Question 1

The Board of Governors of the Federal Reserve System has

Accepted Answer

A) 12 members appointed by the president of the United States. 
B) 12 members elected by the public. 
C) seven members appointed by the president of the United States. 
D) seven members elected by the public. 
E) seven members appointed to life terms. 
A) 12 members appointed by the president of the United States. 
B) 12 members elected by the public. 
C) seven members appointed by the president of the United States. 
D) seven members elected by the public. 
E) seven members appointed to life terms.

Question 2

$$\begin{array} { l c } 
& \begin{array} { c } 
\text { Amount } \
\text { (dollars) }
\end{array} \
\hline \text { Checking deposits } & 600 \
\text { Savings deposits } & 1000 \
\text { Time deposits } & 1,500 \
\text { Loans } & 1,200 \
\text { Government securities } & 2,000 \
\text { Outstanding credit card balances } & 400 \
\text { Currency in vault } & 10 \
\text { Deposits in reserve account at the Fed } & 20
\end{array}$$
-The above table gives assets and deposits for a (small)bank. The bank's deposits that are part of M1 are equal to

Accepted Answer

A) $1,600. 
B) $600. 
C) $3,100. 
D) $3,130. 
E) $30. 
A) $1,600. 
B) $600. 
C) $3,100. 
D) $3,130. 
E) $30.

Question 3

Are the members of the Board of Governors of the Federal Reserve System elected officials?

Accepted Answer

No, the members are not electe

Question 4

Money is any commodity or token that

Accepted Answer

A) is generally accepted as a means of payment. 
B) is backed up and controlled by the government. 
C) is naturally accepted by households to accumulate wealth. 
D) does not change in value over time. 
E) is backed by gold. 
A) is generally accepted as a means of payment. 
B) is backed up and controlled by the government. 
C) is naturally accepted by households to accumulate wealth. 
D) does not change in value over time. 
E) is backed by gold.

Question 5

________ by the Fed means that the Fed ________.

Accepted Answer

A) Credit easing; bought private securities from financial institutions 
B) Credit easing; made loans directly to home buyers 
C) Credit easing; tried to lower long-term interest rates 
D) Quantitative easing; required private banks to increase their lending to home buyers 
E) Quantitative easing; decreased in the required reserve ratio 
A) Credit easing; bought private securities from financial institutions 
B) Credit easing; made loans directly to home buyers 
C) Credit easing; tried to lower long-term interest rates 
D) Quantitative easing; required private banks to increase their lending to home buyers 
E) Quantitative easing; decreased in the required reserve ratio

Question 6

What is the FOMC?
 Who are the members of the FOMC?
 What policy does the FOMC decide?

Accepted Answer

The FOMC is the Federal Open Market Comm

Question 7

"When the Fed makes an open market purchase of government securities, the quantity of money will eventually decrease by a fraction of the initial change in the monetary base." Is the previous statement correct or incorrect?
 Explain your answer.

Accepted Answer

The statement is wrong on two counts. Fi

Question 8

Bank One has reserves of $100,000, government securities of $200,000, loans of $700,000, and checkable deposits of $800,000. If the desired reserve ratio is 10 percent, Bank One can make additional loans totaling

Accepted Answer

A) $0.00. 
B) $10,000. 
C) $20,000. 
D) $80,000. 
E) $100,000. 
A) $0.00. 
B) $10,000. 
C) $20,000. 
D) $80,000. 
E) $100,000.

Question 9

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 10

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 11

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 12

A bank has checkable deposits of $1,000,000, loans of $600,000, and government securities of $400,000. If the required reserve ratio is 5 percent, the amount of required reserves is

Accepted Answer

A) $100,000. 
B) $30,000. 
C) $50,000. 
D) $80,000. 
E) $20,000. 
A) $100,000. 
B) $30,000. 
C) $50,000. 
D) $80,000. 
E) $20,000.

Question 13

The required reserve ratio is 10 percent and Charlie deposits $3,000 in her checking account. The bank must

Accepted Answer

A) increase reserves by $3,000. 
B) increase reserves by $300. 
C) decrease reserves by $3,000. 
D) decrease reserves by $300. 
E) not change its reserves until Charlie decides to withdraw her funds. 
A) increase reserves by $3,000. 
B) increase reserves by $300. 
C) decrease reserves by $3,000. 
D) decrease reserves by $300. 
E) not change its reserves until Charlie decides to withdraw her funds.

Question 14

The part of a commercial bank's reserves that are larger than desired are called

Accepted Answer

A) additional reserves. 
B) required reserves. 
C) excess reserves. 
D) nonrequired reserves. 
E) unnecessary reserves. 
A) additional reserves. 
B) required reserves. 
C) excess reserves. 
D) nonrequired reserves. 
E) unnecessary reserves.

Question 15

The Fed's policy tools include

Accepted Answer

A) required reserve ratios, the discount rate, open market operations, and extraordinary crisis measures. 
B) holding deposits for the U.S. government, reserve requirements, and the discount rate. 
C) setting regulations for lending standards and extraordinary crisis measures. 
D) supervision of the banking system and buying and selling commercial banks. 
E) required reserve ratios, income tax rates, and open market operations. 
A) required reserve ratios, the discount rate, open market operations, and extraordinary crisis measures. 
B) holding deposits for the U.S. government, reserve requirements, and the discount rate. 
C) setting regulations for lending standards and extraordinary crisis measures. 
D) supervision of the banking system and buying and selling commercial banks. 
E) required reserve ratios, income tax rates, and open market operations.

Question 16

If the reserve requirement is 20 percent and the Fed buys $10,000 worth of Treasury bonds, what is the change in the banks' total reserves?

Accepted Answer

A) $2,000 
B) $10,000 
C) $20,000 
D) $50,000 
E) 100,000 
A) $2,000 
B) $10,000 
C) $20,000 
D) $50,000 
E) 100,000

Question 17

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 18

Which of the following is NOT among the primary functions of money?

Accepted Answer

A) unit of account. 
B) store of value 
C) indicator of supply 
D) medium of exchange 
E) an object that is generally accepted in return for goods and services 
A) unit of account. 
B) store of value 
C) indicator of supply 
D) medium of exchange 
E) an object that is generally accepted in return for goods and services

Question 19

Comparing the effect on the monetary base between an open market purchase of government securities from a bank and the same open market operation conducted with the general public, the monetary base

Accepted Answer

A) increases by a larger amount if the general public sells the securities than if a bank sells the securities. 
B) increases by a larger amount if a bank sells the securities than if the general public sells the securities. 
C) does not change if it is the general public that sells the securities. 
D) increases by the same amount if the general public sells the securities or if a bank sells the securities. 
E) decreases by the same amount if the general public sells the securities or if a bank sells the securities. 
A) increases by a larger amount if the general public sells the securities than if a bank sells the securities. 
B) increases by a larger amount if a bank sells the securities than if the general public sells the securities. 
C) does not change if it is the general public that sells the securities. 
D) increases by the same amount if the general public sells the securities or if a bank sells the securities. 
E) decreases by the same amount if the general public sells the securities or if a bank sells the securities.

Question 20

If the Fed sells $100 million of U.S. government securities, what happens to the quantity of money?

Accepted Answer

If the Fed sells $100 million of U.S. go

The Board of Governors of the Federal Reserve System has

Are the members of the Board of Governors of the Federal Reserve System elected officials?

Money is any commodity or token that

by the Fed means that the Fed .

What is the FOMC? Who are the members of the FOMC? What policy does the FOMC decide?

"When the Fed makes an open market purchase of government securities, the quantity of money will eventually decrease by a fraction of the initial change in the monetary base." Is the previous statement correct or incorrect? Explain your answer.

Bank One has reserves of $100,000, government securities of $200,000, loans of $700,000, and checkable deposits of $800,000. If the desired reserve ratio is 10 percent, Bank One can make additional loans totaling

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

The objects we use as money today include

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

A bank has checkable deposits of $1,000,000, loans of $600,000, and government securities of $400,000. If the required reserve ratio is 5 percent, the amount of required reserves is

The required reserve ratio is 10 percent and Charlie deposits $3,000 in her checking account. The bank must

The part of a commercial bank's reserves that are larger than desired are called

The Fed's policy tools include

If the reserve requirement is 20 percent and the Fed buys $10,000 worth of Treasury bonds, what is the change in the banks' total reserves?

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

Which of the following is NOT among the primary functions of money?

Comparing the effect on the monetary base between an open market purchase of government securities from a bank and the same open market operation conducted with the general public, the monetary base

If the Fed sells $100 million of U.S. government securities, what happens to the quantity of money?

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 18: Money and the Monetary System

The Board of Governors of the Federal Reserve System has

Are the members of the Board of Governors of the Federal Reserve System elected officials?

Money is any commodity or token that

________ by the Fed means that the Fed ________.

What is the FOMC? Who are the members of the FOMC? What policy does the FOMC decide?

"When the Fed makes an open market purchase of government securities, the quantity of money will eventually decrease by a fraction of the initial change in the monetary base." Is the previous statement correct or incorrect? Explain your answer.

Bank One has reserves of $100,000, government securities of $200,000, loans of $700,000, and checkable deposits of $800,000. If the desired reserve ratio is 10 percent, Bank One can make additional loans totaling

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

The objects we use as money today include

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

A bank has checkable deposits of $1,000,000, loans of $600,000, and government securities of $400,000. If the required reserve ratio is 5 percent, the amount of required reserves is

The required reserve ratio is 10 percent and Charlie deposits $3,000 in her checking account. The bank must

The part of a commercial bank's reserves that are larger than desired are called

The Fed's policy tools include

If the reserve requirement is 20 percent and the Fed buys $10,000 worth of Treasury bonds, what is the change in the banks' total reserves?

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

Which of the following is NOT among the primary functions of money?

Comparing the effect on the monetary base between an open market purchase of government securities from a bank and the same open market operation conducted with the general public, the monetary base

If the Fed sells $100 million of U.S. government securities, what happens to the quantity of money?

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

by the Fed means that the Fed .