Question 1

If the currency drain is 30 percent and the desired reserve ratio is 10 percent, the money multiplier is

Accepted Answer

A)  0.80. 
B)  1.25. 
C)  3.25. 
D)  5.00. 
E)  10.0. 
A)  0.80. 
B)  1.25. 
C)  3.25. 
D)  5.00. 
E)  10.0.

Question 2

Which of the following is money?

Accepted Answer

A)  a credit card with no credit left 
B)  the check you write to pay tuition 
C)  a credit card that still has credit available on it 
D)  a checkable deposit in your bank 
E)  the current credit available on a credit card 
A)  a credit card with no credit left 
B)  the check you write to pay tuition 
C)  a credit card that still has credit available on it 
D)  a checkable deposit in your bank 
E)  the current credit available on a credit card

Question 3

Checks are not money because they

Accepted Answer

A)  are just instruments to transfer money between banks. 
B)  are not guaranteed by banks. 
C)  can bounce when there are not enough funds to cash them. 
D)  are not issued by the government. 
E)  are not always accepted when trying to purchase goods or services. 
A)  are just instruments to transfer money between banks. 
B)  are not guaranteed by banks. 
C)  can bounce when there are not enough funds to cash them. 
D)  are not issued by the government. 
E)  are not always accepted when trying to purchase goods or services.

Question 4

If the Fed makes an open market purchase of $1 million of government securities, the monetary base

Accepted Answer

A)  is decreased by $1 million. 
B)  is unchanged in size, though its composition changes. 
C)  is increased by $1 million. 
D)  will decrease by a multiple of $1 million over time. 
E)  will increase by a multiple of $1 million over time. 
A)  is decreased by $1 million. 
B)  is unchanged in size, though its composition changes. 
C)  is increased by $1 million. 
D)  will decrease by a multiple of $1 million over time. 
E)  will increase by a multiple of $1 million over time.

Question 5

If the money multiplier is 3.0, a $1,000 increase in the monetary base

Accepted Answer

A)  increases quantity of money by $3,000. 
B)  decreases quantity of money by $3,000. 
C)  increases the monetary base by $300. 
D)  increases the money multiplier by 3 percent. 
E)  decreases the quantity of money by 3 percent. 
A)  increases quantity of money by $3,000. 
B)  decreases quantity of money by $3,000. 
C)  increases the monetary base by $300. 
D)  increases the money multiplier by 3 percent. 
E)  decreases the quantity of money by 3 percent.

Question 6

The desired reserve ratio is 10 percent.Joe deposits $1,000 in Bank A.Bank A keeps its minimum desired reserves and lends the excess to Fred.Fred spends his loan at J.C.Penney.J.C.Penney deposits the check it receives from Fred in Bank B.Bank B keeps its minimum desired reserves and lends the excess to Mary.How much can Bank B lend to Mary?

Accepted Answer

A)  $900 
B)  $90 
C)  $810 
D)  $100 
E)  $1,000. 
A)  $900 
B)  $90 
C)  $810 
D)  $100 
E)  $1,000.

Question 7

When the desired reserve ratio is 10 percent, suppose the Fed buys $1,000,000 of government securities from banks.As a result, the banks' excess reserves

Accepted Answer

A)  increase by $900,000. 
B)  increase by $1,000,000. 
C)  increase by $10,000. 
D)  decrease by $10,000. 
E)  decrease by $1,000,000. 
A)  increase by $900,000. 
B)  increase by $1,000,000. 
C)  increase by $10,000. 
D)  decrease by $10,000. 
E)  decrease by $1,000,000.

Question 8

The discount rate is the interest rate that

Accepted Answer

A)  commercial banks charge their customers. 
B)  commercial banks charge each other for the loan of reserves. 
C)  the Fed charges the government for loans. 
D)  the Fed charges commercial banks when it loans reserves to the banks. 
E)  the Fed pays commercial banks on their reserves held at the Fed. 
A)  commercial banks charge their customers. 
B)  commercial banks charge each other for the loan of reserves. 
C)  the Fed charges the government for loans. 
D)  the Fed charges commercial banks when it loans reserves to the banks. 
E)  the Fed pays commercial banks on their reserves held at the Fed.

Question 9

Open market operations are defined as

Accepted Answer

A)  a bank borrowing from the Fed. 
B)  the buying and selling of securities by the Fed. 
C)  the buying and selling of securities between banks. 
D)  the amount banks can lend on each deposit. 
E)  a bank making a loan to the Fed. 
A)  a bank borrowing from the Fed. 
B)  the buying and selling of securities by the Fed. 
C)  the buying and selling of securities between banks. 
D)  the amount banks can lend on each deposit. 
E)  a bank making a loan to the Fed.

Question 10

If the currency drain is zero, which of the following situations leads to the greatest total increase in the quantity of money?

Accepted Answer

A)  an increase in the monetary base of $100,000 when the desired reserve ratio is 5 percent 
B)  an increase in the monetary base of $120,000 when the desired reserve ratio is 10 percent 
C)  an increase in the monetary base of $200,000 when the desired reserve ratio is 20 percent 
D)  an increase in the monetary base of $250,000 when the desired reserve ratio is 15 percent 
E)  an increase in the monetary base of $100,000 when the desired reserve ratio is 50 percent 
A)  an increase in the monetary base of $100,000 when the desired reserve ratio is 5 percent 
B)  an increase in the monetary base of $120,000 when the desired reserve ratio is 10 percent 
C)  an increase in the monetary base of $200,000 when the desired reserve ratio is 20 percent 
D)  an increase in the monetary base of $250,000 when the desired reserve ratio is 15 percent 
E)  an increase in the monetary base of $100,000 when the desired reserve ratio is 50 percent

Question 11

Assume First Central Bank has a desired reserve ratio of 15 percent; $80,000 in total deposits, loans equal to $60,000, and has $20,000 in actual reserves.First Central can make additional loans totaling

Accepted Answer

A)  $8,000. 
B)  $12,000. 
C)  $20,000. 
D)  $60,000. 
E)  $80,000. 
A)  $8,000. 
B)  $12,000. 
C)  $20,000. 
D)  $60,000. 
E)  $80,000.

Question 12

Which of the following is an example of money?

Accepted Answer

A)  currency in your wallet 
B)  currency inside the banks 
C)  checks written as payment for a good or service 
D)  credit card used as a payment for a good or service 
E)  a debit card 
A)  currency in your wallet 
B)  currency inside the banks 
C)  checks written as payment for a good or service 
D)  credit card used as a payment for a good or service 
E)  a debit card

Question 13

If the Fed sells government securities to a member of the nonbank public, then the resulting effect on the quantity of money is

Accepted Answer

A)  much larger than if the securities were sold to a bank. 
B)  much smaller than if the securities were sold to a bank. 
C)  the same as if the securities were sold to a bank. 
D)  that there is no change in the quantity of money. 
E)  None of the above answers are correct. 
A)  much larger than if the securities were sold to a bank. 
B)  much smaller than if the securities were sold to a bank. 
C)  the same as if the securities were sold to a bank. 
D)  that there is no change in the quantity of money. 
E)  None of the above answers are correct.

Question 14

$$\begin{array} { l c } 
& \begin{array} { c } 
\text { Amount } \
\text { (dollars) }
\end{array} \
\hline \text { Checkable deposits } & 350 \
\text { Savings deposits } & 900 \
\text { Money market funds } & 500 \
\text { Small time deposits } & 600 \
\text { Traveler's checks } & 10 \
\text { Currency outside of banks } & 250
\end{array}$$
-The above table has information about the hypothetical economy of Robotica.Based on the data, the size of M2 is

Accepted Answer

A)  $2,600 billion. 
B)  $2,610 billion. 
C)  $610 billion. 
D)  $600 billion. 
E)  $1,710 billion. 
A)  $2,600 billion. 
B)  $2,610 billion. 
C)  $610 billion. 
D)  $600 billion. 
E)  $1,710 billion.

Question 15

What is the central bank of the United States?

Accepted Answer

A)  There is no central bank in the United States. 
B)  The Department of Treasury. 
C)  The Federal Reserve System. 
D)  Each state has its own central bank, which, when all taken together, constitute the central bank of the United States. 
E)  The U.S.Mint. 
A)  There is no central bank in the United States. 
B)  The Department of Treasury. 
C)  The Federal Reserve System. 
D)  Each state has its own central bank, which, when all taken together, constitute the central bank of the United States. 
E)  The U.S.Mint.

Question 16

In order to influence the interest rate, the Federal Reserve System can immediately adjust the

Accepted Answer

A)  reserves of the banking system. 
B)  inflation level. 
C)  unemployment rate. 
D)  taxes that citizens must pay. 
E)  amount the government borrows. 
A)  reserves of the banking system. 
B)  inflation level. 
C)  unemployment rate. 
D)  taxes that citizens must pay. 
E)  amount the government borrows.

Question 17

If a bank receives an additional deposit of $50,000 and the desired reserve ratio is 20 percent, what is the amount of new loans the bank can make?

Accepted Answer

The bank can make loans equal to its exc

Question 18

The Federal Open Market Committee is

Accepted Answer

A)  the main policy making body of the Fed. 
B)  a seven-member board, each serving a 14-year term. 
C)  comprised of the presidents of the 12 Federal Reserve banks. 
D)  another name for the Board of Governors. 
E)  the government committee charged with determining income tax rates. 
A)  the main policy making body of the Fed. 
B)  a seven-member board, each serving a 14-year term. 
C)  comprised of the presidents of the 12 Federal Reserve banks. 
D)  another name for the Board of Governors. 
E)  the government committee charged with determining income tax rates.

Question 19

Are checks money?

Accepted Answer

Checks are instructions to transfer fund

Question 20

Which of the following best defines what money is now and what it has been in the past?

Accepted Answer

A)  currency 
B)  currency plus checking deposits 
C)  currency plus credit cards 
D)  anything accepted as a means of payment 
E)  anything used as a store of value 
A)  currency 
B)  currency plus checking deposits 
C)  currency plus credit cards 
D)  anything accepted as a means of payment 
E)  anything used as a store of value

If the currency drain is 30 percent and the desired reserve ratio is 10 percent, the money multiplier is

Which of the following is money?

Checks are not money because they

If the Fed makes an open market purchase of $1 million of government securities, the monetary base

If the money multiplier is 3.0, a $1,000 increase in the monetary base

When the desired reserve ratio is 10 percent, suppose the Fed buys $1,000,000 of government securities from banks.As a result, the banks' excess reserves

The discount rate is the interest rate that

Open market operations are defined as

If the currency drain is zero, which of the following situations leads to the greatest total increase in the quantity of money?

Assume First Central Bank has a desired reserve ratio of 15 percent; $80,000 in total deposits, loans equal to $60,000, and has $20,000 in actual reserves.First Central can make additional loans totaling

Which of the following is an example of money?

If the Fed sells government securities to a member of the nonbank public, then the resulting effect on the quantity of money is

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 M2 is

What is the central bank of the United States?

In order to influence the interest rate, the Federal Reserve System can immediately adjust the

If a bank receives an additional deposit of $50,000 and the desired reserve ratio is 20 percent, what is the amount of new loans the bank can make?

The Federal Open Market Committee is

Are checks money?

Which of the following best defines what money is now and what it has been in the past?

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 currency drain is 30 percent and the desired reserve ratio is 10 percent, the money multiplier is

Which of the following is money?

Checks are not money because they

If the Fed makes an open market purchase of $1 million of government securities, the monetary base

If the money multiplier is 3.0, a $1,000 increase in the monetary base

When the desired reserve ratio is 10 percent, suppose the Fed buys $1,000,000 of government securities from banks.As a result, the banks' excess reserves

The discount rate is the interest rate that

Open market operations are defined as

If the currency drain is zero, which of the following situations leads to the greatest total increase in the quantity of money?

Assume First Central Bank has a desired reserve ratio of 15 percent; $80,000 in total deposits, loans equal to $60,000, and has $20,000 in actual reserves.First Central can make additional loans totaling

Which of the following is an example of money?

If the Fed sells government securities to a member of the nonbank public, then the resulting effect on the quantity of money is

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 M2 is

What is the central bank of the United States?

In order to influence the interest rate, the Federal Reserve System can immediately adjust the

If a bank receives an additional deposit of $50,000 and the desired reserve ratio is 20 percent, what is the amount of new loans the bank can make?

The Federal Open Market Committee is

Are checks money?

Which of the following best defines what money is now and what it has been in the past?

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