Question 1

Explain which of the following count as money.
a. a check in Ann's checkbook
b. currency in Ann's bank
c. currency in Ann's purse
d. Ann's checking deposit

Accepted Answer

Only parts (c), currency in Ann's purse,

Question 2

"To count as required reserves, the reserves must be on deposit at the bank's district Federal Reserve Bank." Is the previous statement correct or incorrect?

Accepted Answer

The statement is inc

Question 3

The Federal Reserve System is organized into ________ Federal Reserve districts.

Accepted Answer

A)  6 
B)  10 
C)  12 
D)  15 
E)  50 
A)  6 
B)  10 
C)  12 
D)  15 
E)  50

Question 4

The Fed makes an open market operation purchase of $200,000.The currency drain is 33.33 percent and the desired reserve ratio is 10 percent.By how much does the quantity of money increase?

Accepted Answer

A)  $800,000 
B)  $333,333 
C)  $2,000,000 
D)  $618,604 
E)  $465,116 
A)  $800,000 
B)  $333,333 
C)  $2,000,000 
D)  $618,604 
E)  $465,116

Question 5

The goal of a commercial bank is to

Accepted Answer

A)  establish good regulations for commercial activities. 
B)  make only safe, no-risk loans. 
C)  maximize its stockholders' wealth. 
D)  minimize its taxes paid to state governments. 
E)  accept only deposits made in money. 
A)  establish good regulations for commercial activities. 
B)  make only safe, no-risk loans. 
C)  maximize its stockholders' wealth. 
D)  minimize its taxes paid to state governments. 
E)  accept only deposits made in money.

Question 6

Debit cards and e-checks are not money because

Accepted Answer

A)  they can be forged easily. 
B)  they can fail their purpose of being mediums of exchange as a result of technical difficulties. 
C)  they are just instruments to transfer money between people. 
D)  not all banks offer them and not all businesses accept them. 
E)  they are not regulated by the government. 
A)  they can be forged easily. 
B)  they can fail their purpose of being mediums of exchange as a result of technical difficulties. 
C)  they are just instruments to transfer money between people. 
D)  not all banks offer them and not all businesses accept them. 
E)  they are not regulated by the government.

Question 7

Which of the following are policy tools used by the Federal Reserve?
i. the federal personal income tax
ii. open market operations
iii. changing the required reserve ratio

Accepted Answer

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

Question 8

When you use a credit card to pay your tuition,

Accepted Answer

A)  you've used the credit card as money because it is a means of payment. 
B)  the credit card is not money but is an ID card for an instant loan. 
C)  the credit card is not money because it involves an electronic transaction. 
D)  the credit card is not money because it is not officially issued by the government. 
E)  you've used the credit card as money because you received something in return. 
A)  you've used the credit card as money because it is a means of payment. 
B)  the credit card is not money but is an ID card for an instant loan. 
C)  the credit card is not money because it involves an electronic transaction. 
D)  the credit card is not money because it is not officially issued by the government. 
E)  you've used the credit card as money because you received something in return.

Question 9

The objects we use as money today include

Accepted Answer

A)  currency inside banks and bank deposits. 
B)  currency outside the banks and bank deposits. 
C)  only currency outside the banks. 
D)  only deposits inside the banks. 
E)  credit cards and debit cards. 
A)  currency inside banks and bank deposits. 
B)  currency outside the banks and bank deposits. 
C)  only currency outside the banks. 
D)  only deposits inside the banks. 
E)  credit cards and debit cards.

Question 10

For an asset to be a "means of payment" means the asset

Accepted Answer

A)  is valuable and backed by gold. 
B)  is valuable and backed by the government. 
C)  can be used to settle a debt. 
D)  requires a double coincidence of wants. 
E)  must be used when bartering. 
A)  is valuable and backed by gold. 
B)  is valuable and backed by the government. 
C)  can be used to settle a debt. 
D)  requires a double coincidence of wants. 
E)  must be used when bartering.

Question 11

Money today

Accepted Answer

A)  the demand for loanable funds. 
B)  the supply of loanable funds. 
C)  is only currency inside banks. 
D)  is fiat money. 
E)  in the United States, is only dollar bills and coins . 
A)  the demand for loanable funds. 
B)  the supply of loanable funds. 
C)  is only currency inside banks. 
D)  is fiat money. 
E)  in the United States, is only dollar bills and coins .

Question 12

M2 equals

Accepted Answer

A)  M1 and is just another name for currency outside of banks. 
B)  M1 plus savings deposits, small time deposits, and money market fund deposits. 
C)  M1 minus traveler's checks because they are not really money. 
D)  currency plus savings deposits, all time deposits, and money market funds and other deposits. 
E)  M1 plus savings deposits and small time deposits minus money market fund deposits. 
A)  M1 and is just another name for currency outside of banks. 
B)  M1 plus savings deposits, small time deposits, and money market fund deposits. 
C)  M1 minus traveler's checks because they are not really money. 
D)  currency plus savings deposits, all time deposits, and money market funds and other deposits. 
E)  M1 plus savings deposits and small time deposits minus money market fund deposits.

Question 13

Barter requires the

Accepted Answer

A)  use of commodity money as a medium of payment. 
B)  use of fiat money as a medium of exchange. 
C)  the triple non-coincidence of wants. 
D)  exchange of goods and services directly for other goods and services. 
E)  use of money as a unit of account. 
A)  use of commodity money as a medium of payment. 
B)  use of fiat money as a medium of exchange. 
C)  the triple non-coincidence of wants. 
D)  exchange of goods and services directly for other goods and services. 
E)  use of money as a unit of account.

Question 14

Credit cards are i. a generally accepted form of payment and therefore part of M1.
Ii) are included in M1 because you write a check to pay your monthly bill.
Iii) a means of borrowing money.

Accepted Answer

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

Question 15

Suppose the desired reserve ratio is 20 percent and there is no currency drain.Then a $1 increase in the monetary base leads to the banking system to increase the quantity of money by

Accepted Answer

A)  $0.02. 
B)  $4. 
C)  $5. 
D)  $20. 
E)  $2. 
A)  $0.02. 
B)  $4. 
C)  $5. 
D)  $20. 
E)  $2.

Question 16

Suppose the Federal Reserve buys $50 million worth of securities from a commercial bank.As a result, the monetary base ________ and the quantity of money will ________ $50 million due to the ________.

Accepted Answer

A)  increases; increase by more than; money mulitplier 
B)  decreases; decrease by more than; money multiplier 
C)  increases; increase by more than; expenditure multiplier 
D)  decreases; decrease by less than; expenditure multiplier 
E)  increases; decrease by; currency drain 
A)  increases; increase by more than; money mulitplier 
B)  decreases; decrease by more than; money multiplier 
C)  increases; increase by more than; expenditure multiplier 
D)  decreases; decrease by less than; expenditure multiplier 
E)  increases; decrease by; currency drain

Question 17

The unit of account is defined as

Accepted Answer

A)  the exchange of goods and services directly for other goods and services. 
B)  barter. 
C)  an object that is accepted in return for goods and services. 
D)  an agreed upon measure for stating prices of goods and services. 
E)  the medium of exchange. 
A)  the exchange of goods and services directly for other goods and services. 
B)  barter. 
C)  an object that is accepted in return for goods and services. 
D)  an agreed upon measure for stating prices of goods and services. 
E)  the medium of exchange.

Question 18

Required reserve ratios are the minimum amount of

Accepted Answer

A)  deposits any one bank is allowed to accept as percentage of its capital. 
B)  reserves any one bank must hold as a percentage of its loans. 
C)  reserves any one bank must hold as a percentage of its deposits. 
D)  deposits any one bank must hold as a percentage of its reserves. 
E)  reserves any one bank must hold as a percentage of its total assets. 
A)  deposits any one bank is allowed to accept as percentage of its capital. 
B)  reserves any one bank must hold as a percentage of its loans. 
C)  reserves any one bank must hold as a percentage of its deposits. 
D)  deposits any one bank must hold as a percentage of its reserves. 
E)  reserves any one bank must hold as a percentage of its total assets.

Question 19

The desired reserve ratio is 10 percent.Fly By Night Bank has deposits of $250,000 and reserves of $25,000. What is the amount of its excess reserves?

Accepted Answer

The bank has no excess reserve

Question 20

Suppose the Fed sells $100 of government securities.If the desired reserve ratio is 20 percent and there is no currency drain, then the quantity of money

Accepted Answer

A)  decreases by $100. 
B)  decreases by $500. 
C)  decreases by $400. 
D)  increases by $100. 
E)  decreases by $80. 
A)  decreases by $100. 
B)  decreases by $500. 
C)  decreases by $400. 
D)  increases by $100. 
E)  decreases by $80.

Explain which of the following count as money. a. a check in Ann's checkbook b. currency in Ann's bank c. currency in Ann's purse d. Ann's checking deposit

"To count as required reserves, the reserves must be on deposit at the bank's district Federal Reserve Bank." Is the previous statement correct or incorrect?

The Federal Reserve System is organized into ________ Federal Reserve districts.

The Fed makes an open market operation purchase of $200,000.The currency drain is 33.33 percent and the desired reserve ratio is 10 percent.By how much does the quantity of money increase?

The goal of a commercial bank is to

Debit cards and e-checks are not money because

Which of the following are policy tools used by the Federal Reserve? i. the federal personal income tax ii. open market operations iii. changing the required reserve ratio

When you use a credit card to pay your tuition,

The objects we use as money today include

For an asset to be a "means of payment" means the asset

Money today

M2 equals

Barter requires the

Credit cards are i. a generally accepted form of payment and therefore part of M1. Ii) are included in M1 because you write a check to pay your monthly bill. Iii) a means of borrowing money.

Suppose the desired reserve ratio is 20 percent and there is no currency drain.Then a $1 increase in the monetary base leads to the banking system to increase the quantity of money by

Suppose the Federal Reserve buys $50 million worth of securities from a commercial bank.As a result, the monetary base and the quantity of money will $50 million due to the .

The unit of account is defined as

Required reserve ratios are the minimum amount of

The desired reserve ratio is 10 percent.Fly By Night Bank has deposits of $250,000 and reserves of $25,000. What is the amount of its excess reserves?

Suppose the Fed sells $100 of government securities.If the desired reserve ratio is 20 percent and there is no currency drain, then the quantity of money

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

Explain which of the following count as money. a. a check in Ann's checkbook b. currency in Ann's bank c. currency in Ann's purse d. Ann's checking deposit

"To count as required reserves, the reserves must be on deposit at the bank's district Federal Reserve Bank." Is the previous statement correct or incorrect?

The Federal Reserve System is organized into ________ Federal Reserve districts.

The Fed makes an open market operation purchase of $200,000.The currency drain is 33.33 percent and the desired reserve ratio is 10 percent.By how much does the quantity of money increase?

The goal of a commercial bank is to

Debit cards and e-checks are not money because

Which of the following are policy tools used by the Federal Reserve? i. the federal personal income tax ii. open market operations iii. changing the required reserve ratio

When you use a credit card to pay your tuition,

The objects we use as money today include

For an asset to be a "means of payment" means the asset

Money today

M2 equals

Barter requires the

Credit cards are i. a generally accepted form of payment and therefore part of M1. Ii) are included in M1 because you write a check to pay your monthly bill. Iii) a means of borrowing money.

Suppose the desired reserve ratio is 20 percent and there is no currency drain.Then a $1 increase in the monetary base leads to the banking system to increase the quantity of money by

Suppose the Federal Reserve buys $50 million worth of securities from a commercial bank.As a result, the monetary base ________ and the quantity of money will ________ $50 million due to the ________.

The unit of account is defined as

Required reserve ratios are the minimum amount of

The desired reserve ratio is 10 percent.Fly By Night Bank has deposits of $250,000 and reserves of $25,000. What is the amount of its excess reserves?

Suppose the Fed sells $100 of government securities.If the desired reserve ratio is 20 percent and there is no currency drain, then the quantity of money

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

Suppose the Federal Reserve buys $50 million worth of securities from a commercial bank.As a result, the monetary base and the quantity of money will $50 million due to the .