Question 1

When people make deposits of currency into a bank, the quantity of M1

Accepted Answer

A)  immediately decreases by the amount of the deposit. 
B)  immediately increases by the amount of the deposit. 
C)  does not immediately change. 
D)  immediately changes but whether it increases or decreases depends on whether the bank had excess reserves or did not have excess reserves. 
E)  changes only if the deposit is an open market operation. 
A)  immediately decreases by the amount of the deposit. 
B)  immediately increases by the amount of the deposit. 
C)  does not immediately change. 
D)  immediately changes but whether it increases or decreases depends on whether the bank had excess reserves or did not have excess reserves. 
E)  changes only if the deposit is an open market operation.

Question 2

Banks can make loans up to an amount equal to their

Accepted Answer

A)  total deposits. 
B)  total reserves. 
C)  required reserves. 
D)  excess reserves. 
E)  total government securities. 
A)  total deposits. 
B)  total reserves. 
C)  required reserves. 
D)  excess reserves. 
E)  total government securities.

Question 3

New money is created in the U.S.economy by

Accepted Answer

A)  increased federal government expenditures. 
B)  banks that create checkable deposits. 
C)  the U.S.Treasury. 
D)  U.S.Department of Mint. 
E)  the U.S.Congress. 
A)  increased federal government expenditures. 
B)  banks that create checkable deposits. 
C)  the U.S.Treasury. 
D)  U.S.Department of Mint. 
E)  the U.S.Congress.

Question 4

In 2009 banks kept reserves equal to about ________ of their assets.

Accepted Answer

A)  75 percent. 
B)  25 percent 
C)  8 percent 
D)  50 percent 
E)  37 percent 
A)  75 percent. 
B)  25 percent 
C)  8 percent 
D)  50 percent 
E)  37 percent

Question 5

The desired reserve ratio is 10 percent and banks have no excess reserves.Juliet deposits $300 in her bank.What is the maximum that Juliet's bank can now loan?

Accepted Answer

A)  $3,000. 
B)  $270. 
C)  $30. 
D)  $330. 
E)  $300. 
A)  $3,000. 
B)  $270. 
C)  $30. 
D)  $330. 
E)  $300.

Question 6

Open market operations are the

Accepted Answer

A)  purchase or sale of government securities by the Fed. 
B)  lending of reserves to the banking system by the Fed. 
C)  borrowing of reserves by the Fed from the banking system. 
D)  minimum percentage of loans that banks must retain as reserves in the open market. 
E)  purchase or sale of gold by the Fed. 
A)  purchase or sale of government securities by the Fed. 
B)  lending of reserves to the banking system by the Fed. 
C)  borrowing of reserves by the Fed from the banking system. 
D)  minimum percentage of loans that banks must retain as reserves in the open market. 
E)  purchase or sale of gold by the Fed.

Question 7

A bank reports reserves of $500,000, physical capital of $200,000, loans of $1,000,000, deposits of $1,000,000, and owners' equity of $500,000.If the desired reserve ratio is 5 percent, the bank's desired reserves are

Accepted Answer

A)  $10,000. 
B)  $25,000. 
C)  $50,000. 
D)  $1,000,000. 
E)  $500,000. 
A)  $10,000. 
B)  $25,000. 
C)  $50,000. 
D)  $1,000,000. 
E)  $500,000.

Question 8

The voting members of the Federal Open Market Committee consists of the

Accepted Answer

A)  seven Board of Governor members and the 12 Federal Reserve Bank presidents. 
B)  seven Board of Governor members and five Federal Reserve Bank presidents. 
C)  12 Board of Governor members and the seven Federal Reserve Bank presidents. 
D)  12 Board of Governor members and the five Federal Reserve Bank presidents. 
E)  six Board of Governor members and six Federal Reserve Bank presidents. 
A)  seven Board of Governor members and the 12 Federal Reserve Bank presidents. 
B)  seven Board of Governor members and five Federal Reserve Bank presidents. 
C)  12 Board of Governor members and the seven Federal Reserve Bank presidents. 
D)  12 Board of Governor members and the five Federal Reserve Bank presidents. 
E)  six Board of Governor members and six Federal Reserve Bank presidents.

Question 9

A bank has $400 in checkable deposits, $800 in savings deposits, $700 in time deposits, $900 in loans to businesses, $300 in outstanding credit card balances, $500 in government securities, $10 in currency in its vault, and $20 in deposits at the Fed.The bank's deposits that are part of M1 are equal to

Accepted Answer

A)  $1,900. 
B)  $400. 
C)  $1,210. 
D)  $530. 
E)  $410. 
A)  $1,900. 
B)  $400. 
C)  $1,210. 
D)  $530. 
E)  $410.

Question 10

Physical currency is ________ popular than e-cash, ________.

Accepted Answer

A)  less; and both are portable and recognizable 
B)  more; and both are portable and recognizable 
C)  more; but only physical currency is portable and recognizable 
D)  more; and both are portable, untraceable and anonymous 
E)  less; but both are portable, untraceable and anonymous 
A)  less; and both are portable and recognizable 
B)  more; and both are portable and recognizable 
C)  more; but only physical currency is portable and recognizable 
D)  more; and both are portable, untraceable and anonymous 
E)  less; but both are portable, untraceable and anonymous

Question 11

The desired reserve ratio is 3 percent.Robert deposits $3,000 in Bank America.Bank America keeps its minimum desired reserves and lends the excess to Fredrica.How much does Bank America lend to Fredrica?

Accepted Answer

A)  $3,000 
B)  $2,910 
C)  $300 
D)  $2700. 
E)  $900. 
A)  $3,000 
B)  $2,910 
C)  $300 
D)  $2700. 
E)  $900.

Question 12

"Credit cards are considered money because they serve to purchase goods and services." Is the previous statement true or false?

Accepted Answer

The statement is false.Credit cards are

Question 13

Money serves as a

Accepted Answer

A)  means of payment, legal obligation, and public tax. 
B)  medium of exchange, unit of account, and store of value. 
C)  means of settling debts, transaction lubricant, and private commodity. 
D)  means of worker exploitation and capitalist enrichment. 
E)  means to conduct barter transactions. 
A)  means of payment, legal obligation, and public tax. 
B)  medium of exchange, unit of account, and store of value. 
C)  means of settling debts, transaction lubricant, and private commodity. 
D)  means of worker exploitation and capitalist enrichment. 
E)  means to conduct barter transactions.

Question 14

If Rob deposits $300 in currency into his savings account at Bank of America,

Accepted Answer

A)  M1 decreases. 
B)  M1 does not change. 
C)  M2 increases. 
D)  M2 decreases. 
E)  M1 and M2 both increase. 
A)  M1 decreases. 
B)  M1 does not change. 
C)  M2 increases. 
D)  M2 decreases. 
E)  M1 and M2 both increase.

Question 15

If the currency drain is 40 percent and the desired reserve ratio is 15 percent, what does the money multiplier equal?

Accepted Answer

The money multiplier is 2.55.T

Question 16

Assume the First Bank of Townsville makes a loan of $2,500.This loan will

Accepted Answer

A)  increase the quantity of money initially by $2,500. 
B)  decrease the quantity of money initially by $2,500. 
C)  have no change on the quantity of money, just its composition. 
D)  increase the First Bank of Townville's liabilities at the Fed. 
E)  increase the First Bank of Townville's reserves. 
A)  increase the quantity of money initially by $2,500. 
B)  decrease the quantity of money initially by $2,500. 
C)  have no change on the quantity of money, just its composition. 
D)  increase the First Bank of Townville's liabilities at the Fed. 
E)  increase the First Bank of Townville's reserves.

Question 17

The money multiplier is used to determine how much the

Accepted Answer

A)  monetary base increases when the Fed purchases government securities. 
B)  quantity of money increases when the monetary base increases. 
C)  monetary base increases when the quantity of money increases. 
D)  quantity of money increases when the required reserve ratio increases. 
E)  monetary base increases when the Fed sells government securities. 
A)  monetary base increases when the Fed purchases government securities. 
B)  quantity of money increases when the monetary base increases. 
C)  monetary base increases when the quantity of money increases. 
D)  quantity of money increases when the required reserve ratio increases. 
E)  monetary base increases when the Fed sells government securities.

Question 18

The monetary multiplier is 3 and the change in the monetary base is $100,000.How much will the quantity of money increase?

Accepted Answer

A)  $300,000 
B)  $200,000 
C)  $100,000 
D)  $70,000 
E)  $33,333 
A)  $300,000 
B)  $200,000 
C)  $100,000 
D)  $70,000 
E)  $33,333

Question 19

A commercial bank's main goal is to

Accepted Answer

A)  provide loans to its customers. 
B)  maximize the wealth of its stockholders. 
C)  help the government when it needs money. 
D)  lend money to the Federal Reserve banks. 
E)  open checking accounts. 
A)  provide loans to its customers. 
B)  maximize the wealth of its stockholders. 
C)  help the government when it needs money. 
D)  lend money to the Federal Reserve banks. 
E)  open checking accounts.

Question 20

When the Fed sells government securities to banks, the sale

Accepted Answer

A)  increases banks' reserves. 
B)  increases the quantity of money. 
C)  creates more excess reserves. 
D)  decreases banks' reserves. 
E)  increases the monetary base. 
A)  increases banks' reserves. 
B)  increases the quantity of money. 
C)  creates more excess reserves. 
D)  decreases banks' reserves. 
E)  increases the monetary base.

When people make deposits of currency into a bank, the quantity of M1

Banks can make loans up to an amount equal to their

New money is created in the U.S.economy by

In 2009 banks kept reserves equal to about ________ of their assets.

The desired reserve ratio is 10 percent and banks have no excess reserves.Juliet deposits $300 in her bank.What is the maximum that Juliet's bank can now loan?

Open market operations are the

A bank reports reserves of $500,000, physical capital of $200,000, loans of $1,000,000, deposits of $1,000,000, and owners' equity of $500,000.If the desired reserve ratio is 5 percent, the bank's desired reserves are

The voting members of the Federal Open Market Committee consists of the

Physical currency is popular than e-cash, .

The desired reserve ratio is 3 percent.Robert deposits $3,000 in Bank America.Bank America keeps its minimum desired reserves and lends the excess to Fredrica.How much does Bank America lend to Fredrica?

"Credit cards are considered money because they serve to purchase goods and services." Is the previous statement true or false?

Money serves as a

If Rob deposits $300 in currency into his savings account at Bank of America,

If the currency drain is 40 percent and the desired reserve ratio is 15 percent, what does the money multiplier equal?

Assume the First Bank of Townsville makes a loan of $2,500.This loan will

The money multiplier is used to determine how much the

The monetary multiplier is 3 and the change in the monetary base is $100,000.How much will the quantity of money increase?

A commercial bank's main goal is to

When the Fed sells government securities to banks, the sale

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

When people make deposits of currency into a bank, the quantity of M1

Banks can make loans up to an amount equal to their

New money is created in the U.S.economy by

In 2009 banks kept reserves equal to about ________ of their assets.

The desired reserve ratio is 10 percent and banks have no excess reserves.Juliet deposits $300 in her bank.What is the maximum that Juliet's bank can now loan?

Open market operations are the

A bank reports reserves of $500,000, physical capital of $200,000, loans of $1,000,000, deposits of $1,000,000, and owners' equity of $500,000.If the desired reserve ratio is 5 percent, the bank's desired reserves are

The voting members of the Federal Open Market Committee consists of the

Physical currency is ________ popular than e-cash, ________.

The desired reserve ratio is 3 percent.Robert deposits $3,000 in Bank America.Bank America keeps its minimum desired reserves and lends the excess to Fredrica.How much does Bank America lend to Fredrica?

"Credit cards are considered money because they serve to purchase goods and services." Is the previous statement true or false?

Money serves as a

If Rob deposits $300 in currency into his savings account at Bank of America,

If the currency drain is 40 percent and the desired reserve ratio is 15 percent, what does the money multiplier equal?

Assume the First Bank of Townsville makes a loan of $2,500.This loan will

The money multiplier is used to determine how much the

The monetary multiplier is 3 and the change in the monetary base is $100,000.How much will the quantity of money increase?

A commercial bank's main goal is to

When the Fed sells government securities to banks, the sale

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

Physical currency is popular than e-cash, .