Question 1

How many members are there on the Board of Governors of the Federal Reserve?

Accepted Answer

A)  12 
B)  50 
C)  7 
D)  4 
E)  14 
A)  12 
B)  50 
C)  7 
D)  4 
E)  14

Question 2

Which of the following is not a part of M1?

Accepted Answer

A)  Cash in the hands of the public. 
B)  Demand deposits. 
C)  Traveler's checks. 
D)  Money market mutual fund (MMMF)balances. 
E)  Corporate stocks. 
A)  Cash in the hands of the public. 
B)  Demand deposits. 
C)  Traveler's checks. 
D)  Money market mutual fund (MMMF)balances. 
E)  Corporate stocks.

Question 3

Suppose the required reserve ratio is 10 percent,but banks choose to hold an additional 15 percent of demand deposits as excess reserves.Under these conditions,the demand deposit multiplier will be

Accepted Answer

A)  0 
B)  4 
C)  5 
D)  6.67 
E)  10 
A)  0 
B)  4 
C)  5 
D)  6.67 
E)  10

Question 4

If demand deposits increase,the result is that

Accepted Answer

A)  required reserves must increase 
B)  the reserve ratio must increase 
C)  all banks are "loaned up" 
D)  the number of loans must decrease 
E)  all banks are suffering a loss 
A)  required reserves must increase 
B)  the reserve ratio must increase 
C)  all banks are "loaned up" 
D)  the number of loans must decrease 
E)  all banks are suffering a loss

Question 5

Assume a bank currently holds $75 million in demand deposits,$10 million in vault cash and $25 million deposited at the Federal Reserve.If the required reserve ratio is 15 percent,how much must the bank hold in required reserves?

Accepted Answer

A)  $15.0 million 
B)  $3.75 million 
C)  $11.25 million 
D)  $16.5 million 
E)  $12.75 million. 
A)  $15.0 million 
B)  $3.75 million 
C)  $11.25 million 
D)  $16.5 million 
E)  $12.75 million.

Question 6

If the Federal Reserve sells $1,000 in bonds and,as a result,the money supply decreases by $2,500,what is the required reserve ratio?

Accepted Answer

A)  0.4 
B)  2.5 
C)  0.5 
D)  0.1 
E)  0.2 
A)  0.4 
B)  2.5 
C)  0.5 
D)  0.1 
E)  0.2

Question 7

The 4-year term of the president of the Fed is coterminous with the 4-year term of the president of the U.S.

Accepted Answer

A) True 
 B)False

Question 8

The primary reason that U.S.money has value is that it

Accepted Answer

A)  is backed by gold 
B)  is fiat money 
C)  is accepted by others in exchange for goods and services 
D)  is commodity money 
E)  has a fixed value established by the Federal Reserve. 
A)  is backed by gold 
B)  is fiat money 
C)  is accepted by others in exchange for goods and services 
D)  is commodity money 
E)  has a fixed value established by the Federal Reserve.

Question 9

When a bank needs to increase its reserves,it will

Accepted Answer

A)  call in all its loans 
B)  stop paying interest on its saving accounts 
C)  borrow money from the government 
D)  call in a loan or reduce new lending 
E)  increase the number of loans it makes 
A)  call in all its loans 
B)  stop paying interest on its saving accounts 
C)  borrow money from the government 
D)  call in a loan or reduce new lending 
E)  increase the number of loans it makes

Question 10

If the total amount of demand deposits in the country increases by $12,000 after the Fed purchases $6,000 in bonds,what is the required reserve ratio?

Accepted Answer

A)  0.4 
B)  0.1 
C)  0.2 
D)  0.5 
E)  0.3 
A)  0.4 
B)  0.1 
C)  0.2 
D)  0.5 
E)  0.3

Question 11

When the Federal Reserve buys new government bonds,it is borrowing from the government.

Accepted Answer

A) True 
 B)False

Question 12

Fiat money is

Accepted Answer

A)  money with intrinsic value like gold coins. 
B)  anything that serves as a means of payment by government declaration. 
C)  any currency made of paper. 
D)  a tangible asset like a house. 
E)  money that is backed by gold. 
A)  money with intrinsic value like gold coins. 
B)  anything that serves as a means of payment by government declaration. 
C)  any currency made of paper. 
D)  a tangible asset like a house. 
E)  money that is backed by gold.

Question 13

The least liquid of the following assets is

Accepted Answer

A)  cash in the hands of the public 
B)  time deposits 
C)  savings accounts 
D)  travelers' checks 
E)  demand deposits 
A)  cash in the hands of the public 
B)  time deposits 
C)  savings accounts 
D)  travelers' checks 
E)  demand deposits

Question 14

The Fed can decrease the money supply by

Accepted Answer

A)  decreasing the reserve requirement 
B)  making open market purchases of bonds 
C)  selling government bonds 
D)  destroying printed currency 
E)  creating wealth 
A)  decreasing the reserve requirement 
B)  making open market purchases of bonds 
C)  selling government bonds 
D)  destroying printed currency 
E)  creating wealth

Question 15

Which of the following will the Federal Reserve do in order to increase the money supply?

Accepted Answer

A)  sell government bonds 
B)  buy corporate bonds 
C)  sell common stock 
D)  buy government bonds 
E)  increase the salaries of its governors 
A)  sell government bonds 
B)  buy corporate bonds 
C)  sell common stock 
D)  buy government bonds 
E)  increase the salaries of its governors

Question 16

Which of the following is the most liquid form of asset?

Accepted Answer

A)  Small time deposits 
B)  Large time deposits 
C)  Savings accounts 
D)  Money market mutual fund (MMMF)balances 
E)  Travelers' checks 
A)  Small time deposits 
B)  Large time deposits 
C)  Savings accounts 
D)  Money market mutual fund (MMMF)balances 
E)  Travelers' checks

Question 17

What is the range of the required reserve ratio?

Accepted Answer

A)  Between 0 and 2 
B)  Between 0 and 1 
C)  Between 0 and 100 
D)  Between 0 and infinity 
E)  Between 0 and 10 
A)  Between 0 and 2 
B)  Between 0 and 1 
C)  Between 0 and 100 
D)  Between 0 and infinity 
E)  Between 0 and 10

Question 18

The Fed's open market operations involve

Accepted Answer

A)  buying and selling of government bonds 
B)  changes of the discount rate 
C)  setting the required reserve ratio 
D)  buying and selling corporate bonds 
E)  a policy of last resort used to avert a financial crisis 
A)  buying and selling of government bonds 
B)  changes of the discount rate 
C)  setting the required reserve ratio 
D)  buying and selling corporate bonds 
E)  a policy of last resort used to avert a financial crisis

Question 19

The standard definition of money is

Accepted Answer

A)  currency + checking account balances + saving account balances 
B)  currency + checking account balances + travelers' checks 
C)  currency + checking account balances + credit cards 
D)  currency + credit cards + certificates of deposit 
E)  currency only 
A)  currency + checking account balances + saving account balances 
B)  currency + checking account balances + travelers' checks 
C)  currency + checking account balances + credit cards 
D)  currency + credit cards + certificates of deposit 
E)  currency only

Question 20

In the United States between 1790 and the Civil War,who issued paper currency?

Accepted Answer

A)  The Federal Reserve System 
B)  The U.S.Treasury Department 
C)  The U.S.Congress 
D)  The British government 
E)  Private banks. 
A)  The Federal Reserve System 
B)  The U.S.Treasury Department 
C)  The U.S.Congress 
D)  The British government 
E)  Private banks.

How many members are there on the Board of Governors of the Federal Reserve?

Which of the following is not a part of M1?

Suppose the required reserve ratio is 10 percent,but banks choose to hold an additional 15 percent of demand deposits as excess reserves.Under these conditions,the demand deposit multiplier will be

If demand deposits increase,the result is that

Assume a bank currently holds $75 million in demand deposits,$10 million in vault cash and $25 million deposited at the Federal Reserve.If the required reserve ratio is 15 percent,how much must the bank hold in required reserves?

If the Federal Reserve sells $1,000 in bonds and,as a result,the money supply decreases by $2,500,what is the required reserve ratio?

The 4-year term of the president of the Fed is coterminous with the 4-year term of the president of the U.S.

The primary reason that U.S.money has value is that it

When a bank needs to increase its reserves,it will

If the total amount of demand deposits in the country increases by $12,000 after the Fed purchases $6,000 in bonds,what is the required reserve ratio?

When the Federal Reserve buys new government bonds,it is borrowing from the government.

Fiat money is

The least liquid of the following assets is

The Fed can decrease the money supply by

Which of the following will the Federal Reserve do in order to increase the money supply?

Which of the following is the most liquid form of asset?

What is the range of the required reserve ratio?

The Fed's open market operations involve

The standard definition of money is

In the United States between 1790 and the Civil War,who issued paper currency?

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

How many members are there on the Board of Governors of the Federal Reserve?

Which of the following is not a part of M1?

Suppose the required reserve ratio is 10 percent,but banks choose to hold an additional 15 percent of demand deposits as excess reserves.Under these conditions,the demand deposit multiplier will be

If demand deposits increase,the result is that

Assume a bank currently holds $75 million in demand deposits,$10 million in vault cash and $25 million deposited at the Federal Reserve.If the required reserve ratio is 15 percent,how much must the bank hold in required reserves?

If the Federal Reserve sells $1,000 in bonds and,as a result,the money supply decreases by $2,500,what is the required reserve ratio?

The 4-year term of the president of the Fed is coterminous with the 4-year term of the president of the U.S.

The primary reason that U.S.money has value is that it

When a bank needs to increase its reserves,it will

If the total amount of demand deposits in the country increases by $12,000 after the Fed purchases $6,000 in bonds,what is the required reserve ratio?

When the Federal Reserve buys new government bonds,it is borrowing from the government.

Fiat money is

The least liquid of the following assets is

The Fed can decrease the money supply by

Which of the following will the Federal Reserve do in order to increase the money supply?

Which of the following is the most liquid form of asset?

What is the range of the required reserve ratio?

The Fed's open market operations involve

The standard definition of money is

In the United States between 1790 and the Civil War,who issued paper currency?

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