Question 1

The monetary base is equal to the sum of coins,

Accepted Answer

A) currency and banks' reserves at the Federal Reserve. 
B) currency and checkable deposits at banks. 
C) currency, banks' reserves at the Federal Reserve and checkable deposits at banks. 
D) and checkable deposits at banks. 
E) U.S. government securities owned by the Federal Reserve and Federal Reserve notes. 
A) currency and banks' reserves at the Federal Reserve. 
B) currency and checkable deposits at banks. 
C) currency, banks' reserves at the Federal Reserve and checkable deposits at banks. 
D) and checkable deposits at banks. 
E) U.S. government securities owned by the Federal Reserve and Federal Reserve notes.

Question 2

When we put a price tag on goods and services, we are using money as a

Accepted Answer

A) store of value. 
B) medium of exchange. 
C) barter token. 
D) unit of account. 
E) means of payment. 
A) store of value. 
B) medium of exchange. 
C) barter token. 
D) unit of account. 
E) means of payment.

Question 3

Explain what is meant by the phrase a bank's "balancing act."

Accepted Answer

Banks accept deposits and make loans wit

Question 4

________ increases the size of the money multiplier.

Accepted Answer

A) An increase in the currency drain ratio 
B) An open market purchase of government securities by the Fed 
C) A reduction in the desired reserve ratio 
D) An open market sale of government securities by the Fed 
E) An increase in the size of open market operations 
A) An increase in the currency drain ratio 
B) An open market purchase of government securities by the Fed 
C) A reduction in the desired reserve ratio 
D) An open market sale of government securities by the Fed 
E) An increase in the size of open market operations

Question 5

Which of the following is money?

Accepted Answer

A) credit card 
B) debit card 
C) e-checks 
D) checkable deposit 
E) checks 
A) credit card 
B) debit card 
C) e-checks 
D) checkable deposit 
E) checks

Question 6

Which of the following items is included in the M1 money supply?

Accepted Answer

A) $10 bills in the Bank of America 
B) a $5,000 student loan granted to a U.S. citizen 
C) coins in a Pepsi vending machine, waiting to be used as change 
D) A $5,000 line of credit on a newly graduated student's credit card 
E) $1,500 in a student's saving account 
A) $10 bills in the Bank of America 
B) a $5,000 student loan granted to a U.S. citizen 
C) coins in a Pepsi vending machine, waiting to be used as change 
D) A $5,000 line of credit on a newly graduated student's credit card 
E) $1,500 in a student's saving account

Question 7

The Second National Bank of Townville has $400,000 in checking deposits, $125,000 in savings deposits, $500,000 in loans, $20,000 in its reserve account at the Fed, and $5,000 of currency in its vault. What is the amount of these assets and liabilities that is in M1?

Accepted Answer

The only deposit that is in M1

Question 8

Which of the following financial institutions does NOT have to meet minimum reserve ratios?
I. the Fed
Ii. commercial banks
Iii. credit unions

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 9

A-1 bank initially has no excess reserves. If the desired reserve ratio is 10 percent and a new deposit of $10,000 is made in A-1, then A-1

Accepted Answer

A) is required to hold the deposit in its reserves. 
B) can immediately loan a multiple of the $10,000. 
C) can immediately loan $9,000. 
D) can immediately loan $100,000. 
E) can immediately loan $10,000. 
A) is required to hold the deposit in its reserves. 
B) can immediately loan a multiple of the $10,000. 
C) can immediately loan $9,000. 
D) can immediately loan $100,000. 
E) can immediately loan $10,000.

Question 10

Banks earn a profit by

Accepted Answer

A) keeping as many reserves on hand as possible. 
B) making loans at a lower interest rate than the rate that they offer on their deposits. 
C) charging an interest rate on their depositors' accounts. 
D) making loans at a higher interest rate than the rates that they offer on their deposits. 
E) not paying interest on their reserves. 
A) keeping as many reserves on hand as possible. 
B) making loans at a lower interest rate than the rate that they offer on their deposits. 
C) charging an interest rate on their depositors' accounts. 
D) making loans at a higher interest rate than the rates that they offer on their deposits. 
E) not paying interest on their reserves.

Question 11

What is the interaction between the Federal Reserve districts and the Board of Governors of the Federal Reserve System?

Accepted Answer

The Federal Reserve System divides the n

Question 12

"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. So

Question 13

All of the following are elements in the structure of the Fed EXCEPT the

Accepted Answer

A) Federal Open Market Committee. 
B) Executive Council to the Governor. 
C) 12 Federal Reserve banks. 
D) Board of Governors. 
E) presidents of the 12 Federal Reserve banks. 
A) Federal Open Market Committee. 
B) Executive Council to the Governor. 
C) 12 Federal Reserve banks. 
D) Board of Governors. 
E) presidents of the 12 Federal Reserve banks.

Question 14

An increase in the currency drain ratio

Accepted Answer

A) decreases the size of the money multiplier. 
B) increases the size of the money multiplier. 
C) increases the money supply. 
D) decreases the required reserve ratio. 
E) increases the desired reserve ratio. 
A) decreases the size of the money multiplier. 
B) increases the size of the money multiplier. 
C) increases the money supply. 
D) decreases the required reserve ratio. 
E) increases the desired reserve ratio.

Question 15

$$\begin{array} { l c } 
& \begin{array} { c } 
\text { Amount } \
\text { (dollars) }
\end{array} \
\hline \text { Checking deposits } & 600 \
\text { Savings deposits } & 1000 \
\text { Time deposits } & 1,500 \
\text { Loans } & 1,200 \
\text { Government securities } & 2,000 \
\text { Outstanding credit card balances } & 400 \
\text { Currency in vault } & 10 \
\text { Deposits in reserve account at the Fed } & 20
\end{array}$$
-The above table gives assets and deposits for a (small)bank. The bank's deposits that are part of M2 are equal to

Accepted Answer

A) $600. 
B) $1600. 
C) $3,100. 
D) $30. 
E) $5,100. 
A) $600. 
B) $1600. 
C) $3,100. 
D) $30. 
E) $5,100.

Question 16

The Federal Reserve is the nation's central bank. Therefore, does it provide banking services to individual citizens?

Accepted Answer

No, because it is the nation's

Question 17

If Rob deposits $300 in currency into his savings account at Bank of America,

Accepted Answer

A) M1 decreases. 
B) M1 does not change. 
C) M2 increases. 
D) M2 decreases. 
E) M1 and M2 both increase. 
A) M1 decreases. 
B) M1 does not change. 
C) M2 increases. 
D) M2 decreases. 
E) M1 and M2 both increase.

Question 18

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 19

When a bank receives deposits,

Accepted Answer

A) it must hold the entire amount as reserves in case of withdrawal. 
B) the Fed requires it to hold only a small percentage as reserves. 
C) it and it alone decides how much it will hold as reserves. 
D) its liabilities increase in amount but its assets do not change. 
E) its assets increase in amount but its liabilities do not change. 
A) it must hold the entire amount as reserves in case of withdrawal. 
B) the Fed requires it to hold only a small percentage as reserves. 
C) it and it alone decides how much it will hold as reserves. 
D) its liabilities increase in amount but its assets do not change. 
E) its assets increase in amount but its liabilities do not change.

Question 20

If the Fed buys $10 million of government securities when the desired reserve ratio is 20 percent and the currency drain ratio is 5 percent, the quantity of money

Accepted Answer

A) increases by $42 million. 
B) increases by $50 million. 
C) decreases by $42 million. 
D) decreases by $50 million. 
E) increases by $7.5 million. 
A) increases by $42 million. 
B) increases by $50 million. 
C) decreases by $42 million. 
D) decreases by $50 million. 
E) increases by $7.5 million.

The monetary base is equal to the sum of coins,

When we put a price tag on goods and services, we are using money as a

Explain what is meant by the phrase a bank's "balancing act."

________ increases the size of the money multiplier.

Which of the following is money?

Which of the following items is included in the M1 money supply?

The Second National Bank of Townville has $400,000 in checking deposits, $125,000 in savings deposits, $500,000 in loans, $20,000 in its reserve account at the Fed, and $5,000 of currency in its vault. What is the amount of these assets and liabilities that is in M1?

Which of the following financial institutions does NOT have to meet minimum reserve ratios? I. the Fed Ii. commercial banks Iii. credit unions

A-1 bank initially has no excess reserves. If the desired reserve ratio is 10 percent and a new deposit of $10,000 is made in A-1, then A-1

Banks earn a profit by

What is the interaction between the Federal Reserve districts and the Board of Governors of the Federal Reserve System?

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

All of the following are elements in the structure of the Fed EXCEPT the

An increase in the currency drain ratio

The Federal Reserve is the nation's central bank. Therefore, does it provide banking services to individual citizens?

If Rob deposits $300 in currency into his savings account at Bank of America,

Which of the following is money?

When a bank receives deposits,

If the Fed buys $10 million of government securities when the desired reserve ratio is 20 percent and the currency drain ratio is 5 percent, 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 monetary base is equal to the sum of coins,

When we put a price tag on goods and services, we are using money as a

Explain what is meant by the phrase a bank's "balancing act."

________ increases the size of the money multiplier.

Which of the following is money?

Which of the following items is included in the M1 money supply?

The Second National Bank of Townville has $400,000 in checking deposits, $125,000 in savings deposits, $500,000 in loans, $20,000 in its reserve account at the Fed, and $5,000 of currency in its vault. What is the amount of these assets and liabilities that is in M1?

Which of the following financial institutions does NOT have to meet minimum reserve ratios? I. the Fed Ii. commercial banks Iii. credit unions

A-1 bank initially has no excess reserves. If the desired reserve ratio is 10 percent and a new deposit of $10,000 is made in A-1, then A-1

Banks earn a profit by

What is the interaction between the Federal Reserve districts and the Board of Governors of the Federal Reserve System?

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

All of the following are elements in the structure of the Fed EXCEPT the

An increase in the currency drain ratio

The Federal Reserve is the nation's central bank. Therefore, does it provide banking services to individual citizens?

If Rob deposits $300 in currency into his savings account at Bank of America,

Which of the following is money?

When a bank receives deposits,

If the Fed buys $10 million of government securities when the desired reserve ratio is 20 percent and the currency drain ratio is 5 percent, 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