Question 1

Which of the following statements is correct?

Accepted Answer

A) required reserves = (total deposits)× (excess reserve ratio) 
B) required reserves = (total reserves)× (excess reserve ratio) 
C) required reserves = (total deposits)× (required reserve ratio) 
D) required reserves = (total deposits)÷ (required reserve ratio) 
E) required reserves = (total deposits)× (required reserve ratio)- excess reserves 
A) required reserves = (total deposits)× (excess reserve ratio) 
B) required reserves = (total reserves)× (excess reserve ratio) 
C) required reserves = (total deposits)× (required reserve ratio) 
D) required reserves = (total deposits)÷ (required reserve ratio) 
E) required reserves = (total deposits)× (required reserve ratio)- excess reserves

Question 2

What are the institutions that make up the nation's banking system?

Accepted Answer

Part of the nation's banking system is t

Question 3

In 2011 banks kept reserves equal to about ________ of their assets.

Accepted Answer

A) 75 percent. 
B) 25 percent 
C) 13 percent 
D) 50 percent 
E) 37 percent 
A) 75 percent. 
B) 25 percent 
C) 13 percent 
D) 50 percent 
E) 37 percent

Question 4

$$\begin{array} { l c } 
& \begin{array} { c } 
\text { Amount } \
\text { (dollars) }
\end{array} \
\hline \text { Checkable deposits } & 350 \
\text { Savings deposits } & 900 \
\text { Money market funds } & 500 \
\text { Small time deposits } & 600 \
\text { Traveler's checks } & 10 \
\text { Currency outside of banks } & 250
\end{array}$$
-The above table has information about the hypothetical economy of Robotica. Based on the data, the size of M2 is

Accepted Answer

A) $2,600 billion. 
B) $2,610 billion. 
C) $610 billion. 
D) $600 billion. 
E) $1,710 billion. 
A) $2,600 billion. 
B) $2,610 billion. 
C) $610 billion. 
D) $600 billion. 
E) $1,710 billion.

Question 5

Which of the following counts as part of M1?

Accepted Answer

A) $5,000 worth of gold 
B) $5,000 worth of government bonds 
C) $5,000 in a checking account 
D) $5,000 credit line on a credit card 
E) $5,000 of real estate 
A) $5,000 worth of gold 
B) $5,000 worth of government bonds 
C) $5,000 in a checking account 
D) $5,000 credit line on a credit card 
E) $5,000 of real estate

Question 6

The voting members of the Federal Open Market Committee consists of the

Accepted Answer

A) seven Board of Governor members and the 12 Federal Reserve Bank presidents. 
B) seven Board of Governor members and five Federal Reserve Bank presidents. 
C) 12 Board of Governor members and the seven Federal Reserve Bank presidents. 
D) 12 Board of Governor members and the five Federal Reserve Bank presidents. 
E) six Board of Governor members and six Federal Reserve Bank presidents. 
A) seven Board of Governor members and the 12 Federal Reserve Bank presidents. 
B) seven Board of Governor members and five Federal Reserve Bank presidents. 
C) 12 Board of Governor members and the seven Federal Reserve Bank presidents. 
D) 12 Board of Governor members and the five Federal Reserve Bank presidents. 
E) six Board of Governor members and six Federal Reserve Bank presidents.

Question 7

Assume the First Bank of Townsville makes a loan of $2,500. This loan will

Accepted Answer

A) increase the quantity of money initially by $2,500. 
B) decrease the quantity of money initially by $2,500. 
C) have no change on the quantity of money, just its composition. 
D) increase the First Bank of Townville's liabilities at the Fed. 
E) increase the First Bank of Townville's reserves. 
A) increase the quantity of money initially by $2,500. 
B) decrease the quantity of money initially by $2,500. 
C) have no change on the quantity of money, just its composition. 
D) increase the First Bank of Townville's liabilities at the Fed. 
E) increase the First Bank of Townville's reserves.

Question 8

A commercial bank is defined as

Accepted Answer

A) any institution that accepts deposits. 
B) a firm that is chartered to accept deposits and make loans. 
C) the institution that sets regulations for commercial activities. 
D) a firm that obtains funds by selling shares and then buys U.S. Treasury bills. 
E) any institution that makes loans. 
A) any institution that accepts deposits. 
B) a firm that is chartered to accept deposits and make loans. 
C) the institution that sets regulations for commercial activities. 
D) a firm that obtains funds by selling shares and then buys U.S. Treasury bills. 
E) any institution that makes loans.

Question 9

A barter system of payment is

Accepted Answer

A) similar to a money system of payment because both require a double coincidence of wants. 
B) similar to a money system of payment because both use one asset as a unit of account. 
C) different from a money system of payment because the barter system is a better unit of account. 
D) different from a money system of payment because money does not require a double coincidence of wants. 
E) similar to a money system of payment because both are used as stores of value and units of account. 
A) similar to a money system of payment because both require a double coincidence of wants. 
B) similar to a money system of payment because both use one asset as a unit of account. 
C) different from a money system of payment because the barter system is a better unit of account. 
D) different from a money system of payment because money does not require a double coincidence of wants. 
E) similar to a money system of payment because both are used as stores of value and units of account.

Question 10

If you have assets that include $50 in cash, a checking account with $135, a savings account with $500, and a jar of coins for laundry of $15.75, how much M1 do you have?

Accepted Answer

You have $200.75 of M1, compri

Question 11

Suppose the currency drain ratio is 33.33 percent and the desired reserve ratio is 10 percent. The money multiplier equals

Accepted Answer

A) 4.27. 
B) 3.00. 
C) 3.08. 
D) 2.50. 
E) 6.67. 
A) 4.27. 
B) 3.00. 
C) 3.08. 
D) 2.50. 
E) 6.67.

Question 12

M1 is defined as a measure of money including, in part,

Accepted Answer

A) checkable deposits and currency. 
B) time deposits and currency. 
C) currency and savings deposits. 
D) time deposits and money market fund deposits. 
E) the lines of credit on credit cards and currency. 
A) checkable deposits and currency. 
B) time deposits and currency. 
C) currency and savings deposits. 
D) time deposits and money market fund deposits. 
E) the lines of credit on credit cards and currency.

Question 13

Cisco is considering opening a financial institution that accepts savings deposits from only its employees and makes loans to only its employees. The best description of this financial institution is that it is a

Accepted Answer

A) credit union. 
B) commercial bank. 
C) savings and loan association. 
D) savings bank. 
E) federal government chartered credit bank. 
A) credit union. 
B) commercial bank. 
C) savings and loan association. 
D) savings bank. 
E) federal government chartered credit bank.

Question 14

________ the quantity of money in the United States.

Accepted Answer

A) The State Department regulates 
B) The Department of Treasury regulates 
C) The Federal Reserve System regulates 
D) Commercial banks regulate 
E) The President of the United States regulates 
A) The State Department regulates 
B) The Department of Treasury regulates 
C) The Federal Reserve System regulates 
D) Commercial banks regulate 
E) The President of the United States regulates

Question 15

The discount rate is the

Accepted Answer

A) banks' real interest rate. 
B) interest rate at which the Fed will loan reserves to commercial banks. 
C) interest rate banks charge the Fed when the Fed borrows from the banks. 
D) name of the interest rate banks charge their most credit-worthy borrowers. 
E) the interest rate paid on U.S. government securities. 
A) banks' real interest rate. 
B) interest rate at which the Fed will loan reserves to commercial banks. 
C) interest rate banks charge the Fed when the Fed borrows from the banks. 
D) name of the interest rate banks charge their most credit-worthy borrowers. 
E) the interest rate paid on U.S. government securities.

Question 16

Suppose the Fed conducts an open market operation in which it buys government securities from a commercial bank. Why is there a multiplier effect on the quantity of money?

Accepted Answer

When the Fed buys government securities

Question 17

Riley deposits $4,000 cash in her checkable deposit at Fershur Bank. If the desired reserve ratio is 5 percent, Fershur Bank's

Accepted Answer

A) desired reserves increase by $4,000. 
B) assets and its liabilities change in opposite directions. 
C) desired reserves increase by $200 and its excess reserves increase by $3,800. 
D) excess reserves increase by $4,000. 
E) liabilities do not change but its assets increase. 
A) desired reserves increase by $4,000. 
B) assets and its liabilities change in opposite directions. 
C) desired reserves increase by $200 and its excess reserves increase by $3,800. 
D) excess reserves increase by $4,000. 
E) liabilities do not change but its assets increase.

Question 18

The U.S. dollar is called

Accepted Answer

A) fiat money because the law decrees it is money. 
B) faith money. 
C) commodity money because it is convertible into gold. 
D) frail money because wear and tear ruins paper bills. 
E) convertible money because the government stands ready to convert it into gold or silver. 
A) fiat money because the law decrees it is money. 
B) faith money. 
C) commodity money because it is convertible into gold. 
D) frail money because wear and tear ruins paper bills. 
E) convertible money because the government stands ready to convert it into gold or silver.

Question 19

What is larger: M1 or M2?
 Why?

Accepted Answer

M2 is larger than M1. M2 includes M1 plu

Question 20

Money is best defined as

Accepted Answer

A) anything that has value. 
B) anything accepted as a means of payment. 
C) anything that can be sold to pay for something. 
D) currency. 
E) anything that is backed by gold. 
A) anything that has value. 
B) anything accepted as a means of payment. 
C) anything that can be sold to pay for something. 
D) currency. 
E) anything that is backed by gold.

Which of the following statements is correct?

What are the institutions that make up the nation's banking system?

In 2011 banks kept reserves equal to about ________ of their assets.

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 M2 is

Which of the following counts as part of M1?

The voting members of the Federal Open Market Committee consists of the

Assume the First Bank of Townsville makes a loan of $2,500. This loan will

A commercial bank is defined as

A barter system of payment is

If you have assets that include $50 in cash, a checking account with $135, a savings account with $500, and a jar of coins for laundry of $15.75, how much M1 do you have?

Suppose the currency drain ratio is 33.33 percent and the desired reserve ratio is 10 percent. The money multiplier equals

M1 is defined as a measure of money including, in part,

Cisco is considering opening a financial institution that accepts savings deposits from only its employees and makes loans to only its employees. The best description of this financial institution is that it is a

________ the quantity of money in the United States.

The discount rate is the

Suppose the Fed conducts an open market operation in which it buys government securities from a commercial bank. Why is there a multiplier effect on the quantity of money?

Riley deposits $4,000 cash in her checkable deposit at Fershur Bank. If the desired reserve ratio is 5 percent, Fershur Bank's

The U.S. dollar is called

What is larger: M1 or M2? Why?

Money is best defined as

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

Which of the following statements is correct?

What are the institutions that make up the nation's banking system?

In 2011 banks kept reserves equal to about ________ of their assets.

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 M2 is

Which of the following counts as part of M1?

The voting members of the Federal Open Market Committee consists of the

Assume the First Bank of Townsville makes a loan of $2,500. This loan will

A commercial bank is defined as

A barter system of payment is

If you have assets that include $50 in cash, a checking account with $135, a savings account with $500, and a jar of coins for laundry of $15.75, how much M1 do you have?

Suppose the currency drain ratio is 33.33 percent and the desired reserve ratio is 10 percent. The money multiplier equals

M1 is defined as a measure of money including, in part,

Cisco is considering opening a financial institution that accepts savings deposits from only its employees and makes loans to only its employees. The best description of this financial institution is that it is a

________ the quantity of money in the United States.

The discount rate is the

Suppose the Fed conducts an open market operation in which it buys government securities from a commercial bank. Why is there a multiplier effect on the quantity of money?

Riley deposits $4,000 cash in her checkable deposit at Fershur Bank. If the desired reserve ratio is 5 percent, Fershur Bank's

The U.S. dollar is called

What is larger: M1 or M2? Why?

Money is best defined as

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