Question 1

When the Fed engages in open market operations, it is buying or selling

Accepted Answer

A) capital equipment. 
B) U.S. government securities newly issued by the U.S. Treasury. 
C) U.S. government securities. 
D) loans made to banks to meet the legal reserve requirement ratio. 
E) gold. 
A) capital equipment. 
B) U.S. government securities newly issued by the U.S. Treasury. 
C) U.S. government securities. 
D) loans made to banks to meet the legal reserve requirement ratio. 
E) gold.

Question 2

Decisions of ________ determine the magnitude of the monetary multiplier.

Accepted Answer

A) only the Fed 
B) only the public 
C) both the Fed and the public 
D) neither the Fed nor the public 
E) Fed and the U.S. Congress 
A) only the Fed 
B) only the public 
C) both the Fed and the public 
D) neither the Fed nor the public 
E) Fed and the U.S. Congress

Question 3

If the desired reserve ratio is 15 percent, then for every dollar that is deposited in the bank, the bank will

Accepted Answer

A) keep 15 cents as reserves. 
B) keep 85 cents as reserves. 
C) keep 85 cents as reserves and loan 85 cents. 
D) loan 15 cents. 
E) keep 15 cents as reserves and loan 15 cents. 
A) keep 15 cents as reserves. 
B) keep 85 cents as reserves. 
C) keep 85 cents as reserves and loan 85 cents. 
D) loan 15 cents. 
E) keep 15 cents as reserves and loan 15 cents.

Question 4

The store of value function is defined as the

Accepted Answer

A) pricing of goods and services in one measure. 
B) exchange of goods and services directly for other goods and services. 
C) holding of money from one transaction to be used later in another transaction. 
D) double coincidence of wants that is used in the debate over barter versus money. 
E) use of money as a medium of exchange. 
A) pricing of goods and services in one measure. 
B) exchange of goods and services directly for other goods and services. 
C) holding of money from one transaction to be used later in another transaction. 
D) double coincidence of wants that is used in the debate over barter versus money. 
E) use of money as a medium of exchange.

Question 5

What is a "currency drain"?
 How and why does it affect the money multiplier?

Accepted Answer

An increase in currency held outside the

Question 6

What is fiat money?

Accepted Answer

Fiat money is objects that are money bec

Question 7

Susan just sold her text books for $200 cash and deposited the cash she received in her checking account. This transaction has

Accepted Answer

A) increased the quantity of M1. 
B) decreased the quantity of M1. 
C) increased the quantity of M2. 
D) decreased the quantity of M2. 
E) not changed either M1 or M2. 
A) increased the quantity of M1. 
B) decreased the quantity of M1. 
C) increased the quantity of M2. 
D) decreased the quantity of M2. 
E) not changed either M1 or M2.

Question 8

The number by which a change in the monetary base is multiplied to find the resulting change in the quantity of money is called the

Accepted Answer

A) desired reserve ratio. 
B) money multiplier. 
C) currency multiplier. 
D) currency drain. 
E) open market operation. 
A) desired reserve ratio. 
B) money multiplier. 
C) currency multiplier. 
D) currency drain. 
E) open market operation.

Question 9

Banks can make loans as long as they have

Accepted Answer

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

Question 10

An increase in the currency drain ratio ________.

Accepted Answer

A) increases the size of the money multiplier 
B) decreases the size of the money multiplier 
C) increases the deposits in all banks 
D) decreases the size of the monetary base 
E) increases the size of the monetary base 
A) increases the size of the money multiplier 
B) decreases the size of the money multiplier 
C) increases the deposits in all banks 
D) decreases the size of the monetary base 
E) increases the size of the monetary base

Question 11

Which of the following is the best example of money?

Accepted Answer

A) phone card 
B) checkable deposit 
C) credit card 
D) gold 
E) share of Intel stock 
A) phone card 
B) checkable deposit 
C) credit card 
D) gold 
E) share of Intel stock

Question 12

List the Fed's main policy tools and briefly explain each one.

Accepted Answer

The Fed's main policy tools are: require

Question 13

When the Fed ________, the quantity of banks' reserves decreases.

Accepted Answer

A) hikes taxes 
B) buys government securities 
C) sells government securities 
D) lowers the required reserve ratio 
E) raises the required reserve ratio 
A) hikes taxes 
B) buys government securities 
C) sells government securities 
D) lowers the required reserve ratio 
E) raises the required reserve ratio

Question 14

Which of the following are considered money?
i. electronic checks
ii. paper checks
iii. the deposit transferred using an e-check

Accepted Answer

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

Question 15

$$\begin{array} { l c } 
& \begin{array} { c } 
\text { Amount } \
\text { (dollars) }
\end{array} \
\hline \text { Checkable deposits } & 350 \
\text { Savings deposits } & 900 \
\text { Money market funds } & 500 \
\text { Small time deposits } & 600 \
\text { Traveler's checks } & 10 \
\text { Currency outside of banks } & 250
\end{array}$$
-The above table has information about the hypothetical economy of Robotica. Based on the data, the size of M1 is

Accepted Answer

A) $610 billion. 
B) $1,510 billion. 
C) $600 billion. 
D) $1,110 billion. 
E) $2,600 billion. 
A) $610 billion. 
B) $1,510 billion. 
C) $600 billion. 
D) $1,110 billion. 
E) $2,600 billion.

Question 16

Barter is

Accepted Answer

A) the exchange of goods and services for money. 
B) the pricing of goods and services with one agreed upon standard. 
C) the exchange of goods and services directly for other goods and services. 
D) a generally accepted means of payment. 
E) storing money for use at a later date. 
A) the exchange of goods and services for money. 
B) the pricing of goods and services with one agreed upon standard. 
C) the exchange of goods and services directly for other goods and services. 
D) a generally accepted means of payment. 
E) storing money for use at a later date.

Question 17

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 18

________ like a check and ________ considered money.

Accepted Answer

A) Debit cards work; are not 
B) Debit cards work; are 
C) E-checks work; are 
D) E-cash works; is not 
E) E-cash works; is 
A) Debit cards work; are not 
B) Debit cards work; are 
C) E-checks work; are 
D) E-cash works; is not 
E) E-cash works; is

Question 19

The Fed purchases $100,000 of U.S. government securities from One Bank. Assuming the desired reserve ratio is 10 percent, banks loan all excess reserves, and the currency drain is 20 percent, how much does the quantity of money increase?

Accepted Answer

The quantity of money increases by (mone

Question 20

Banks create money by

Accepted Answer

A) printing paper money. 
B) minting coins. 
C) making loans. 
D) buying government securities. 
E) None of the above because banks cannot create money, only the Federal Reserve can create money. 
A) printing paper money. 
B) minting coins. 
C) making loans. 
D) buying government securities. 
E) None of the above because banks cannot create money, only the Federal Reserve can create money.

When the Fed engages in open market operations, it is buying or selling

Decisions of ________ determine the magnitude of the monetary multiplier.

If the desired reserve ratio is 15 percent, then for every dollar that is deposited in the bank, the bank will

The store of value function is defined as the

What is a "currency drain"? How and why does it affect the money multiplier?

What is fiat money?

Susan just sold her text books for $200 cash and deposited the cash she received in her checking account. This transaction has

The number by which a change in the monetary base is multiplied to find the resulting change in the quantity of money is called the

Banks can make loans as long as they have

An increase in the currency drain ratio ________.

Which of the following is the best example of money?

List the Fed's main policy tools and briefly explain each one.

When the Fed ________, the quantity of banks' reserves decreases.

Which of the following are considered money? i. electronic checks ii. paper checks iii. the deposit transferred using an e-check

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 M1 is

Barter is

A debit card is

like a check and considered money.

The Fed purchases $100,000 of U.S. government securities from One Bank. Assuming the desired reserve ratio is 10 percent, banks loan all excess reserves, and the currency drain is 20 percent, how much does the quantity of money increase?

Banks create money by

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

When the Fed engages in open market operations, it is buying or selling

Decisions of ________ determine the magnitude of the monetary multiplier.

If the desired reserve ratio is 15 percent, then for every dollar that is deposited in the bank, the bank will

The store of value function is defined as the

What is a "currency drain"? How and why does it affect the money multiplier?

What is fiat money?

Susan just sold her text books for $200 cash and deposited the cash she received in her checking account. This transaction has

The number by which a change in the monetary base is multiplied to find the resulting change in the quantity of money is called the

Banks can make loans as long as they have

An increase in the currency drain ratio ________.

Which of the following is the best example of money?

List the Fed's main policy tools and briefly explain each one.

When the Fed ________, the quantity of banks' reserves decreases.

Which of the following are considered money? i. electronic checks ii. paper checks iii. the deposit transferred using an e-check

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 M1 is

Barter is

A debit card is

________ like a check and ________ considered money.

The Fed purchases $100,000 of U.S. government securities from One Bank. Assuming the desired reserve ratio is 10 percent, banks loan all excess reserves, and the currency drain is 20 percent, how much does the quantity of money increase?

Banks create money by

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

like a check and considered money.