Question 1

If the Fed buys $10 million of government securities when the desired reserve ratio is 20 percent and the currency drain is 5 percent, the quantity of money

Accepted Answer

A)  increases by $42 million. 
B)  increases by $50 million. 
C)  decreases by $42 million. 
D)  decreases by $50 million. 
E)  increases by $7.5 million. 
A)  increases by $42 million. 
B)  increases by $50 million. 
C)  decreases by $42 million. 
D)  decreases by $50 million. 
E)  increases by $7.5 million.

Question 2

The Fed is a central bank and as such

Accepted Answer

A)  does business only with the federal government. 
B)  provides banking services to banks but not individuals. 
C)  provides banking services to individuals and firms. 
D)  does business with international organizations such as the United Nations. 
E)  is where the Federal Government turns when it needs to borrow. 
A)  does business only with the federal government. 
B)  provides banking services to banks but not individuals. 
C)  provides banking services to individuals and firms. 
D)  does business with international organizations such as the United Nations. 
E)  is where the Federal Government turns when it needs to borrow.

Question 3

If there is an increase in the amount of currency held outside banks, then the

Accepted Answer

A)  monetary base will decrease. 
B)  quantity of money will increase. 
C)  quantity of money and the monetary base will decrease. 
D)  quantity of money will decrease. 
E)  quantity of money will not change. 
A)  monetary base will decrease. 
B)  quantity of money will increase. 
C)  quantity of money and the monetary base will decrease. 
D)  quantity of money will decrease. 
E)  quantity of money will not change.

Question 4

Whenever somebody deposits a check from bank A into a checkable deposit at bank B, bank A's reserves ________ and bank B's reserves ________.

Accepted Answer

A)  increase; decrease 
B)  increase; increase 
C)  decrease; decrease 
D)  decrease; increase 
E)  do not change; do not change 
A)  increase; decrease 
B)  increase; increase 
C)  decrease; decrease 
D)  decrease; increase 
E)  do not change; do not change

Question 5

When the Fed buys government securities, the immediate effect of the purchase is that banks'

Accepted Answer

A)  reserves increase. 
B)  deposits increase. 
C)  assets increase. 
D)  reserves decrease. 
E)  loans decrease. 
A)  reserves increase. 
B)  deposits increase. 
C)  assets increase. 
D)  reserves decrease. 
E)  loans decrease.

Question 6

Which of the flowing lists includes only banks' assets?

Accepted Answer

A)  liquid assets, loans, securities, and reserves 
B)  reserves, savings deposits, securities, and loans 
C)  reserves, securities, liquid assets, and savings deposits 
D)  securities, reserves, checkable deposits, and liquid assets 
E)  reserves, checkable deposits, securities, and loans 
A)  liquid assets, loans, securities, and reserves 
B)  reserves, savings deposits, securities, and loans 
C)  reserves, securities, liquid assets, and savings deposits 
D)  securities, reserves, checkable deposits, and liquid assets 
E)  reserves, checkable deposits, securities, and loans

Question 7

The Fed sells $300 million U.S.government securities to commercial banks.This action leads to ________ in Fed assets and ________ in Fed liabilities.

Accepted Answer

A)  a $300 million increase; a $300 million increase 
B)  a $300 million increase; a $300 million decrease 
C)  no change in Fed assets; no change in Fed liabilities 
D)  a $300 million decrease; a $300 million decrease in 
E)  a $300 million decrease; a $300 million increase 
A)  a $300 million increase; a $300 million increase 
B)  a $300 million increase; a $300 million decrease 
C)  no change in Fed assets; no change in Fed liabilities 
D)  a $300 million decrease; a $300 million decrease in 
E)  a $300 million decrease; a $300 million increase

Question 8

Money performs all of the following functions EXCEPT serving as a i. medium of exchange.
Ii) unit of account.
Iii) barter mechanism.

Accepted Answer

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

Question 9

A bank has $250 in checking deposits, $1,000 in savings deposits, $1,200 in time deposits, $1,000 in loans to businesses, $400 in outstanding credit card balances, $800 in government securities, $25 in currency in its vault, and $25 in deposits at the Fed.The bank's reserves are equal to

Accepted Answer

A)  $25. 
B)  $275. 
C)  $2,225 
D)  $50. 
E)  $350. 
A)  $25. 
B)  $275. 
C)  $2,225 
D)  $50. 
E)  $350.

Question 10

Keeping $20 in currency to be able to buy gasoline, money is performing which function?

Accepted Answer

A)  Medium of exchange. 
B)  Unit of account. 
C)  Store of value. 
D)  Barter mechanism. 
E)  Symbol of fiat. 
A)  Medium of exchange. 
B)  Unit of account. 
C)  Store of value. 
D)  Barter mechanism. 
E)  Symbol of fiat.

Question 11

All of the following are financial institutions that accept deposits and make loans to people and businesses EXCEPT

Accepted Answer

A)  commercial banks. 
B)  savings and loans. 
C)  credit unions. 
D)  central banks. 
E)  savings banks. 
A)  commercial banks. 
B)  savings and loans. 
C)  credit unions. 
D)  central banks. 
E)  savings banks.

Question 12

If you shop for a car online and compare car prices across dealerships, money is functioning as a

Accepted Answer

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

Question 13

When Zane deposits $20,000 cash in his checkable deposit at the Citicorp and the Citicorp's desired reserves increase by $5,000, the desired reserve ratio is

Accepted Answer

A)  5 percent. 
B)  75 percent. 
C)  25 percent. 
D)  20 percent. 
E)  $5,000. 
A)  5 percent. 
B)  75 percent. 
C)  25 percent. 
D)  20 percent. 
E)  $5,000.

Question 14

Money must be ________ which includes the fact that is should ________.

Accepted Answer

A)  in physical form; not be transferable using electronic means 
B)  accepted as a means of payment across countries' borders; not be fiat money 
C)  generally accepted as a means of payment; be recognizable and divisible into small parts 
D)  whatever is used in a barter system; transferable across countries' borders 
E)  backed by gold; not decrease in value over time 
A)  in physical form; not be transferable using electronic means 
B)  accepted as a means of payment across countries' borders; not be fiat money 
C)  generally accepted as a means of payment; be recognizable and divisible into small parts 
D)  whatever is used in a barter system; transferable across countries' borders 
E)  backed by gold; not decrease in value over time

Question 15

When a bank receives $100,000 in new deposits, the amount of loans the bank can make is limited by

Accepted Answer

A)  federal law. 
B)  the annual federal budget. 
C)  the Treasury Department. 
D)  its desired reserve ratio. 
E)  state law, with banks in different states being able to make different amounts of loans. 
A)  federal law. 
B)  the annual federal budget. 
C)  the Treasury Department. 
D)  its desired reserve ratio. 
E)  state law, with banks in different states being able to make different amounts of loans.

Question 16

Define money and list its functions.

Accepted Answer

Money is any commodity or toke

Question 17

The First National Bank of Townville has $125,000 in U.S.government securities, $200,000 in savings accounts, $300,000 in checking accounts, $50,000 in its reserve account at the Fed, $10,000 of currency in its vault, and loans of $250,000.What is the amount of its reserves?

Accepted Answer

Reserves include the bank's de

Question 18

The ________ easing that the Fed created during the 2008 financial crisis was designed to stimulate ________.

Accepted Answer

A)  credit; private banks to increase their lending 
B)  credit; the federal government to make loans directly to home buyers 
C)  credit; the federal government to make loans directly to small businesses 
D)  quantitative; private banks to increase their lending to home buyers 
E)  quantitative; decreased in the required reserve ratio 
A)  credit; private banks to increase their lending 
B)  credit; the federal government to make loans directly to home buyers 
C)  credit; the federal government to make loans directly to small businesses 
D)  quantitative; private banks to increase their lending to home buyers 
E)  quantitative; decreased in the required reserve ratio

Question 19

When Maria deposits $100 in currency in her checkable deposit at Bank of America, the immediate effect is that the quantity of M1

Accepted Answer

A)  decreases. 
B)  does not change. 
C)  increases. 
D)  changes, but the direction of the change depends on whether the deposit was accepted by a thrift institution or a commercial bank. 
E)  changes only if Bank of America does not have excess reserves. 
A)  decreases. 
B)  does not change. 
C)  increases. 
D)  changes, but the direction of the change depends on whether the deposit was accepted by a thrift institution or a commercial bank. 
E)  changes only if Bank of America does not have excess reserves.

Question 20

When the Fed buys or sells securities, it is conducting ________ operation.

Accepted Answer

A)  a government debt 
B)  an open market 
C)  a money multiplier 
D)  a deposit 
E)  a currency 
A)  a government debt 
B)  an open market 
C)  a money multiplier 
D)  a deposit 
E)  a currency

If the Fed buys $10 million of government securities when the desired reserve ratio is 20 percent and the currency drain is 5 percent, the quantity of money

The Fed is a central bank and as such

If there is an increase in the amount of currency held outside banks, then the

Whenever somebody deposits a check from bank A into a checkable deposit at bank B, bank A's reserves and bank B's reserves .

When the Fed buys government securities, the immediate effect of the purchase is that banks'

Which of the flowing lists includes only banks' assets?

The Fed sells $300 million U.S.government securities to commercial banks.This action leads to in Fed assets and in Fed liabilities.

Money performs all of the following functions EXCEPT serving as a i. medium of exchange. Ii) unit of account. Iii) barter mechanism.

A bank has $250 in checking deposits, $1,000 in savings deposits, $1,200 in time deposits, $1,000 in loans to businesses, $400 in outstanding credit card balances, $800 in government securities, $25 in currency in its vault, and $25 in deposits at the Fed.The bank's reserves are equal to

Keeping $20 in currency to be able to buy gasoline, money is performing which function?

All of the following are financial institutions that accept deposits and make loans to people and businesses EXCEPT

If you shop for a car online and compare car prices across dealerships, money is functioning as a

When Zane deposits $20,000 cash in his checkable deposit at the Citicorp and the Citicorp's desired reserves increase by $5,000, the desired reserve ratio is

Money must be which includes the fact that is should .

When a bank receives $100,000 in new deposits, the amount of loans the bank can make is limited by

Define money and list its functions.

The First National Bank of Townville has $125,000 in U.S.government securities, $200,000 in savings accounts, $300,000 in checking accounts, $50,000 in its reserve account at the Fed, $10,000 of currency in its vault, and loans of $250,000.What is the amount of its reserves?

The easing that the Fed created during the 2008 financial crisis was designed to stimulate .

When Maria deposits $100 in currency in her checkable deposit at Bank of America, the immediate effect is that the quantity of M1

When the Fed buys or sells securities, it is conducting ________ operation.

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 Fed buys $10 million of government securities when the desired reserve ratio is 20 percent and the currency drain is 5 percent, the quantity of money

The Fed is a central bank and as such

If there is an increase in the amount of currency held outside banks, then the

Whenever somebody deposits a check from bank A into a checkable deposit at bank B, bank A's reserves ________ and bank B's reserves ________.

When the Fed buys government securities, the immediate effect of the purchase is that banks'

Which of the flowing lists includes only banks' assets?

The Fed sells $300 million U.S.government securities to commercial banks.This action leads to ________ in Fed assets and ________ in Fed liabilities.

Money performs all of the following functions EXCEPT serving as a i. medium of exchange. Ii) unit of account. Iii) barter mechanism.

A bank has $250 in checking deposits, $1,000 in savings deposits, $1,200 in time deposits, $1,000 in loans to businesses, $400 in outstanding credit card balances, $800 in government securities, $25 in currency in its vault, and $25 in deposits at the Fed.The bank's reserves are equal to

Keeping $20 in currency to be able to buy gasoline, money is performing which function?

All of the following are financial institutions that accept deposits and make loans to people and businesses EXCEPT

If you shop for a car online and compare car prices across dealerships, money is functioning as a

When Zane deposits $20,000 cash in his checkable deposit at the Citicorp and the Citicorp's desired reserves increase by $5,000, the desired reserve ratio is

Money must be ________ which includes the fact that is should ________.

When a bank receives $100,000 in new deposits, the amount of loans the bank can make is limited by

Define money and list its functions.

The First National Bank of Townville has $125,000 in U.S.government securities, $200,000 in savings accounts, $300,000 in checking accounts, $50,000 in its reserve account at the Fed, $10,000 of currency in its vault, and loans of $250,000.What is the amount of its reserves?

The ________ easing that the Fed created during the 2008 financial crisis was designed to stimulate ________.

When Maria deposits $100 in currency in her checkable deposit at Bank of America, the immediate effect is that the quantity of M1

When the Fed buys or sells securities, it is conducting ________ operation.

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

Whenever somebody deposits a check from bank A into a checkable deposit at bank B, bank A's reserves and bank B's reserves .

The Fed sells $300 million U.S.government securities to commercial banks.This action leads to in Fed assets and in Fed liabilities.

Money must be which includes the fact that is should .

The easing that the Fed created during the 2008 financial crisis was designed to stimulate .