Question 1

If a piece of currency must be accepted for payment because the government says so,the currency is called

Accepted Answer

A)  commodity money 
B)  money backed by gold 
C)  high-powered money 
D)  greenbacks 
E)  fiat money 
A)  commodity money 
B)  money backed by gold 
C)  high-powered money 
D)  greenbacks 
E)  fiat money

Question 2

If the Federal Reserve purchases $1,000 in bonds and the reserve requirement ratio is 0.2,what will be the total change in reserves at all banks assuming there are no excess reserves?

Accepted Answer

A)  +$500 
B)  +$5,000 
C)  -$500 
D)  -$5,000 
E)  +$1,000 
A)  +$500 
B)  +$5,000 
C)  -$500 
D)  -$5,000 
E)  +$1,000

Question 3

Given the balance sheet below and assuming a required reserve ratio of 20 percent,how much (in dollar terms)is this bank actually holding in reserves?

Accepted Answer

A)  $3.5 million 
B)  $8 million 
C)  $15 million 
D)  $20 million 
E)  $35 million 
A)  $3.5 million 
B)  $8 million 
C)  $15 million 
D)  $20 million 
E)  $35 million

Question 4

The chairman of the Board of Governors of the Federal Reserve System is appointed by the Senate and approved by the President.

Accepted Answer

A) True 
 B)False

Question 5

Even a bank in good financial health can fail if there is a run on the bank.

Accepted Answer

A) True 
 B)False

Question 6

The demand deposit multiplier is the number by which we must multiply the

Accepted Answer

A)  injection of reserves to get the total change in demand deposits 
B)  total amount of demand deposits to get the total change in the money supply 
C)  level of required reserves to get the total change in the money supply 
D)  total amount of currency in circulation to find total demand deposits 
E)  change in demand deposits to find the total change in the money supply 
A)  injection of reserves to get the total change in demand deposits 
B)  total amount of demand deposits to get the total change in the money supply 
C)  level of required reserves to get the total change in the money supply 
D)  total amount of currency in circulation to find total demand deposits 
E)  change in demand deposits to find the total change in the money supply

Question 7

If the required reserve ratio is 0.05 and the Fed sells a $2,000 bond directly to an individual who pays for it with a check,what will happen to the money supply?

Accepted Answer

A)  The money supply will increase by $2,000. 
B)  The money supply will decrease by $2,000. 
C)  The money supply will increase by $100. 
D)  The money supply will decrease by $100. 
E)  The money supply will decrease by $200. 
A)  The money supply will increase by $2,000. 
B)  The money supply will decrease by $2,000. 
C)  The money supply will increase by $100. 
D)  The money supply will decrease by $100. 
E)  The money supply will decrease by $200.

Question 8

What interest rate does the Fed charge when it makes loans to banks?

Accepted Answer

A)  the prime rate 
B)  the U.S.Treasury Bond rate 
C)  the discount rate 
D)  the federal funds rate 
E)  the U.S.Treasury Bill rate 
A)  the prime rate 
B)  the U.S.Treasury Bond rate 
C)  the discount rate 
D)  the federal funds rate 
E)  the U.S.Treasury Bill rate

Question 9

Which of the following is not a tool for controlling the money supply?

Accepted Answer

A)  Buying government bonds 
B)  Selling government bonds 
C)  Changing tax rates 
D)  Changing the required reserve ratio 
E)  Changing the discount rate. 
A)  Buying government bonds 
B)  Selling government bonds 
C)  Changing tax rates 
D)  Changing the required reserve ratio 
E)  Changing the discount rate.

Question 10

If the Federal Reserve sells $1,000 in bonds and the required reserve ratio is 0.1 (assume banks hold no excess reserves)what will be the total change in reserves at all banks?

Accepted Answer

A)  $10,000 
B)  $1,000 
C)  -$10,000 
D)  -$1,000 
E)  -$1,100 
A)  $10,000 
B)  $1,000 
C)  -$10,000 
D)  -$1,000 
E)  -$1,100

Question 11

A run on a bank occurs when everyone is trying to withdraw their funds simultaneously.

Accepted Answer

A) True 
 B)False

Question 12

When money is used to compare the costs of different goods and services,it is functioning as

Accepted Answer

A)  a unit of account 
B)  a means of payment 
C)  fiat money 
D)  a store of wealth 
E)  legal tender 
A)  a unit of account 
B)  a means of payment 
C)  fiat money 
D)  a store of wealth 
E)  legal tender

Question 13

Congress created the Federal Deposit Insurance Corporation to

Accepted Answer

A)  sell insurance to individuals who have bank accounts 
B)  inject reserves into the economy more quickly 
C)  develop a better working relationship between bank managers and government officials 
D)  charge higher interest rates to banks 
E)  reimburse those who lose their bank deposits 
A)  sell insurance to individuals who have bank accounts 
B)  inject reserves into the economy more quickly 
C)  develop a better working relationship between bank managers and government officials 
D)  charge higher interest rates to banks 
E)  reimburse those who lose their bank deposits

Question 14

If a commercial bank has liabilities valued at $150 million,a net worth of $50 million and assets (not including loans)of $180 million,what is the value of the bank's loans?

Accepted Answer

A)  $180 million 
B)  $200 million 
C)  $20 million 
D)  $280 million 
E)  $80 million 
A)  $180 million 
B)  $200 million 
C)  $20 million 
D)  $280 million 
E)  $80 million

Question 15

In the aftermath of the 2008 financial crisis,everyone agreed that lower leverage ratios would be a good thing.

Accepted Answer

A) True 
 B)False

Question 16

Money in the U.S.has value primarily because it is fiat money.

Accepted Answer

A) True 
 B)False

Question 17

Federal Reserve regulations apply

Accepted Answer

A)  to all banks in the United States 
B)  only to member banks 
C)  only to private commercial banks 
D)  only to national banks 
E)  only to state banks 
A)  to all banks in the United States 
B)  only to member banks 
C)  only to private commercial banks 
D)  only to national banks 
E)  only to state banks

Question 18

Which of the following is the result of a banking panic?

Accepted Answer

A)  A decrease in the demand deposit multiplier 
B)  An increase in the money supply 
C)  An increase in bank reserves 
D)  A decrease in the money supply 
E)  An increase in the demand deposit multiplier 
A)  A decrease in the demand deposit multiplier 
B)  An increase in the money supply 
C)  An increase in bank reserves 
D)  A decrease in the money supply 
E)  An increase in the demand deposit multiplier

Question 19

The Fed issues bonds to raise money and uses it to finance the U.S.government's budget deficit.

Accepted Answer

A) True 
 B)False

Question 20

For the two year period ending in 2008-2009,what has been the number of bank failures?

Accepted Answer

A)  About 500 
B)  About 2,000 
C)  Fewer than 150 
D)  More than 5,000 
E)  Fewer than 1,000 
A)  About 500 
B)  About 2,000 
C)  Fewer than 150 
D)  More than 5,000 
E)  Fewer than 1,000

If a piece of currency must be accepted for payment because the government says so,the currency is called

If the Federal Reserve purchases $1,000 in bonds and the reserve requirement ratio is 0.2,what will be the total change in reserves at all banks assuming there are no excess reserves?

Given the balance sheet below and assuming a required reserve ratio of 20 percent,how much (in dollar terms)is this bank actually holding in reserves?

The chairman of the Board of Governors of the Federal Reserve System is appointed by the Senate and approved by the President.

Even a bank in good financial health can fail if there is a run on the bank.

The demand deposit multiplier is the number by which we must multiply the

If the required reserve ratio is 0.05 and the Fed sells a $2,000 bond directly to an individual who pays for it with a check,what will happen to the money supply?

What interest rate does the Fed charge when it makes loans to banks?

Which of the following is not a tool for controlling the money supply?

If the Federal Reserve sells $1,000 in bonds and the required reserve ratio is 0.1 (assume banks hold no excess reserves)what will be the total change in reserves at all banks?

A run on a bank occurs when everyone is trying to withdraw their funds simultaneously.

When money is used to compare the costs of different goods and services,it is functioning as

Congress created the Federal Deposit Insurance Corporation to

If a commercial bank has liabilities valued at $150 million,a net worth of $50 million and assets (not including loans)of $180 million,what is the value of the bank's loans?

In the aftermath of the 2008 financial crisis,everyone agreed that lower leverage ratios would be a good thing.

Money in the U.S.has value primarily because it is fiat money.

Federal Reserve regulations apply

Which of the following is the result of a banking panic?

The Fed issues bonds to raise money and uses it to finance the U.S.government's budget deficit.

For the two year period ending in 2008-2009,what has been the number of bank failures?

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

If a piece of currency must be accepted for payment because the government says so,the currency is called

If the Federal Reserve purchases $1,000 in bonds and the reserve requirement ratio is 0.2,what will be the total change in reserves at all banks assuming there are no excess reserves?

Given the balance sheet below and assuming a required reserve ratio of 20 percent,how much (in dollar terms)is this bank actually holding in reserves?

The chairman of the Board of Governors of the Federal Reserve System is appointed by the Senate and approved by the President.

Even a bank in good financial health can fail if there is a run on the bank.

The demand deposit multiplier is the number by which we must multiply the

If the required reserve ratio is 0.05 and the Fed sells a $2,000 bond directly to an individual who pays for it with a check,what will happen to the money supply?

What interest rate does the Fed charge when it makes loans to banks?

Which of the following is not a tool for controlling the money supply?

If the Federal Reserve sells $1,000 in bonds and the required reserve ratio is 0.1 (assume banks hold no excess reserves)what will be the total change in reserves at all banks?

A run on a bank occurs when everyone is trying to withdraw their funds simultaneously.

When money is used to compare the costs of different goods and services,it is functioning as

Congress created the Federal Deposit Insurance Corporation to

If a commercial bank has liabilities valued at $150 million,a net worth of $50 million and assets (not including loans)of $180 million,what is the value of the bank's loans?

In the aftermath of the 2008 financial crisis,everyone agreed that lower leverage ratios would be a good thing.

Money in the U.S.has value primarily because it is fiat money.

Federal Reserve regulations apply

Which of the following is the result of a banking panic?

The Fed issues bonds to raise money and uses it to finance the U.S.government's budget deficit.

For the two year period ending in 2008-2009,what has been the number of bank failures?

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