Question 1

When the desired reserve ratio is 10 percent, suppose the Fed buys $1,000,000 of government securities from banks. As a result, the banks' excess reserves

Accepted Answer

A) increase by $900,000. 
B) increase by $1,000,000. 
C) increase by $10,000. 
D) decrease by $10,000. 
E) decrease by $1,000,000. 
A) increase by $900,000. 
B) increase by $1,000,000. 
C) increase by $10,000. 
D) decrease by $10,000. 
E) decrease by $1,000,000.

Question 2

Which of the following are assets of commercial banks?
I. reserves
Ii. loans
Iii. deposits

Accepted Answer

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

Question 3

Conducting the nation's monetary policy is the duty of the

Accepted Answer

A) Department of Commerce. 
B) U.S. Treasury department. 
C) Federal Reserve System. 
D) Federation of Banks. 
E) Federal Bank Supervisor. 
A) Department of Commerce. 
B) U.S. Treasury department. 
C) Federal Reserve System. 
D) Federation of Banks. 
E) Federal Bank Supervisor.

Question 4

A bank has $250 in checking deposits, $1,000 in savings deposits, $1,200 in time deposits, $1,000 in loans to businesses, $400 in outstanding credit card balances, $800 in government securities, $25 in currency in its vault, and $25 in deposits at the Fed. Of these, ________ are part of M2.

Accepted Answer

A) $3,450 
B) $2,450 
C) $2,850 
D) $2,200 
E) $2,600 
A) $3,450 
B) $2,450 
C) $2,850 
D) $2,200 
E) $2,600

Question 5

The "double coincidence of wants" is

Accepted Answer

A) what is needed to use money. 
B) eliminated with the use of money. 
C) eliminated when we barter instead of using money. 
D) how value is stored when we transact with money. 
E) money's role as a unit of account. 
A) what is needed to use money. 
B) eliminated with the use of money. 
C) eliminated when we barter instead of using money. 
D) how value is stored when we transact with money. 
E) money's role as a unit of account.

Question 6

If the currency drain ratio increases, how can the Fed adjust the monetary base to offset the effect on the quantity of money?

Accepted Answer

If the currency drain ratio increases, t

Question 7

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 8

Which of the following is a tool the Federal Reserve System can use to regulate the quantity of money?
I. changing the discount rate
Ii. conducting open market operations
Iii. changing the required reserve ratio

Accepted Answer

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

Question 9

If the currency drain ratio is zero, which of the following situations leads to the greatest total increase in the quantity of money?

Accepted Answer

A) an increase in the monetary base of $100,000 when the desired reserve ratio is 5 percent 
B) an increase in the monetary base of $120,000 when the desired reserve ratio is 10 percent 
C) an increase in the monetary base of $200,000 when the desired reserve ratio is 20 percent 
D) an increase in the monetary base of $250,000 when the desired reserve ratio is 15 percent 
E) an increase in the monetary base of $100,000 when the desired reserve ratio is 50 percent 
A) an increase in the monetary base of $100,000 when the desired reserve ratio is 5 percent 
B) an increase in the monetary base of $120,000 when the desired reserve ratio is 10 percent 
C) an increase in the monetary base of $200,000 when the desired reserve ratio is 20 percent 
D) an increase in the monetary base of $250,000 when the desired reserve ratio is 15 percent 
E) an increase in the monetary base of $100,000 when the desired reserve ratio is 50 percent

Question 10

What assets are included in M1?
 In M2?
 Is all of M1 and M2 money?
 If some assets of M1 or M2 are not money, why are they included in M1 or M2?

Accepted Answer

M1 is the sum of currency held by indivi

Question 11

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 12

When the First Bank of Townsville makes a loan, it

Accepted Answer

A) prints money. 
B) borrows the money from the Fed. 
C) creates a checkable deposit. 
D) decreases the quantity of money. 
E) increases its reserves. 
A) prints money. 
B) borrows the money from the Fed. 
C) creates a checkable deposit. 
D) decreases the quantity of money. 
E) increases its reserves.

Question 13

The discount rate is the interest rate that

Accepted Answer

A) commercial banks charge their customers. 
B) commercial banks charge each other for the loan of reserves. 
C) the Fed charges the government for loans. 
D) the Fed charges commercial banks when it loans reserves to the banks. 
E) the Fed pays commercial banks on their reserves held at the Fed. 
A) commercial banks charge their customers. 
B) commercial banks charge each other for the loan of reserves. 
C) the Fed charges the government for loans. 
D) the Fed charges commercial banks when it loans reserves to the banks. 
E) the Fed pays commercial banks on their reserves held at the Fed.

Question 14

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.

Question 15

Are checks money?

Accepted Answer

Checks are instructions to transfer fund

Question 16

The amount of loans that a bank can create is limited by

Accepted Answer

A) a law enacted by Congress. 
B) the bank's excess reserves. 
C) a directive from the Federal Reserve System, which takes into account the bank's financial stability. 
D) the real interest rate. 
E) the bank's government securities. 
A) a law enacted by Congress. 
B) the bank's excess reserves. 
C) a directive from the Federal Reserve System, which takes into account the bank's financial stability. 
D) the real interest rate. 
E) the bank's government securities.

Question 17

How does a currency drain affect the money multiplier?

Accepted Answer

If the currency drain is zero so that al

Question 18

A bank has deposits of $400, reserves of $50, and the desired reserve ratio is 7 percent. The bank's excess reserves are

Accepted Answer

A) $0. 
B) $22. 
C) $28. 
D) $3.50 
E) $50. 
A) $0. 
B) $22. 
C) $28. 
D) $3.50 
E) $50.

Question 19

The Banks of the Mississippi has excess reserves of $20,000, desired reserves of $80,000 and the desired reserve ratio is 5 percent. What are the total amount of deposits in this bank?

Accepted Answer

A) $5,000 
B) $1,000,000 
C) $1,600,000 
D) $100,000 
E) $180,000 
A) $5,000 
B) $1,000,000 
C) $1,600,000 
D) $100,000 
E) $180,000

Question 20

When goldsmiths issued receipts to gold owners, and those gold receipts circulated while gold stayed in the goldsmiths' safes,

Accepted Answer

A) the gold receipts were considered money because they were used as a means of payment. 
B) an infant banking system developed in sixteenth century Europe. 
C) fiat money was created. 
D) money was invented. 
E) Both A and B are correct. 
A) the gold receipts were considered money because they were used as a means of payment. 
B) an infant banking system developed in sixteenth century Europe. 
C) fiat money was created. 
D) money was invented. 
E) Both A and B are correct.

When the desired reserve ratio is 10 percent, suppose the Fed buys $1,000,000 of government securities from banks. As a result, the banks' excess reserves

Which of the following are assets of commercial banks? I. reserves Ii. loans Iii. deposits

Conducting the nation's monetary policy is the duty of the

A bank has $250 in checking deposits, $1,000 in savings deposits, $1,200 in time deposits, $1,000 in loans to businesses, $400 in outstanding credit card balances, $800 in government securities, $25 in currency in its vault, and $25 in deposits at the Fed. Of these, ________ are part of M2.

The "double coincidence of wants" is

If the currency drain ratio increases, how can the Fed adjust the monetary base to offset the effect on the quantity of money?

Debit cards and e-checks are not money because

Which of the following is a tool the Federal Reserve System can use to regulate the quantity of money? I. changing the discount rate Ii. conducting open market operations Iii. changing the required reserve ratio

If the currency drain ratio is zero, which of the following situations leads to the greatest total increase in the quantity of money?

What assets are included in M1? In M2? Is all of M1 and M2 money? If some assets of M1 or M2 are not money, why are they included in M1 or M2?

Barter requires the

When the First Bank of Townsville makes a loan, it

The discount rate is the interest rate that

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

Are checks money?

The amount of loans that a bank can create is limited by

How does a currency drain affect the money multiplier?

A bank has deposits of $400, reserves of $50, and the desired reserve ratio is 7 percent. The bank's excess reserves are

The Banks of the Mississippi has excess reserves of $20,000, desired reserves of $80,000 and the desired reserve ratio is 5 percent. What are the total amount of deposits in this bank?

When goldsmiths issued receipts to gold owners, and those gold receipts circulated while gold stayed in the goldsmiths' safes,

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 desired reserve ratio is 10 percent, suppose the Fed buys $1,000,000 of government securities from banks. As a result, the banks' excess reserves

Which of the following are assets of commercial banks? I. reserves Ii. loans Iii. deposits

Conducting the nation's monetary policy is the duty of the

A bank has $250 in checking deposits, $1,000 in savings deposits, $1,200 in time deposits, $1,000 in loans to businesses, $400 in outstanding credit card balances, $800 in government securities, $25 in currency in its vault, and $25 in deposits at the Fed. Of these, ________ are part of M2.

The "double coincidence of wants" is

If the currency drain ratio increases, how can the Fed adjust the monetary base to offset the effect on the quantity of money?

Debit cards and e-checks are not money because

Which of the following is a tool the Federal Reserve System can use to regulate the quantity of money? I. changing the discount rate Ii. conducting open market operations Iii. changing the required reserve ratio

If the currency drain ratio is zero, which of the following situations leads to the greatest total increase in the quantity of money?

What assets are included in M1? In M2? Is all of M1 and M2 money? If some assets of M1 or M2 are not money, why are they included in M1 or M2?

Barter requires the

When the First Bank of Townsville makes a loan, it

The discount rate is the interest rate that

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

Are checks money?

The amount of loans that a bank can create is limited by

How does a currency drain affect the money multiplier?

A bank has deposits of $400, reserves of $50, and the desired reserve ratio is 7 percent. The bank's excess reserves are

The Banks of the Mississippi has excess reserves of $20,000, desired reserves of $80,000 and the desired reserve ratio is 5 percent. What are the total amount of deposits in this bank?

When goldsmiths issued receipts to gold owners, and those gold receipts circulated while gold stayed in the goldsmiths' safes,

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