Question 1

A commercial bank's reserves are

Accepted Answer

A)  bonds issued by the U.S.government that are very safe. 
B)  the provision of funds to businesses and individuals. 
C)  currency in its vault plus the balance on its reserve account at a Federal Reserve Bank. 
D)  savings and time deposits. 
E)  its loans. 
A)  bonds issued by the U.S.government that are very safe. 
B)  the provision of funds to businesses and individuals. 
C)  currency in its vault plus the balance on its reserve account at a Federal Reserve Bank. 
D)  savings and time deposits. 
E)  its loans.

Question 2

The FUN Bank has no excess reserves when a new deposit of $20,000 is made.The desired reserve ratio is 5 percent.After the deposit, but before making any loans, how much does The FUN Bank have in excess reserves?

Accepted Answer

A)  $1,000 
B)  $20,000 
C)  $9,000 
D)  $19,000 
E)  $21,000 
A)  $1,000 
B)  $20,000 
C)  $9,000 
D)  $19,000 
E)  $21,000

Question 3

M1 is composed of

Accepted Answer

A)  currency held by individuals and businesses, traveler's checks, and checkable deposits owned by individuals and businesses. 
B)  checkable deposits owned by individuals and businesses, saving deposits, and certificates of deposit. 
C)  currency inside of banks, traveler's checks, and government-issued checks. 
D)  traveler's checks, credit cards, and e-cash. 
E)  currency held by individuals and businesses, traveler's checks, and the credit line on credit cards. 
A)  currency held by individuals and businesses, traveler's checks, and checkable deposits owned by individuals and businesses. 
B)  checkable deposits owned by individuals and businesses, saving deposits, and certificates of deposit. 
C)  currency inside of banks, traveler's checks, and government-issued checks. 
D)  traveler's checks, credit cards, and e-cash. 
E)  currency held by individuals and businesses, traveler's checks, and the credit line on credit cards.

Question 4

If we look at the components of M2, we find that

Accepted Answer

A)  money market funds are the largest component. 
B)  savings deposits are the largest component. 
C)  currency is the largest component. 
D)  banks' reserves is the largest component. 
E)  loans are the largest component. 
A)  money market funds are the largest component. 
B)  savings deposits are the largest component. 
C)  currency is the largest component. 
D)  banks' reserves is the largest component. 
E)  loans are the largest component.

Question 5

Which of the following accept deposits from or sell shares to the general public?
i. money market funds
ii. thrift institutions
iii. commercial banks

Accepted Answer

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

Question 6

Which of the following is a thrift institution?

Accepted Answer

A)  a savings and loan association 
B)  a money market fund 
C)  a commercial bank 
D)  a loan institution 
E)  the Federal Reserve 
A)  a savings and loan association 
B)  a money market fund 
C)  a commercial bank 
D)  a loan institution 
E)  the Federal Reserve

Question 7

Suppose the desired reserve ratio is 10 percent.If the Commerce Bank has total deposits of $20,000, total assets of $10,000, and actual reserves of $8000, the amount of excess reserves is

Accepted Answer

A)  $2,000. 
B)  $6,000. 
C)  $800. 
D)  $100. 
E)  $0. 
A)  $2,000. 
B)  $6,000. 
C)  $800. 
D)  $100. 
E)  $0.

Question 8

"If the currency drain increases, the monetary base decreases." Explain whether the previous statement is correct or incorrect.

Accepted Answer

The statement is false.If the

Question 9

A credit card is

Accepted Answer

A)  money. 
B)  barter money. 
C)  not money. 
D)  fiat money. 
E)  not money but the card's credit line is money. 
A)  money. 
B)  barter money. 
C)  not money. 
D)  fiat money. 
E)  not money but the card's credit line is money.

Question 10

The Fed purchases $1 million of U.S.government securities from First Bank.The desired reserve ratio is 10 percent, the currency drain is zero, and banks loan all excess reserves.The money multiplier is equal to

Accepted Answer

A)  0.10. 
B)  1.0. 
C)  10.0. 
D)  100.0. 
E)  $1 million. 
A)  0.10. 
B)  1.0. 
C)  10.0. 
D)  100.0. 
E)  $1 million.

Question 11

"Even though we can convert them into money, deposits at banks are not money." Is the previous statement correct or not?

Accepted Answer

The statement is incorrect.Som

Question 12

The monetary base does NOT include which of the following items?
i. Federal Reserve notes
ii. banks' reserves at the Federal Reserve
iii. U.S.government securities owned by the Federal Reserve

Accepted Answer

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

Question 13

When part of a bank loan does not return to the banking system but rather remains outside the banking system as currency, then the money multiplier ________ in size and the amount of money created by an open market operation ________.

Accepted Answer

A)  increases; decreases 
B)  does not change; increases 
C)  decreases; decreases 
D)  increases; increases 
E)  decreases; does not change 
A)  increases; decreases 
B)  does not change; increases 
C)  decreases; decreases 
D)  increases; increases 
E)  decreases; does not change

Question 14

Which of the following is money?

Accepted Answer

A)  debit cards 
B)  e-checks 
C)  checks 
D)  bank deposits 
E)  credit cards 
A)  debit cards 
B)  e-checks 
C)  checks 
D)  bank deposits 
E)  credit cards

Question 15

A debit card is

Accepted Answer

A)  money because it is a means of payment. 
B)  not money but is used to transfer bank deposits which are money. 
C)  money because it is generally accepted as a means of payment. 
D)  not money because it is not officially issued by the government. 
E)  part of the M2 money supply but not part of the M1 money supply. 
A)  money because it is a means of payment. 
B)  not money but is used to transfer bank deposits which are money. 
C)  money because it is generally accepted as a means of payment. 
D)  not money because it is not officially issued by the government. 
E)  part of the M2 money supply but not part of the M1 money supply.

Question 16

"Because monetary policy must be approved by the president of the United States, the president is chair of the Federal Open Market Committee." Analyze the previous statement.is it correct or incorrect?

Accepted Answer

The statement is incorrect on several di

Question 17

What is fiat money?

Accepted Answer

Fiat money is objects that are money bec

Question 18

Suppose the Fed buys $1 million of government securities from Bank One, a large commercial bank.Bank One's reserves ________ and its deposits ________.

Accepted Answer

A)  increase by $1 million; do not change 
B)  increase by $1 million; increase by $1 million 
C)  do not change; increase by $1 million 
D)  do not change; do not change 
E)  decrease by $1 million; do not change 
A)  increase by $1 million; do not change 
B)  increase by $1 million; increase by $1 million 
C)  do not change; increase by $1 million 
D)  do not change; do not change 
E)  decrease by $1 million; do not change

Question 19

What is barter?
 What is a double coincidence of wants?
 How does the existence of money affect barter?

Accepted Answer

Barter is the direct exchange of one goo

Question 20

Actual reserves are equal to

Accepted Answer

A)  minimum balances plus desired reserves. 
B)  required reserves plus fractional deposits. 
C)  excess reserves plus liabilities. 
D)  desired reserves plus excess reserves. 
E)  government securities plus cash in the bank's vault. 
A)  minimum balances plus desired reserves. 
B)  required reserves plus fractional deposits. 
C)  excess reserves plus liabilities. 
D)  desired reserves plus excess reserves. 
E)  government securities plus cash in the bank's vault.

A commercial bank's reserves are

The FUN Bank has no excess reserves when a new deposit of $20,000 is made.The desired reserve ratio is 5 percent.After the deposit, but before making any loans, how much does The FUN Bank have in excess reserves?

M1 is composed of

If we look at the components of M2, we find that

Which of the following accept deposits from or sell shares to the general public? i. money market funds ii. thrift institutions iii. commercial banks

Which of the following is a thrift institution?

Suppose the desired reserve ratio is 10 percent.If the Commerce Bank has total deposits of $20,000, total assets of $10,000, and actual reserves of $8000, the amount of excess reserves is

"If the currency drain increases, the monetary base decreases." Explain whether the previous statement is correct or incorrect.

A credit card is

The Fed purchases $1 million of U.S.government securities from First Bank.The desired reserve ratio is 10 percent, the currency drain is zero, and banks loan all excess reserves.The money multiplier is equal to

"Even though we can convert them into money, deposits at banks are not money." Is the previous statement correct or not?

The monetary base does NOT include which of the following items? i. Federal Reserve notes ii. banks' reserves at the Federal Reserve iii. U.S.government securities owned by the Federal Reserve

When part of a bank loan does not return to the banking system but rather remains outside the banking system as currency, then the money multiplier in size and the amount of money created by an open market operation .

Which of the following is money?

A debit card is

"Because monetary policy must be approved by the president of the United States, the president is chair of the Federal Open Market Committee." Analyze the previous statement.is it correct or incorrect?

What is fiat money?

Suppose the Fed buys $1 million of government securities from Bank One, a large commercial bank.Bank One's reserves and its deposits .

What is barter? What is a double coincidence of wants? How does the existence of money affect barter?

Actual reserves are 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

A commercial bank's reserves are

The FUN Bank has no excess reserves when a new deposit of $20,000 is made.The desired reserve ratio is 5 percent.After the deposit, but before making any loans, how much does The FUN Bank have in excess reserves?

M1 is composed of

If we look at the components of M2, we find that

Which of the following accept deposits from or sell shares to the general public? i. money market funds ii. thrift institutions iii. commercial banks

Which of the following is a thrift institution?

Suppose the desired reserve ratio is 10 percent.If the Commerce Bank has total deposits of $20,000, total assets of $10,000, and actual reserves of $8000, the amount of excess reserves is

"If the currency drain increases, the monetary base decreases." Explain whether the previous statement is correct or incorrect.

A credit card is

The Fed purchases $1 million of U.S.government securities from First Bank.The desired reserve ratio is 10 percent, the currency drain is zero, and banks loan all excess reserves.The money multiplier is equal to

"Even though we can convert them into money, deposits at banks are not money." Is the previous statement correct or not?

The monetary base does NOT include which of the following items? i. Federal Reserve notes ii. banks' reserves at the Federal Reserve iii. U.S.government securities owned by the Federal Reserve

When part of a bank loan does not return to the banking system but rather remains outside the banking system as currency, then the money multiplier ________ in size and the amount of money created by an open market operation ________.

Which of the following is money?

A debit card is

"Because monetary policy must be approved by the president of the United States, the president is chair of the Federal Open Market Committee." Analyze the previous statement.is it correct or incorrect?

What is fiat money?

Suppose the Fed buys $1 million of government securities from Bank One, a large commercial bank.Bank One's reserves ________ and its deposits ________.

What is barter? What is a double coincidence of wants? How does the existence of money affect barter?

Actual reserves are 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

When part of a bank loan does not return to the banking system but rather remains outside the banking system as currency, then the money multiplier in size and the amount of money created by an open market operation .

Suppose the Fed buys $1 million of government securities from Bank One, a large commercial bank.Bank One's reserves and its deposits .