Question 1

The monetary base is equal to

Accepted Answer

A)  M1. 
B)  M2. 
C)  currency and coins in circulation plus checkable deposits. 
D)  the sum of coins, Federal Reserve notes, and banks' reserves at the Fed. 
E)  the sum of coins, Federal Reserve notes, and gold at the Fed. 
A)  M1. 
B)  M2. 
C)  currency and coins in circulation plus checkable deposits. 
D)  the sum of coins, Federal Reserve notes, and banks' reserves at the Fed. 
E)  the sum of coins, Federal Reserve notes, and gold at the Fed.

Question 2

Comparing the effect on the monetary base between an open market purchase of government securities from a bank and the same open market operation conducted with the general public, the monetary base

Accepted Answer

A)  increases by a larger amount if the general public sells the securities than if a bank sells the securities. 
B)  increases by a larger amount if a bank sells the securities than if the general public sells the securities. 
C)  does not change if it is the general public that sells the securities. 
D)  increases by the same amount if the general public sells the securities or if a bank sells the securities. 
E)  decreases by the same amount if the general public sells the securities or if a bank sells the securities. 
A)  increases by a larger amount if the general public sells the securities than if a bank sells the securities. 
B)  increases by a larger amount if a bank sells the securities than if the general public sells the securities. 
C)  does not change if it is the general public that sells the securities. 
D)  increases by the same amount if the general public sells the securities or if a bank sells the securities. 
E)  decreases by the same amount if the general public sells the securities or if a bank sells the securities.

Question 3

The Fed buys $100 million U.S.government securities from Bank of America.Bank of America's balance sheet shows this transaction as ________ in total assets and ________ in reserves.

Accepted Answer

A)  no change; a $100 million decrease 
B)  no change; a $100 million increase 
C)  a $100 million increase; no change 
D)  a $100 million increase; a $100 million increase 
E)  a $100 million decrease; a $100 million decrease 
A)  no change; a $100 million decrease 
B)  no change; a $100 million increase 
C)  a $100 million increase; no change 
D)  a $100 million increase; a $100 million increase 
E)  a $100 million decrease; a $100 million decrease

Question 4

The discount rate is

Accepted Answer

A)  the interest rate that banks have to pay for any reserves that they borrow from the non-bank public. 
B)  the interest rate that banks have to pay to the owners of bank deposits. 
C)  equal to the nominal interest rate minus the inflation rate. 
D)  the interest rate that banks pay for reserves that they borrow from the Fed. 
E)  the interest rate that banks receive for the reserves that they have on reserve at the Fed. 
A)  the interest rate that banks have to pay for any reserves that they borrow from the non-bank public. 
B)  the interest rate that banks have to pay to the owners of bank deposits. 
C)  equal to the nominal interest rate minus the inflation rate. 
D)  the interest rate that banks pay for reserves that they borrow from the Fed. 
E)  the interest rate that banks receive for the reserves that they have on reserve at the Fed.

Question 5

If the Fed buys government securities from the non-bank public, then

Accepted Answer

A)  reserves at banks decrease. 
B)  loans at banks decrease. 
C)  deposits at banks increase and banks' reserves decrease. 
D)  deposits at banks increase and banks' reserves increase. 
E)  deposits at banks decrease and banks' reserves increase. 
A)  reserves at banks decrease. 
B)  loans at banks decrease. 
C)  deposits at banks increase and banks' reserves decrease. 
D)  deposits at banks increase and banks' reserves increase. 
E)  deposits at banks decrease and banks' reserves increase.

Question 6

The monetary base is the sum of

Accepted Answer

A)  Federal Reserve notes and banks' reserves at the Fed. 
B)  coins, Federal Reserve notes, and individuals' deposits at the Fed. 
C)  Federal Reserve notes, Treasury deposits at the Fed, banks' reserves at the Fed, and coins. 
D)  coins, Federal Reserve notes, and banks' reserves at the Fed. 
E)  coins, Federal Reserve notes, and gold at the Fed. 
A)  Federal Reserve notes and banks' reserves at the Fed. 
B)  coins, Federal Reserve notes, and individuals' deposits at the Fed. 
C)  Federal Reserve notes, Treasury deposits at the Fed, banks' reserves at the Fed, and coins. 
D)  coins, Federal Reserve notes, and banks' reserves at the Fed. 
E)  coins, Federal Reserve notes, and gold at the Fed.

Question 7

When Grayce deposits $4,000 cash in her checkable deposit at the Beach Bank and the Beach Bank's excess reserves increase by $3,600, the desired reserve ratio is

Accepted Answer

A)  5 percent. 
B)  10 percent. 
C)  15 percent. 
D)  90 percent. 
E)  $400. 
A)  5 percent. 
B)  10 percent. 
C)  15 percent. 
D)  90 percent. 
E)  $400.

Question 8

The interest rate the Federal Reserve charges a bank when it borrows reserves from the Fed is called the

Accepted Answer

A)  market interest rate. 
B)  federal funds rate. 
C)  discount rate. 
D)  prime rate. 
E)  borrowing rate. 
A)  market interest rate. 
B)  federal funds rate. 
C)  discount rate. 
D)  prime rate. 
E)  borrowing rate.

Question 9

When the Fed engages in open market operations, it is buying or selling

Accepted Answer

A)  capital equipment. 
B)  U.S.government securities newly issued by the U.S.Treasury. 
C)  U.S.government securities. 
D)  loans made to banks to meet the legal reserve requirement ratio. 
E)  gold. 
A)  capital equipment. 
B)  U.S.government securities newly issued by the U.S.Treasury. 
C)  U.S.government securities. 
D)  loans made to banks to meet the legal reserve requirement ratio. 
E)  gold.

Question 10

If the currency drain increases, how can the Fed adjust the monetary base to offset the effect on the quantity of money?

Accepted Answer

If the currency drain increases, the siz

Question 11

Which of the following is NOT a function of money?
i. unit of account
ii. store of value
iii. unit of debt

Accepted Answer

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

Question 12

Which of the following is money?

Accepted Answer

A)  credit card 
B)  debit card 
C)  e-checks 
D)  checkable deposit 
E)  checks 
A)  credit card 
B)  debit card 
C)  e-checks 
D)  checkable deposit 
E)  checks

Question 13

The functions of money are

Accepted Answer

A)  medium of exchange, unit of account, and store of value. 
B)  medium of exchange, the ability to buy goods and services, and the ability to pay off debts. 
C)  medium of exchange, the ability to buy goods and services, and checking accounts. 
D)  credit cards, checking accounts, currency, and coins. 
E)  store of value, use as a barter mechanism, and unit of account. 
A)  medium of exchange, unit of account, and store of value. 
B)  medium of exchange, the ability to buy goods and services, and the ability to pay off debts. 
C)  medium of exchange, the ability to buy goods and services, and checking accounts. 
D)  credit cards, checking accounts, currency, and coins. 
E)  store of value, use as a barter mechanism, and unit of account.

Question 14

_______ like a check and ________ considered money.

Accepted Answer

A)  Debit cards work; are not 
B)  Debit cards work; are 
C)  E-checks work; are 
D)  E-cash works; is not 
E)  E-cash works; is 
A)  Debit cards work; are not 
B)  Debit cards work; are 
C)  E-checks work; are 
D)  E-cash works; is not 
E)  E-cash works; is

Question 15

Which of the following is a tool the Fed uses to adjust the quantity of money?
i. The Fed can change the interest rate on loans to bank customers.
ii. The Fed can change the discount rate on loans to banks.
iii. The Fed can buy or sell government securities.

Accepted Answer

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

Question 16

What is the structure of the Federal Reserve Bank System?

Accepted Answer

The key elements in the structure of the

Question 17

Decisions of ________ determine the magnitude of the monetary multiplier.

Accepted Answer

A)  only the Fed 
B)  only the public 
C)  both the Fed and the public 
D)  neither the Fed nor the public 
E)  Fed and the U.S.Congress 
A)  only the Fed 
B)  only the public 
C)  both the Fed and the public 
D)  neither the Fed nor the public 
E)  Fed and the U.S.Congress

Question 18

What is the discount rate?

Accepted Answer

The discount rate is the inter

Question 19

Regulating the amount of money in the United States is one of the most important responsibilities of the

Accepted Answer

A)  State Department. 
B)  state governments. 
C)  Treasury Department. 
D)  Federal Reserve. 
E)  U.S.Mint. 
A)  State Department. 
B)  state governments. 
C)  Treasury Department. 
D)  Federal Reserve. 
E)  U.S.Mint.

Question 20

When you see a mansion and think to yourself that it must be worth a million dollars, you are using money to perform which function?

Accepted Answer

A)  Medium of exchange. 
B)  Unit of account. 
C)  Store of value. 
D)  Means of payment. 
E)  Method of avoiding barter. 
A)  Medium of exchange. 
B)  Unit of account. 
C)  Store of value. 
D)  Means of payment. 
E)  Method of avoiding barter.

The monetary base is equal to

Comparing the effect on the monetary base between an open market purchase of government securities from a bank and the same open market operation conducted with the general public, the monetary base

The Fed buys $100 million U.S.government securities from Bank of America.Bank of America's balance sheet shows this transaction as in total assets and in reserves.

The discount rate is

If the Fed buys government securities from the non-bank public, then

The monetary base is the sum of

When Grayce deposits $4,000 cash in her checkable deposit at the Beach Bank and the Beach Bank's excess reserves increase by $3,600, the desired reserve ratio is

The interest rate the Federal Reserve charges a bank when it borrows reserves from the Fed is called the

When the Fed engages in open market operations, it is buying or selling

If the currency drain increases, how can the Fed adjust the monetary base to offset the effect on the quantity of money?

Which of the following is NOT a function of money? i. unit of account ii. store of value iii. unit of debt

Which of the following is money?

The functions of money are

_ like a check and __ considered money.

Which of the following is a tool the Fed uses to adjust the quantity of money? i. The Fed can change the interest rate on loans to bank customers. ii. The Fed can change the discount rate on loans to banks. iii. The Fed can buy or sell government securities.

What is the structure of the Federal Reserve Bank System?

Decisions of ________ determine the magnitude of the monetary multiplier.

What is the discount rate?

Regulating the amount of money in the United States is one of the most important responsibilities of the

When you see a mansion and think to yourself that it must be worth a million dollars, you are using money to perform which function?

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

The monetary base is equal to

Comparing the effect on the monetary base between an open market purchase of government securities from a bank and the same open market operation conducted with the general public, the monetary base

The Fed buys $100 million U.S.government securities from Bank of America.Bank of America's balance sheet shows this transaction as ________ in total assets and ________ in reserves.

The discount rate is

If the Fed buys government securities from the non-bank public, then

The monetary base is the sum of

When Grayce deposits $4,000 cash in her checkable deposit at the Beach Bank and the Beach Bank's excess reserves increase by $3,600, the desired reserve ratio is

The interest rate the Federal Reserve charges a bank when it borrows reserves from the Fed is called the

When the Fed engages in open market operations, it is buying or selling

If the currency drain increases, how can the Fed adjust the monetary base to offset the effect on the quantity of money?

Which of the following is NOT a function of money? i. unit of account ii. store of value iii. unit of debt

Which of the following is money?

The functions of money are

_______ like a check and ________ considered money.

Which of the following is a tool the Fed uses to adjust the quantity of money? i. The Fed can change the interest rate on loans to bank customers. ii. The Fed can change the discount rate on loans to banks. iii. The Fed can buy or sell government securities.

What is the structure of the Federal Reserve Bank System?

Decisions of ________ determine the magnitude of the monetary multiplier.

What is the discount rate?

Regulating the amount of money in the United States is one of the most important responsibilities of the

When you see a mansion and think to yourself that it must be worth a million dollars, you are using money to perform which function?

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

The Fed buys $100 million U.S.government securities from Bank of America.Bank of America's balance sheet shows this transaction as in total assets and in reserves.

_ like a check and __ considered money.