Question 1

Stocks and bonds are

Accepted Answer

A)  financial assets;therefore,they are considered to be money 
B)  highly-liquid financial assets;therefore,they are considered to be money 
C)  not highly-liquid financial assets;therefore,they are not considered to be money 
D)  widely accepted means of payment;therefore,they are considered to be money 
E)  not financial assets;therefore,they are not considered to be money 
A)  financial assets;therefore,they are considered to be money 
B)  highly-liquid financial assets;therefore,they are considered to be money 
C)  not highly-liquid financial assets;therefore,they are not considered to be money 
D)  widely accepted means of payment;therefore,they are considered to be money 
E)  not financial assets;therefore,they are not considered to be money

Question 2

The Federal Reserve Open Market Committee allows representatives of the President and Congress to sit on its meetings.

Accepted Answer

A) True 
 B)False

Question 3

A financial intermediary less strictly regulated than a bank,and with no government guaranteed deposits is known as a

Accepted Answer

A)  non-bank. 
B)  junior bank. 
C)  secondary bank. 
D)  trade bank. 
E)  intermediary bank. 
A)  non-bank. 
B)  junior bank. 
C)  secondary bank. 
D)  trade bank. 
E)  intermediary bank.

Question 4

In any monetary system,the means of payment must be the same as the unit of value.

Accepted Answer

A) True 
 B)False

Question 5

Banks can create

Accepted Answer

A)  income 
B)  power 
C)  wealth 
D)  money 
E)  capital stock 
A)  income 
B)  power 
C)  wealth 
D)  money 
E)  capital stock

Question 6

The main function of the Federal Open Market Committee is

Accepted Answer

A)  to control the printing of currency. 
B)  to determine the path of tax rates. 
C)  to use open market operations to control the nation's money supply. 
D)  to create and issue bonds on behalf of the Treasury. 
E)  to oversee economic activity in the various Federal Reserve districts. 
A)  to control the printing of currency. 
B)  to determine the path of tax rates. 
C)  to use open market operations to control the nation's money supply. 
D)  to create and issue bonds on behalf of the Treasury. 
E)  to oversee economic activity in the various Federal Reserve districts.

Question 7

Excess reserves can be found by subtracting required reserves from total reserves.

Accepted Answer

A) True 
 B)False

Question 8

When the Fed conducts open market operations,what type of bonds does the Fed purchase?

Accepted Answer

A)  Newly issued bonds from the treasury 
B)  Bonds newly issued by companies 
C)  Previously issued bonds from the treasury 
D)  Bonds previously issued by companies 
E)  Newly issued bonds from other countries. 
A)  Newly issued bonds from the treasury 
B)  Bonds newly issued by companies 
C)  Previously issued bonds from the treasury 
D)  Bonds previously issued by companies 
E)  Newly issued bonds from other countries.

Question 9

The means of payment function of money refers to the common unit for measuring how much something is worth

Accepted Answer

A) True 
 B)False

Question 10

Assuming that households do not change their cash holdings and banks loan out all of their excess reserves,if the required reserve ratio (RRR)is 10 percent and the Fed purchases $2,000 worth of bonds from banks,how much money will be eventually created?

Accepted Answer

A)  $1,800 
B)  $2,000 
C)  $9,000 
D)  $18,000 
E)  $20,000 
A)  $1,800 
B)  $2,000 
C)  $9,000 
D)  $18,000 
E)  $20,000

Question 11

Which of the following would not be considered money in the hands of the public?

Accepted Answer

A)  cash hidden under a mattress 
B)  a bank's vault cash 
C)  cash in the cash register of a hardware store 
D)  cash stored in the hardware store's vault 
E)  cash in your wallet 
A)  cash hidden under a mattress 
B)  a bank's vault cash 
C)  cash in the cash register of a hardware store 
D)  cash stored in the hardware store's vault 
E)  cash in your wallet

Question 12

The Federal Reserve System is under the strict control of

Accepted Answer

A)  the executive branch 
B)  the legislative branch 
C)  the judicial branch 
D)  the International Monetary Fund 
E)  none of the above 
A)  the executive branch 
B)  the legislative branch 
C)  the judicial branch 
D)  the International Monetary Fund 
E)  none of the above

Question 13

If the Fed conducts an open market purchase of bonds,the

Accepted Answer

A)  money supply decreases as reserves are injected into the banking system 
B)  demand for money increases as reserves are drained from the banking system 
C)  demand for money decreases as reserves are injected into the banking system 
D)  money supply increases as reserves are injected into the banking system 
E)  money supply increases as reserves are drained from the banking system 
A)  money supply decreases as reserves are injected into the banking system 
B)  demand for money increases as reserves are drained from the banking system 
C)  demand for money decreases as reserves are injected into the banking system 
D)  money supply increases as reserves are injected into the banking system 
E)  money supply increases as reserves are drained from the banking system

Question 14

The unit of value function of money refers to how we think about and record a transaction,whereas the means of payment function refers to how we actually pay for the items.

Accepted Answer

A) True 
 B)False

Question 15

Given the balance sheet below,what is the simple leverage ratio?

Accepted Answer

A)  1.25 
B)  0.25 
C)  5.00 
D)  4.00 
E)  1.00 
A)  1.25 
B)  0.25 
C)  5.00 
D)  4.00 
E)  1.00

Question 16

If the reserve requirement is 0.2 and demand deposits are $800 (assume no earlier loans),the banks can lend out

Accepted Answer

A)  $800 
B)  $80 
C)  $640 
D)  $160 
E)  $960 
A)  $800 
B)  $80 
C)  $640 
D)  $160 
E)  $960

Question 17

The Federal Reserve System was created in

Accepted Answer

A)  1776 
B)  1894 
C)  1913 
D)  1930 
E)  1936 
A)  1776 
B)  1894 
C)  1913 
D)  1930 
E)  1936

Question 18

Suppose the Federal Reserve wants to decrease the money supply by $100,000.If the required reserve ratio is 0.1,which of the following actions will achieve the Fed's goal?

Accepted Answer

A)  The Fed must purchase $100,000 in bonds. 
B)  The Fed must sell $100,000 in bonds. 
C)  The Fed must purchase $10,000 in bonds. 
D)  The Fed must sell $10,000 in bonds. 
E)  The Fed must sell $90,000 in bonds. 
A)  The Fed must purchase $100,000 in bonds. 
B)  The Fed must sell $100,000 in bonds. 
C)  The Fed must purchase $10,000 in bonds. 
D)  The Fed must sell $10,000 in bonds. 
E)  The Fed must sell $90,000 in bonds.

Question 19

Which of the following groups exerts the most control over the money supply in the United States?

Accepted Answer

A)  The executive branch of government 
B)  The legislative branch of government 
C)  The judicial branch of government 
D)  The Federal Reserve 
E)  The U.S.Treasury Department 
A)  The executive branch of government 
B)  The legislative branch of government 
C)  The judicial branch of government 
D)  The Federal Reserve 
E)  The U.S.Treasury Department

Question 20

Which of the following is the relationship between the required reserve ratio (RRR)and the demand deposit multiplier?

Accepted Answer

A)  The demand deposit multiplier = 1/RRR 
B)  The demand deposit multiplier = RRR × change in reserves 
C)  The demand deposit multiplier = 1/(1 + RRR) 
D)  RRR = demand deposit multiplier 
E)  The demand deposit multiplier = 1/(1 - RRR). 
A)  The demand deposit multiplier = 1/RRR 
B)  The demand deposit multiplier = RRR × change in reserves 
C)  The demand deposit multiplier = 1/(1 + RRR) 
D)  RRR = demand deposit multiplier 
E)  The demand deposit multiplier = 1/(1 - RRR).

Stocks and bonds are

The Federal Reserve Open Market Committee allows representatives of the President and Congress to sit on its meetings.

A financial intermediary less strictly regulated than a bank,and with no government guaranteed deposits is known as a

In any monetary system,the means of payment must be the same as the unit of value.

Banks can create

The main function of the Federal Open Market Committee is

Excess reserves can be found by subtracting required reserves from total reserves.

When the Fed conducts open market operations,what type of bonds does the Fed purchase?

The means of payment function of money refers to the common unit for measuring how much something is worth

Assuming that households do not change their cash holdings and banks loan out all of their excess reserves,if the required reserve ratio (RRR)is 10 percent and the Fed purchases $2,000 worth of bonds from banks,how much money will be eventually created?

Which of the following would not be considered money in the hands of the public?

The Federal Reserve System is under the strict control of

If the Fed conducts an open market purchase of bonds,the

The unit of value function of money refers to how we think about and record a transaction,whereas the means of payment function refers to how we actually pay for the items.

Given the balance sheet below,what is the simple leverage ratio?

If the reserve requirement is 0.2 and demand deposits are $800 (assume no earlier loans),the banks can lend out

The Federal Reserve System was created in

Suppose the Federal Reserve wants to decrease the money supply by $100,000.If the required reserve ratio is 0.1,which of the following actions will achieve the Fed's goal?

Which of the following groups exerts the most control over the money supply in the United States?

Which of the following is the relationship between the required reserve ratio (RRR)and the demand deposit multiplier?

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

Stocks and bonds are

The Federal Reserve Open Market Committee allows representatives of the President and Congress to sit on its meetings.

A financial intermediary less strictly regulated than a bank,and with no government guaranteed deposits is known as a

In any monetary system,the means of payment must be the same as the unit of value.

Banks can create

The main function of the Federal Open Market Committee is

Excess reserves can be found by subtracting required reserves from total reserves.

When the Fed conducts open market operations,what type of bonds does the Fed purchase?

The means of payment function of money refers to the common unit for measuring how much something is worth

Assuming that households do not change their cash holdings and banks loan out all of their excess reserves,if the required reserve ratio (RRR)is 10 percent and the Fed purchases $2,000 worth of bonds from banks,how much money will be eventually created?

Which of the following would not be considered money in the hands of the public?

The Federal Reserve System is under the strict control of

If the Fed conducts an open market purchase of bonds,the

The unit of value function of money refers to how we think about and record a transaction,whereas the means of payment function refers to how we actually pay for the items.

Given the balance sheet below,what is the simple leverage ratio?

If the reserve requirement is 0.2 and demand deposits are $800 (assume no earlier loans),the banks can lend out

The Federal Reserve System was created in

Suppose the Federal Reserve wants to decrease the money supply by $100,000.If the required reserve ratio is 0.1,which of the following actions will achieve the Fed's goal?

Which of the following groups exerts the most control over the money supply in the United States?

Which of the following is the relationship between the required reserve ratio (RRR)and the demand deposit multiplier?

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