True 
 B)False

Savings and loan associations are not a financial intermediary.

Which of the following represent the Federal Reserve's most important responsibilities?

Why do financial intermediaries aid in the efficient operation of the economy?

Given the following information,what would be the value of M1?

The Fed sometimes acts as a lender of last resort.This means that

The president of the Federal Reserve Bank of which district has a permanent vote in the Federal Open Market Committee?.

Which of the following is the proper order of assets ranked from most to least liquid?

When was the first U.S.paper currency,the greenback,created?

Because of the history of banking panics in the U.S. ,one of the Fed's primary functions is to

If a bank receives a deposit of $3,000 and loans out $2,000,what changes will occur on the bank's balance sheet (after all checks involved with the loan are cleared)?

Which of the following will the Federal Reserve do to decrease the money supply?

An increase in the discount rate will lead to a decrease in the money supply.

The deposit-creation process can continue as long as

If the required reserve ratio is 0.25 and the First National Bank holds $10 million in demand deposits and $5 million in reserves,how much more in demand deposits is this bank capable of creating?

The most powerful person at the Fed is

One reason a bank keeps vault cash is because it

Which of the following statements is true?

A bank's balance sheet can show a negative net worth and yet its income statement can show a profit for the year.

M1 and M2 are

When the Federal Reserve increases the money supply,it has the immediate effect of creating wealth.

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters

Exam 13: Money, Banks, and the Federal Reserve

Savings and loan associations are not a financial intermediary.

Which of the following represent the Federal Reserve's most important responsibilities?

Why do financial intermediaries aid in the efficient operation of the economy?

Given the following information,what would be the value of M1?

The Fed sometimes acts as a lender of last resort.This means that

The president of the Federal Reserve Bank of which district has a permanent vote in the Federal Open Market Committee?.

Which of the following is the proper order of assets ranked from most to least liquid?

When was the first U.S.paper currency,the greenback,created?

Because of the history of banking panics in the U.S. ,one of the Fed's primary functions is to

If a bank receives a deposit of $3,000 and loans out $2,000,what changes will occur on the bank's balance sheet (after all checks involved with the loan are cleared)?

Which of the following will the Federal Reserve do to decrease the money supply?

An increase in the discount rate will lead to a decrease in the money supply.

The deposit-creation process can continue as long as

If the required reserve ratio is 0.25 and the First National Bank holds $10 million in demand deposits and $5 million in reserves,how much more in demand deposits is this bank capable of creating?

The most powerful person at the Fed is

One reason a bank keeps vault cash is because it

Which of the following statements is true?

A bank's balance sheet can show a negative net worth and yet its income statement can show a profit for the year.

M1 and M2 are

When the Federal Reserve increases the money supply,it has the immediate effect of creating wealth.

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters