Question 1

Discuss some of the government regulations designed to ensure depositors' safety and to control the money supply.

Accepted Answer

Deposit insurance: The principal innovat

Question 2

The M2 definition of the money supply is based on the concept that

Accepted Answer

A)  M1 is a small number, and should be increased in size. 
B)  many types of deposits can be used as both payments and stores of value. 
C)  checking deposits are used for payments, and therefore, not part of M1. 
D)  cash is not used for the majority of payments. 
A)  M1 is a small number, and should be increased in size. 
B)  many types of deposits can be used as both payments and stores of value. 
C)  checking deposits are used for payments, and therefore, not part of M1. 
D)  cash is not used for the majority of payments.

Question 3

Most observers nowadays see monetary policy as much less important than fiscal policy.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is included in M1?

Accepted Answer

A)  savings accounts 
B)  money market deposit accounts 
C)  money market mutual funds 
D)  certificates of deposit 
E)  None of the above are included. 
A)  savings accounts 
B)  money market deposit accounts 
C)  money market mutual funds 
D)  certificates of deposit 
E)  None of the above are included.

Question 5

In a monetary system,people will exchange a good for

Accepted Answer

A)  another good. 
B)  a service. 
C)  money. 
D)  gold or other precious metals. 
A)  another good. 
B)  a service. 
C)  money. 
D)  gold or other precious metals.

Question 6

Nowadays,most observers believe that monetary policy

Accepted Answer

A)  is less important than fiscal policy. 
B)  is more important than fiscal policy. 
C)  and fiscal policy are equally important. 
D)  and fiscal policy are both unimportant. 
A)  is less important than fiscal policy. 
B)  is more important than fiscal policy. 
C)  and fiscal policy are equally important. 
D)  and fiscal policy are both unimportant.

Question 7

In which of the following monetary aggregates are Treasury Bills included?

Accepted Answer

A)  M1 only 
B)  M2 only 
C)  both M1 and M2 
D)  neither M1 nor M2 
A)  M1 only 
B)  M2 only 
C)  both M1 and M2 
D)  neither M1 nor M2

Question 8

Bankers have a reputation for conservatism in politics,dress,and business affairs.Is there an economic rationale for this conservatism? Explain.

Accepted Answer

There is an economic rationale for this

Question 9

Money is almost always used to quote prices.This illustrates the function of money as a

Accepted Answer

A)  medium of exchange. 
B)  store of value. 
C)  unit of account. 
D)  commodity value. 
A)  medium of exchange. 
B)  store of value. 
C)  unit of account. 
D)  commodity value.

Question 10

Which of the following definitions of the money supply is the least liquid?

Accepted Answer

A)  M1 
B)  M2 
C)  M3 
D)  L 
A)  M1 
B)  M2 
C)  M3 
D)  L

Question 11

In an economic system with privately owned,profit-maximizing banks,there will always be a difference between

Accepted Answer

A)  private profits and social profits. 
B)  bank profits and other corporate profits. 
C)  bank profits and macroeconomic objectives. 
D)  bank profits and government profits. 
A)  private profits and social profits. 
B)  bank profits and other corporate profits. 
C)  bank profits and macroeconomic objectives. 
D)  bank profits and government profits.

Question 12

Which of the following was t regarding sub-prime mortgages that were popular in 2005-2006?

Accepted Answer

A)  More than 90% of these loans were made by regulated banks. 
B)  Bankers expected higher default rates on these loans. 
C)  They were generally fixed rate loans. 
D)  all of the above 
A)  More than 90% of these loans were made by regulated banks. 
B)  Bankers expected higher default rates on these loans. 
C)  They were generally fixed rate loans. 
D)  all of the above

Question 13

The major contribution of goldsmiths to the development of modern banking was

Accepted Answer

A)  local banking. 
B)  market banking. 
C)  fractional reserve banking. 
D)  gold standard banking. 
A)  local banking. 
B)  market banking. 
C)  fractional reserve banking. 
D)  gold standard banking.

Question 14

During the 2007-2009 financial crisis,the U.S.government decided that Lehman Brothers was not too big to fail and that AIG was too big to fail.

Accepted Answer

A) True 
 B)False

Question 15

E-cash cards are considered a major portion of the modern money supply.

Accepted Answer

A) True 
 B)False

Question 16

One problem for economic stability is that in a period of inflation

Accepted Answer

A)  banks will be tempted to increase lending in order to increase profits. 
B)  banks will be tempted to decrease lending in order to increase profits. 
C)  profit-oriented banks will tend to hold excess reserves and decrease the money supply. 
D)  deposits will decrease and banks will have to reduce lending. 
A)  banks will be tempted to increase lending in order to increase profits. 
B)  banks will be tempted to decrease lending in order to increase profits. 
C)  profit-oriented banks will tend to hold excess reserves and decrease the money supply. 
D)  deposits will decrease and banks will have to reduce lending.

Question 17

The narrowest definition of the money supply,including cash and checking deposits,is known as

Accepted Answer

A)  M0. 
B)  M1. 
C)  M payments. 
D)  currency. 
E)  real-value money. 
A)  M0. 
B)  M1. 
C)  M payments. 
D)  currency. 
E)  real-value money.

Question 18

It is imperative that banks maintain a reputation for safety in order that

Accepted Answer

A)  regulators can reduce their efforts. 
B)  bank runs can be reduced or prevented. 
C)  customers will not be afraid to ask for loans. 
D)  stockholders can earn a high rate of return. 
A)  regulators can reduce their efforts. 
B)  bank runs can be reduced or prevented. 
C)  customers will not be afraid to ask for loans. 
D)  stockholders can earn a high rate of return.

Question 19

Banks in the United States may create new money equal to their amount of required reserves.

Accepted Answer

A) True 
 B)False

Question 20

If a bank has $1,000,000 in reserves and checking deposits of $3,000,000,what is the bank's reserve position if the required reserve ratio is 20 percent?

Accepted Answer

A)  The bank has $500,000 of required reserves and $500,000 of excess reserves. 
B)  The bank has $600,000 of required reserves and $400,000 of excess reserves. 
C)  The bank has $400,000 of required reserves and $600,000 of excess reserves. 
D)  The bank has $200,000 of required reserves and $800,000 of excess reserves. 
A)  The bank has $500,000 of required reserves and $500,000 of excess reserves. 
B)  The bank has $600,000 of required reserves and $400,000 of excess reserves. 
C)  The bank has $400,000 of required reserves and $600,000 of excess reserves. 
D)  The bank has $200,000 of required reserves and $800,000 of excess reserves.

Discuss some of the government regulations designed to ensure depositors' safety and to control the money supply.

The M2 definition of the money supply is based on the concept that

Most observers nowadays see monetary policy as much less important than fiscal policy.

Which of the following is included in M1?

In a monetary system,people will exchange a good for

Nowadays,most observers believe that monetary policy

In which of the following monetary aggregates are Treasury Bills included?

Bankers have a reputation for conservatism in politics,dress,and business affairs.Is there an economic rationale for this conservatism? Explain.

Money is almost always used to quote prices.This illustrates the function of money as a

Which of the following definitions of the money supply is the least liquid?

In an economic system with privately owned,profit-maximizing banks,there will always be a difference between

Which of the following was t regarding sub-prime mortgages that were popular in 2005-2006?

The major contribution of goldsmiths to the development of modern banking was

During the 2007-2009 financial crisis,the U.S.government decided that Lehman Brothers was not too big to fail and that AIG was too big to fail.

E-cash cards are considered a major portion of the modern money supply.

One problem for economic stability is that in a period of inflation

The narrowest definition of the money supply,including cash and checking deposits,is known as

It is imperative that banks maintain a reputation for safety in order that

Banks in the United States may create new money equal to their amount of required reserves.

If a bank has $1,000,000 in reserves and checking deposits of $3,000,000,what is the bank's reserve position if the required reserve ratio is 20 percent?

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

Discuss some of the government regulations designed to ensure depositors' safety and to control the money supply.

The M2 definition of the money supply is based on the concept that

Most observers nowadays see monetary policy as much less important than fiscal policy.

Which of the following is included in M1?

In a monetary system,people will exchange a good for

Nowadays,most observers believe that monetary policy

In which of the following monetary aggregates are Treasury Bills included?

Bankers have a reputation for conservatism in politics,dress,and business affairs.Is there an economic rationale for this conservatism? Explain.

Money is almost always used to quote prices.This illustrates the function of money as a

Which of the following definitions of the money supply is the least liquid?

In an economic system with privately owned,profit-maximizing banks,there will always be a difference between

Which of the following was t regarding sub-prime mortgages that were popular in 2005-2006?

The major contribution of goldsmiths to the development of modern banking was

During the 2007-2009 financial crisis,the U.S.government decided that Lehman Brothers was not too big to fail and that AIG was too big to fail.

E-cash cards are considered a major portion of the modern money supply.

One problem for economic stability is that in a period of inflation

The narrowest definition of the money supply,including cash and checking deposits,is known as

It is imperative that banks maintain a reputation for safety in order that

Banks in the United States may create new money equal to their amount of required reserves.

If a bank has $1,000,000 in reserves and checking deposits of $3,000,000,what is the bank's reserve position if the required reserve ratio is 20 percent?

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