Question 1

Although a variety of commodities have been used as money,the most commonly used have been

Accepted Answer

A)  stones and cattle. 
B)  shells and beads. 
C)  gold and silver. 
D)  cigarettes and candy bars. 
A)  stones and cattle. 
B)  shells and beads. 
C)  gold and silver. 
D)  cigarettes and candy bars.

Question 2

When a banker accepts a deposit of $1,000 in cash and puts $200 aside as required reserves and then makes a loan of $800 to a new borrower,this set of transactions

Accepted Answer

A)  decreases the money supply by $1,000. 
B)  decreases the money supply by $200. 
C)  does not change the money supply. 
D)  increases the money supply by $200. 
E)  increases the money supply by $800. 
A)  decreases the money supply by $1,000. 
B)  decreases the money supply by $200. 
C)  does not change the money supply. 
D)  increases the money supply by $200. 
E)  increases the money supply by $800.

Question 3

As of December 2010,the largest single component of M1 consists of

Accepted Answer

A)  checkable deposits at banks. 
B)  money market mutual funds. 
C)  savings deposits. 
D)  currency. 
A)  checkable deposits at banks. 
B)  money market mutual funds. 
C)  savings deposits. 
D)  currency.

Question 4

The net worth of a bank is defined as the difference between

Accepted Answer

A)  income and expenses. 
B)  assets and liabilities. 
C)  loans and deposits. 
D)  loans and reserves. 
A)  income and expenses. 
B)  assets and liabilities. 
C)  loans and deposits. 
D)  loans and reserves.

Question 5

What may limit the size of the money supply expansion to an amount less than indicated by the oversimplified deposit creation formula?

Accepted Answer

The oversimplified deposit creation form

Question 6

If Ms.Anniston transfers $1,000 from her checking account to her money market account,then

Accepted Answer

A)  M1 falls and M2 remains the same. 
B)  M1 falls and M2 rises. 
C)  both M1 and M2 rise. 
D)  M1 remains the same and M2 rises. 
A)  M1 falls and M2 remains the same. 
B)  M1 falls and M2 rises. 
C)  both M1 and M2 rise. 
D)  M1 remains the same and M2 rises.

Question 7

When prices for goods and services are quoted in money terms,this is an example of money being used as a store of value.

Accepted Answer

A) True 
 B)False

Question 8

The amount of money held in checking accounts is significantly greater than money in the form of currency.

Accepted Answer

A) True 
 B)False

Question 9

According to the convention followed in the text,"money" consists all of the following except

Accepted Answer

A)  coins. 
B)  credit cards. 
C)  checkable deposits. 
D)  paper money. 
A)  coins. 
B)  credit cards. 
C)  checkable deposits. 
D)  paper money.

Question 10

"Near monies" are

Accepted Answer

A)  stocks, bonds, and real estate. 
B)  U.S. notes and Federal Reserve notes. 
C)  included in the M1 definition of the money supply. 
D)  liquid assets that are close substitutes for money. 
E)  All of the above are correct. 
A)  stocks, bonds, and real estate. 
B)  U.S. notes and Federal Reserve notes. 
C)  included in the M1 definition of the money supply. 
D)  liquid assets that are close substitutes for money. 
E)  All of the above are correct.

Question 11

Why are checking account balances included in the M1 definition of the money supply?

Accepted Answer

A)  They are a traditional form of money that pre-dates paper money. 
B)  They are used to make so many payments. 
C)  They are backed by gold and silver. 
D)  They pay interest. 
A)  They are a traditional form of money that pre-dates paper money. 
B)  They are used to make so many payments. 
C)  They are backed by gold and silver. 
D)  They pay interest.

Question 12

In September 2007 the British bank Northern Rock which specialized in home mortgages experienced a noteworthy bank run.

Accepted Answer

A) True 
 B)False

Question 13

When banking first began,it could be said that paper money was in reality

Accepted Answer

A)  worthless. 
B)  receipts. 
C)  government money. 
D)  fiat money. 
A)  worthless. 
B)  receipts. 
C)  government money. 
D)  fiat money.

Question 14

Government regulations to insure the safety of bank deposits and to control the money supply include

Accepted Answer

A)  limitations on the types and quantities of assets in which banks may invest. 
B)  elimination of the need for required reserves. 
C)  setting interest rate ceilings on savings and money market deposit accounts. 
D)  All of the above are correct. 
A)  limitations on the types and quantities of assets in which banks may invest. 
B)  elimination of the need for required reserves. 
C)  setting interest rate ceilings on savings and money market deposit accounts. 
D)  All of the above are correct.

Question 15

Liquidity refers to the

Accepted Answer

A)  rapidity with which money flows through the economy. 
B)  ease with which an asset can be converted into cash. 
C)  ease with which banks move funds from checking to savings accounts. 
D)  All of the above are correct. 
A)  rapidity with which money flows through the economy. 
B)  ease with which an asset can be converted into cash. 
C)  ease with which banks move funds from checking to savings accounts. 
D)  All of the above are correct.

Question 16

Which of the following are reasons that banks are so heavily regulated?

Accepted Answer

A)  Governments are concerned about the safety of deposits. 
B)  The industry is a principal determinant of aggregate demand. 
C)  Bank failures are contagious. 
D)  All of the above are correct. 
A)  Governments are concerned about the safety of deposits. 
B)  The industry is a principal determinant of aggregate demand. 
C)  Bank failures are contagious. 
D)  All of the above are correct.

Question 17

Fiat money is money

Accepted Answer

A)  backed by land. 
B)  backed by gold or silver. 
C)  that can be converted to gold or silver. 
D)  because a government says it is. 
A)  backed by land. 
B)  backed by gold or silver. 
C)  that can be converted to gold or silver. 
D)  because a government says it is.

Question 18

Liquidity refers to the ability of an asset to hold its value in periods of inflation.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following would be a liability to a bank?

Accepted Answer

A)  cash in the vault 
B)  a loan to a new business 
C)  a checking account of a professor 
D)  All of the above are correct. 
A)  cash in the vault 
B)  a loan to a new business 
C)  a checking account of a professor 
D)  All of the above are correct.

Question 20

____ is an object in use as a medium of exchange,but which also has a substantial value in alternative uses.

Accepted Answer

A)  IOU 
B)  A commodity money 
C)  Fiat money 
D)  Deposit certificate 
A)  IOU 
B)  A commodity money 
C)  Fiat money 
D)  Deposit certificate

Although a variety of commodities have been used as money,the most commonly used have been

When a banker accepts a deposit of $1,000 in cash and puts $200 aside as required reserves and then makes a loan of $800 to a new borrower,this set of transactions

As of December 2010,the largest single component of M1 consists of

The net worth of a bank is defined as the difference between

What may limit the size of the money supply expansion to an amount less than indicated by the oversimplified deposit creation formula?

If Ms.Anniston transfers $1,000 from her checking account to her money market account,then

When prices for goods and services are quoted in money terms,this is an example of money being used as a store of value.

The amount of money held in checking accounts is significantly greater than money in the form of currency.

According to the convention followed in the text,"money" consists all of the following except

"Near monies" are

Why are checking account balances included in the M1 definition of the money supply?

In September 2007 the British bank Northern Rock which specialized in home mortgages experienced a noteworthy bank run.

When banking first began,it could be said that paper money was in reality

Government regulations to insure the safety of bank deposits and to control the money supply include

Liquidity refers to the

Which of the following are reasons that banks are so heavily regulated?

Fiat money is money

Liquidity refers to the ability of an asset to hold its value in periods of inflation.

Which of the following would be a liability to a bank?

____ is an object in use as a medium of exchange,but which also has a substantial value in alternative uses.

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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Exam 12: Money and the Banking System

Although a variety of commodities have been used as money,the most commonly used have been

When a banker accepts a deposit of $1,000 in cash and puts $200 aside as required reserves and then makes a loan of $800 to a new borrower,this set of transactions

As of December 2010,the largest single component of M1 consists of

The net worth of a bank is defined as the difference between

What may limit the size of the money supply expansion to an amount less than indicated by the oversimplified deposit creation formula?

If Ms.Anniston transfers $1,000 from her checking account to her money market account,then

When prices for goods and services are quoted in money terms,this is an example of money being used as a store of value.

The amount of money held in checking accounts is significantly greater than money in the form of currency.

According to the convention followed in the text,"money" consists all of the following except

"Near monies" are

Why are checking account balances included in the M1 definition of the money supply?

In September 2007 the British bank Northern Rock which specialized in home mortgages experienced a noteworthy bank run.

When banking first began,it could be said that paper money was in reality

Government regulations to insure the safety of bank deposits and to control the money supply include

Liquidity refers to the

Which of the following are reasons that banks are so heavily regulated?

Fiat money is money

Liquidity refers to the ability of an asset to hold its value in periods of inflation.

Which of the following would be a liability to a bank?

____ is an object in use as a medium of exchange,but which also has a substantial value in alternative uses.

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

Filters