Question 1

If the desired reserve ratio decreases, then

Accepted Answer

A)  banks' desired reserves increase and their excess reserves decrease. 
B)  bank customers become more willing to make deposits in banks. 
C)  banks are able to make more loans. 
D)  banks are forced to buy fewer government securities. 
E)  banks' desired reserves decrease and their excess reserves do not change. 
A)  banks' desired reserves increase and their excess reserves decrease. 
B)  bank customers become more willing to make deposits in banks. 
C)  banks are able to make more loans. 
D)  banks are forced to buy fewer government securities. 
E)  banks' desired reserves decrease and their excess reserves do not change.

Question 2

Which of the following is a tool the Federal Reserve System can use to regulate the quantity of money?
i. changing the discount rate
ii. conducting open market operations
iii. changing the required reserve ratio

Accepted Answer

A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and ii 
E)  i, ii, and iii 
A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and ii 
E)  i, ii, and iii

Question 3

________ the quantity of money in the United States.

Accepted Answer

A)  The State Department regulates 
B)  The Department of Treasury regulates 
C)  The Federal Reserve System regulates 
D)  Commercial banks regulate 
E)  The President of the United States regulates 
A)  The State Department regulates 
B)  The Department of Treasury regulates 
C)  The Federal Reserve System regulates 
D)  Commercial banks regulate 
E)  The President of the United States regulates

Question 4

Money is used as a ________ when you visit the local farmer's market and compare prices across different vendors.

Accepted Answer

A)  means of payment. 
B)  unit of account. 
C)  store of value. 
D)  medium of exchange. 
E)  measure of barter. 
A)  means of payment. 
B)  unit of account. 
C)  store of value. 
D)  medium of exchange. 
E)  measure of barter.

Question 5

If the Fed engages in quantitative easing, it has likely

Accepted Answer

A)  decreased the federal funds rate to almost zero by buying large sums of securities. 
B)  increased the discount rate to prevent inflation. 
C)  decreased the discount rate by selling its own securities. 
D)  increased the federal funds rate by selling private securities. 
E)  started paying interest on required reserves. 
A)  decreased the federal funds rate to almost zero by buying large sums of securities. 
B)  increased the discount rate to prevent inflation. 
C)  decreased the discount rate by selling its own securities. 
D)  increased the federal funds rate by selling private securities. 
E)  started paying interest on required reserves.

Question 6

For a commodity or token to be money it must

Accepted Answer

A)  be accepted in exchange for all other goods and services. 
B)  have a double coincidence of wants. 
C)  be backed by government precious metals, like gold. 
D)  be paper. 
E)  be issued by the government or a government agency. 
A)  be accepted in exchange for all other goods and services. 
B)  have a double coincidence of wants. 
C)  be backed by government precious metals, like gold. 
D)  be paper. 
E)  be issued by the government or a government agency.

Question 7

The required reserve ratio is 20 percent and banks have no excess reserves.Katie deposits $300 in her bank.What are the bank's excess reserves immediately after Katie makes her deposit?

Accepted Answer

A)  $30 
B)  $90 
C)  $240 
D)  $60 
E)  $300 
A)  $30 
B)  $90 
C)  $240 
D)  $60 
E)  $300

Question 8

When goldsmiths issued receipts to gold owners, and those gold receipts circulated while gold stayed in the goldsmiths' safes,

Accepted Answer

A)  the gold receipts were considered money because they were used as a means of payment. 
B)  an infant banking system developed in sixteenth century Europe. 
C)  fiat money was created. 
D)  money was invented. 
E)  Both A and B are correct. 
A)  the gold receipts were considered money because they were used as a means of payment. 
B)  an infant banking system developed in sixteenth century Europe. 
C)  fiat money was created. 
D)  money was invented. 
E)  Both A and B are correct.

Question 9

Explain the process by which the banking system creates money.

Accepted Answer

When a bank gains excess reserves, it us

Question 10

$$\begin{array} { l c } 
& \begin{array} { c } 
\text { Amount } \
\text { (dollars) }
\end{array} \
\hline \text { Checkable deposits } & 350 \
\text { Savings deposits } & 900 \
\text { Money market funds } & 500 \
\text { Small time deposits } & 600 \
\text { Traveler's checks } & 10 \
\text { Currency outside of banks } & 250
\end{array}$$
-The above table has information about the hypothetical economy of Robotica.Based on the data, the size of M1 is

Accepted Answer

A)  $610 billion. 
B)  $1,510 billion. 
C)  $600 billion. 
D)  $1,110 billion. 
E)  $2,600 billion. 
A)  $610 billion. 
B)  $1,510 billion. 
C)  $600 billion. 
D)  $1,110 billion. 
E)  $2,600 billion.

Question 11

How can a new deposit of $10,000 at one bank create other new deposits at other banks?
 Suppose the desired reserve ratio is 10 percent and people keep no currency outside of the banks.What will be the new amount of deposits in the second and third rounds?

Accepted Answer

When the bank receives a new deposit of

Question 12

The objects that we use as money today are

Accepted Answer

A)  checks and credit cards. 
B)  currency and checks. 
C)  currency and deposits. 
D)  deposits and checks. 
E)  currency, deposits, and gold. 
A)  checks and credit cards. 
B)  currency and checks. 
C)  currency and deposits. 
D)  deposits and checks. 
E)  currency, deposits, and gold.

Question 13

For anything to be considered money it must be

Accepted Answer

A)  a valuable commodity, such as gold. 
B)  a token, such as a green piece of paper. 
C)  either a commodity or a token, as long as it is generally accepted as a means of payment. 
D)  a mystical token, such as whale teeth. 
E)  used in barter transactions. 
A)  a valuable commodity, such as gold. 
B)  a token, such as a green piece of paper. 
C)  either a commodity or a token, as long as it is generally accepted as a means of payment. 
D)  a mystical token, such as whale teeth. 
E)  used in barter transactions.

Question 14

A new bank has reserves of $600,000, checkable deposits of $500,000, and government securities of $100,000.If the desired reserve ratio is 10 percent, the amount of loans this bank can make is

Accepted Answer

A)  $50,000. 
B)  $60,000. 
C)  $540,000. 
D)  $550,000. 
E)  $600,000. 
A)  $50,000. 
B)  $60,000. 
C)  $540,000. 
D)  $550,000. 
E)  $600,000.

Question 15

A-1 bank initially has no excess reserves.If the desired reserve ratio is 10 percent and a new deposit of $10,000 is made in A-1, then A-1

Accepted Answer

A)  is required to hold the deposit in its reserves. 
B)  can immediately loan a multiple of the $10,000. 
C)  can immediately loan $9,000. 
D)  can immediately loan $100,000. 
E)  can immediately loan $10,000. 
A)  is required to hold the deposit in its reserves. 
B)  can immediately loan a multiple of the $10,000. 
C)  can immediately loan $9,000. 
D)  can immediately loan $100,000. 
E)  can immediately loan $10,000.

Question 16

A currency drain is

Accepted Answer

A)  an increase in currency held outside banks. 
B)  when the Fed buys securities but it is not when the Fed sells securities. 
C)  when the Fed sells securities but it is not when the Fed buys securities. 
D)  when the Fed either buys or sells securities. 
E)  when the Fed raises the required reserve ratio. 
A)  an increase in currency held outside banks. 
B)  when the Fed buys securities but it is not when the Fed sells securities. 
C)  when the Fed sells securities but it is not when the Fed buys securities. 
D)  when the Fed either buys or sells securities. 
E)  when the Fed raises the required reserve ratio.

Question 17

If the desired reserve ratio is 10 percent and there is no currency drain, then a $100 increase in the monetary base leads the banking system to increase the quantity of money by

Accepted Answer

A)  $1,000. 
B)  $400. 
C)  $900. 
D)  $110. 
E)  $1,100. 
A)  $1,000. 
B)  $400. 
C)  $900. 
D)  $110. 
E)  $1,100.

Question 18

When the Fed sells $100 million of securities to a commercial bank the

Accepted Answer

A)  monetary base increases. 
B)  money supply increases. 
C)  bank's reserves decrease. 
D)  required reserve ratio decreases. 
E)  bank's reserves do not change. 
A)  monetary base increases. 
B)  money supply increases. 
C)  bank's reserves decrease. 
D)  required reserve ratio decreases. 
E)  bank's reserves do not change.

Question 19

Which of the following statements is correct?

Accepted Answer

A)  required reserves = (total deposits) × (excess reserve ratio) 
B)  required reserves = (total reserves) × (excess reserve ratio) 
C)  required reserves = (total deposits) × (required reserve ratio) 
D)  required reserves = (total deposits) ÷ (required reserve ratio) 
E)  required reserves = (total deposits) × (required reserve ratio) - excess reserves 
A)  required reserves = (total deposits) × (excess reserve ratio) 
B)  required reserves = (total reserves) × (excess reserve ratio) 
C)  required reserves = (total deposits) × (required reserve ratio) 
D)  required reserves = (total deposits) ÷ (required reserve ratio) 
E)  required reserves = (total deposits) × (required reserve ratio) - excess reserves

Question 20

At any point in time, a single bank can loan an amount equal to

Accepted Answer

A)  its excess reserves. 
B)  its required reserves. 
C)  its government securities. 
D)  the amount of loans the bank made in the past. 
E)  its total reserves. 
A)  its excess reserves. 
B)  its required reserves. 
C)  its government securities. 
D)  the amount of loans the bank made in the past. 
E)  its total reserves.

If the desired reserve ratio decreases, then

Which of the following is a tool the Federal Reserve System can use to regulate the quantity of money? i. changing the discount rate ii. conducting open market operations iii. changing the required reserve ratio

________ the quantity of money in the United States.

Money is used as a ________ when you visit the local farmer's market and compare prices across different vendors.

If the Fed engages in quantitative easing, it has likely

For a commodity or token to be money it must

The required reserve ratio is 20 percent and banks have no excess reserves.Katie deposits $300 in her bank.What are the bank's excess reserves immediately after Katie makes her deposit?

When goldsmiths issued receipts to gold owners, and those gold receipts circulated while gold stayed in the goldsmiths' safes,

Explain the process by which the banking system creates money.

Amount (dollars) Checkable deposits 350 Savings deposits 900 Money market funds 500 Small time deposits 600 Traveler's checks 10 Currency outside of banks 250 -The above table has information about the hypothetical economy of Robotica.Based on the data, the size of M1 is

How can a new deposit of $10,000 at one bank create other new deposits at other banks? Suppose the desired reserve ratio is 10 percent and people keep no currency outside of the banks.What will be the new amount of deposits in the second and third rounds?

The objects that we use as money today are

For anything to be considered money it must be

A new bank has reserves of $600,000, checkable deposits of $500,000, and government securities of $100,000.If the desired reserve ratio is 10 percent, the amount of loans this bank can make is

A-1 bank initially has no excess reserves.If the desired reserve ratio is 10 percent and a new deposit of $10,000 is made in A-1, then A-1

A currency drain is

If the desired reserve ratio is 10 percent and there is no currency drain, then a $100 increase in the monetary base leads the banking system to increase the quantity of money by

When the Fed sells $100 million of securities to a commercial bank the

Which of the following statements is correct?

At any point in time, a single bank can loan an amount equal to

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 11: The Monetary System

If the desired reserve ratio decreases, then

Which of the following is a tool the Federal Reserve System can use to regulate the quantity of money? i. changing the discount rate ii. conducting open market operations iii. changing the required reserve ratio

________ the quantity of money in the United States.

Money is used as a ________ when you visit the local farmer's market and compare prices across different vendors.

If the Fed engages in quantitative easing, it has likely

For a commodity or token to be money it must

The required reserve ratio is 20 percent and banks have no excess reserves.Katie deposits $300 in her bank.What are the bank's excess reserves immediately after Katie makes her deposit?

When goldsmiths issued receipts to gold owners, and those gold receipts circulated while gold stayed in the goldsmiths' safes,

Explain the process by which the banking system creates money.

Amount (dollars) Checkable deposits 350 Savings deposits 900 Money market funds 500 Small time deposits 600 Traveler's checks 10 Currency outside of banks 250 -The above table has information about the hypothetical economy of Robotica.Based on the data, the size of M1 is

How can a new deposit of $10,000 at one bank create other new deposits at other banks? Suppose the desired reserve ratio is 10 percent and people keep no currency outside of the banks.What will be the new amount of deposits in the second and third rounds?

The objects that we use as money today are

For anything to be considered money it must be

A new bank has reserves of $600,000, checkable deposits of $500,000, and government securities of $100,000.If the desired reserve ratio is 10 percent, the amount of loans this bank can make is

A-1 bank initially has no excess reserves.If the desired reserve ratio is 10 percent and a new deposit of $10,000 is made in A-1, then A-1

A currency drain is

If the desired reserve ratio is 10 percent and there is no currency drain, then a $100 increase in the monetary base leads the banking system to increase the quantity of money by

When the Fed sells $100 million of securities to a commercial bank the

Which of the following statements is correct?

At any point in time, a single bank can loan an amount equal to

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters