Question 1

The group within the Federal Reserve System that determines the general course for the nation's money supply is the

Accepted Answer

A)  Federal Monetary Oversight Committee 
B)  Federal Advisory Council 
C)  Board of Governors 
D)  Department of Commerce 
E)  Federal Open Market Committee 
A)  Federal Monetary Oversight Committee 
B)  Federal Advisory Council 
C)  Board of Governors 
D)  Department of Commerce 
E)  Federal Open Market Committee

Question 2

How long are the terms of members of the Board of Governors in the Federal Reserve System?

Accepted Answer

A)  2 years 
B)  4 years 
C)  6 years 
D)  14 years 
E)  The remainder of the governor's life. 
A)  2 years 
B)  4 years 
C)  6 years 
D)  14 years 
E)  The remainder of the governor's life.

Question 3

Credit cards are considered to be money because they facilitate exchange.

Accepted Answer

A) True 
 B)False

Question 4

When many banks fail simultaneously,this is known as a

Accepted Answer

A)  run on the bank 
B)  depression 
C)  recession 
D)  banking panic 
E)  Federal Reserve crisis 
A)  run on the bank 
B)  depression 
C)  recession 
D)  banking panic 
E)  Federal Reserve crisis

Question 5

Which of following is an example of fiat money?

Accepted Answer

A)  US dollars 
B)  Gold 
C)  Diamonds 
D)  Silver 
E)  Fur 
A)  US dollars 
B)  Gold 
C)  Diamonds 
D)  Silver 
E)  Fur

Question 6

One of the costs of the Federal Deposit Insurance Corporation's protection is

Accepted Answer

A)  bank managers may take great risks with depositors' money 
B)  the public pays closer attention to the bank managers' actions 
C)  the Fed was forced to reduce its regulation of banks 
D)  bank managers may act too cautiously with depositors' money 
E)  banks' profits increased 
A)  bank managers may take great risks with depositors' money 
B)  the public pays closer attention to the bank managers' actions 
C)  the Fed was forced to reduce its regulation of banks 
D)  bank managers may act too cautiously with depositors' money 
E)  banks' profits increased

Question 7

A bank wants to get rid of excess reserves by making loans because

Accepted Answer

A)  it will be penalized if it does not get rid of the reserves 
B)  the reserves do not earn interest 
C)  it is afraid it will lose the excess reserves 
D)  firms will not borrow from a bank with excess reserves 
E)  the bank has too many liabilities 
A)  it will be penalized if it does not get rid of the reserves 
B)  the reserves do not earn interest 
C)  it is afraid it will lose the excess reserves 
D)  firms will not borrow from a bank with excess reserves 
E)  the bank has too many liabilities

Question 8

Suppose the Fed reduces the reserve ratio from 0.25 to 0.20 and the current level of demand deposits is $10,000.By how much would excess reserves change?

Accepted Answer

A)  Excess reserves would increase by $2,500. 
B)  Excess reserves would increase by $2,000. 
C)  Excess reserves would decrease by $500. 
D)  Excess reserves would increase by $500. 
E)  Excess reserves would increase by $4,500. 
A)  Excess reserves would increase by $2,500. 
B)  Excess reserves would increase by $2,000. 
C)  Excess reserves would decrease by $500. 
D)  Excess reserves would increase by $500. 
E)  Excess reserves would increase by $4,500.

Question 9

Money is the means of payment in the economy.Examples of money include

Accepted Answer

A)  currency,checking account balances,and credit card limits 
B)  ATM cards,checking account balances,and currency 
C)  travelers' checks and credit card limits 
D)  currency,stocks,and travelers' checks 
E)  currency,travelers' checks,and personal checks 
A)  currency,checking account balances,and credit card limits 
B)  ATM cards,checking account balances,and currency 
C)  travelers' checks and credit card limits 
D)  currency,stocks,and travelers' checks 
E)  currency,travelers' checks,and personal checks

Question 10

Assume the required reserve ratio (RRR)is 10 percent.If the Fed purchases a $5,000 bond from a bond dealer who then deposits the $5,000 in a HSBC Bank account,what has happened to the money supply?

Accepted Answer

A)  It has decreased by $5,000. 
B)  It has increased by $5,000. 
C)  It has decreased by $4,500. 
D)  It has increased by $4,500. 
E)  There has been no change in the money supply. 
A)  It has decreased by $5,000. 
B)  It has increased by $5,000. 
C)  It has decreased by $4,500. 
D)  It has increased by $4,500. 
E)  There has been no change in the money supply.

Question 11

In what year was the Federal Reserve System created?

Accepted Answer

A)  1790 
B)  1861 
C)  1879 
D)  1913 
E)  1935 
A)  1790 
B)  1861 
C)  1879 
D)  1913 
E)  1935

Question 12

Which of the following is the most liquid asset?

Accepted Answer

A)  A classic art painting 
B)  A commercial building 
C)  A savings bond 
D)  A checking account balance 
E)  Gold 
A)  A classic art painting 
B)  A commercial building 
C)  A savings bond 
D)  A checking account balance 
E)  Gold

Question 13

When economists and government officials speak about the money supply,they usually mean M2.

Accepted Answer

A) True 
 B)False

Question 14

A financial institution's leverage ratio is defined as:

Accepted Answer

A)  Profit / Revenue. 
B)  Total Assets / Shareholders' Equity. 
C)  Shareholders' Equity / Total Assets. 
D)  Value of Delinquent Loans / Value of All Loans. 
E)  Total Debt / Total Revenue. 
A)  Profit / Revenue. 
B)  Total Assets / Shareholders' Equity. 
C)  Shareholders' Equity / Total Assets. 
D)  Value of Delinquent Loans / Value of All Loans. 
E)  Total Debt / Total Revenue.

Question 15

There are approximately ______ banks in the U.S.

Accepted Answer

A)  8,000. 
B)  2,000. 
C)  100,000. 
D)  25,000. 
E)  4,000. 
A)  8,000. 
B)  2,000. 
C)  100,000. 
D)  25,000. 
E)  4,000.

Question 16

Examples of Fed actions that could decrease money supply are making open market

Accepted Answer

A)  purchases,increasing the required reserve ratio,and increasing the discount rate 
B)  sales,decreasing the required reserve ratio,and increasing the discount rate 
C)  sales,increasing the required reserve ratio,and decreasing the discount rate 
D)  sales,increasing the required reserve ratio,and increasing the discount rate 
E)  purchases,decreasing the required reserve ratio,and decreasing the discount rate 
A)  purchases,increasing the required reserve ratio,and increasing the discount rate 
B)  sales,decreasing the required reserve ratio,and increasing the discount rate 
C)  sales,increasing the required reserve ratio,and decreasing the discount rate 
D)  sales,increasing the required reserve ratio,and increasing the discount rate 
E)  purchases,decreasing the required reserve ratio,and decreasing the discount rate

Question 17

Reserves that the Fed injects into the banking system are ultimately

Accepted Answer

A)  converted into loans that banks make to other banks 
B)  distributed among different banks in the system as required reserves 
C)  end up in just two or three banks 
D)  ineffective at increasing money supply 
E)  important to banks that want more customers 
A)  converted into loans that banks make to other banks 
B)  distributed among different banks in the system as required reserves 
C)  end up in just two or three banks 
D)  ineffective at increasing money supply 
E)  important to banks that want more customers

Question 18

It was the rapid and system-wide deleveraging that contributed to the downward spiral of the 2008 financial crisis.

Accepted Answer

A) True 
 B)False

Question 19

For any value of the required reserve ratio (RRR),the demand deposit multiplier is

Accepted Answer

A)  1/RRR 
B)  1 - (1/RRR) 
C)  RRR multiplied by the change in reserves 
D)  1 - RRR 
E)  (1/RRR)-1 
A)  1/RRR 
B)  1 - (1/RRR) 
C)  RRR multiplied by the change in reserves 
D)  1 - RRR 
E)  (1/RRR)-1

Question 20

As of 2009,M2 had a value of more than ______ dollars.

Accepted Answer

A)  $8 trillion. 
B)  $1 trillion. 
C)  $5 trillion. 
D)  $3 trillion. 
E)  $14 trillion. 
A)  $8 trillion. 
B)  $1 trillion. 
C)  $5 trillion. 
D)  $3 trillion. 
E)  $14 trillion.

The group within the Federal Reserve System that determines the general course for the nation's money supply is the

How long are the terms of members of the Board of Governors in the Federal Reserve System?

Credit cards are considered to be money because they facilitate exchange.

When many banks fail simultaneously,this is known as a

Which of following is an example of fiat money?

One of the costs of the Federal Deposit Insurance Corporation's protection is

A bank wants to get rid of excess reserves by making loans because

Suppose the Fed reduces the reserve ratio from 0.25 to 0.20 and the current level of demand deposits is $10,000.By how much would excess reserves change?

Money is the means of payment in the economy.Examples of money include

Assume the required reserve ratio (RRR)is 10 percent.If the Fed purchases a $5,000 bond from a bond dealer who then deposits the $5,000 in a HSBC Bank account,what has happened to the money supply?

In what year was the Federal Reserve System created?

Which of the following is the most liquid asset?

When economists and government officials speak about the money supply,they usually mean M2.

A financial institution's leverage ratio is defined as:

There are approximately ______ banks in the U.S.

Examples of Fed actions that could decrease money supply are making open market

Reserves that the Fed injects into the banking system are ultimately

It was the rapid and system-wide deleveraging that contributed to the downward spiral of the 2008 financial crisis.

For any value of the required reserve ratio (RRR),the demand deposit multiplier is

As of 2009,M2 had a value of more than ______ dollars.

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

The group within the Federal Reserve System that determines the general course for the nation's money supply is the

How long are the terms of members of the Board of Governors in the Federal Reserve System?

Credit cards are considered to be money because they facilitate exchange.

When many banks fail simultaneously,this is known as a

Which of following is an example of fiat money?

One of the costs of the Federal Deposit Insurance Corporation's protection is

A bank wants to get rid of excess reserves by making loans because

Suppose the Fed reduces the reserve ratio from 0.25 to 0.20 and the current level of demand deposits is $10,000.By how much would excess reserves change?

Money is the means of payment in the economy.Examples of money include

Assume the required reserve ratio (RRR)is 10 percent.If the Fed purchases a $5,000 bond from a bond dealer who then deposits the $5,000 in a HSBC Bank account,what has happened to the money supply?

In what year was the Federal Reserve System created?

Which of the following is the most liquid asset?

When economists and government officials speak about the money supply,they usually mean M2.

A financial institution's leverage ratio is defined as:

There are approximately ______ banks in the U.S.

Examples of Fed actions that could decrease money supply are making open market

Reserves that the Fed injects into the banking system are ultimately

It was the rapid and system-wide deleveraging that contributed to the downward spiral of the 2008 financial crisis.

For any value of the required reserve ratio (RRR),the demand deposit multiplier is

As of 2009,M2 had a value of more than ______ dollars.

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