Question 1

If a bank receives a new transaction deposit of $10,000 and the reserve ratio is 15 percent, then the bank could expand its loans by as much as

Accepted Answer

A) $1,500. 
B) $8,500. 
C) $15,000. 
D) $66,700. 
A) $1,500. 
B) $8,500. 
C) $15,000. 
D) $66,700.

Question 2

One of the benefits of money as a medium of exchange is that

Accepted Answer

A) it allows for private transactions such as trading vegetables for medical services. 
B) it allows individuals to compare the relative value of goods. 
C) over time it will become more valuable so that individuals can purchase more goods and services. 
D) it allows for specialization that leads to economic efficiencies. 
A) it allows for private transactions such as trading vegetables for medical services. 
B) it allows individuals to compare the relative value of goods. 
C) over time it will become more valuable so that individuals can purchase more goods and services. 
D) it allows for specialization that leads to economic efficiencies.

Question 3

The largest component of M1 is

Accepted Answer

A) transaction deposits. 
B) currency and coins. 
C) travelers checks. 
D) savings accounts. 
A) transaction deposits. 
B) currency and coins. 
C) travelers checks. 
D) savings accounts.

Question 4

Which of the following is a financial intermediary?

Accepted Answer

A) the Red Cross 
B) the Internal Revenue Service 
C) a share of corporate stock 
D) an insurance company 
A) the Red Cross 
B) the Internal Revenue Service 
C) a share of corporate stock 
D) an insurance company

Question 5

Who appoints the Federal Reserve System's Board of Governors?

Accepted Answer

A) the Secretary of the Treasury 
B) the President of the United States 
C) the Speaker of the House of Representatives 
D) the American Banking Association 
A) the Secretary of the Treasury 
B) the President of the United States 
C) the Speaker of the House of Representatives 
D) the American Banking Association

Question 6

The transactions approach to measuring money stresses the role of money as a

Accepted Answer

A) medium of exchange. 
B) unit of accounting. 
C) store of value. 
D) standard of deferred payment. 
A) medium of exchange. 
B) unit of accounting. 
C) store of value. 
D) standard of deferred payment.

Question 7

Which function of money allows people to specialize in areas in which they have a comparative advantage?

Accepted Answer

A) medium of exchange 
B) unit of accounting 
C) store of value 
D) standard of deferred payment 
A) medium of exchange 
B) unit of accounting 
C) store of value 
D) standard of deferred payment

Question 8

How does the liquidity approach to measuring the money supply differ from the transaction approach?

Accepted Answer

The liquidity approach focuses on assets

Question 9

A fiduciary monetary system means

Accepted Answer

A) that the value of each currency is determined by the amount of gold held by each nation. 
B) that the currency is backed by implicit faith in government. 
C) that money is legal tender. 
D) that money has commodity value. 
A) that the value of each currency is determined by the amount of gold held by each nation. 
B) that the currency is backed by implicit faith in government. 
C) that money is legal tender. 
D) that money has commodity value.

Question 10

When money serves as a standard for comparing values of different things, it is functioning as a

Accepted Answer

A) store of value. 
B) hedge against inflation. 
C) standard of deferred payment. 
D) unit of accounting. 
A) store of value. 
B) hedge against inflation. 
C) standard of deferred payment. 
D) unit of accounting.

Question 11

The level of reserves in the banking system is determined by

Accepted Answer

A) the American Banking Association. 
B) the Federal Open Market Committee. 
C) bond dealers. 
D) the Treasury Department. 
A) the American Banking Association. 
B) the Federal Open Market Committee. 
C) bond dealers. 
D) the Treasury Department.

Question 12

A barter arrangement essentially means

Accepted Answer

A) a cashless transaction. 
B) a credit deal. 
C) buying with an I.O.U. 
D) swapping goods for cash. 
A) a cashless transaction. 
B) a credit deal. 
C) buying with an I.O.U. 
D) swapping goods for cash.

Question 13

Giving the store clerk a $20 bill for a sweater priced at $20 is an example of money serving as a

Accepted Answer

A) medium of exchange. 
B) unit of accounting. 
C) store of value. 
D) standard of deferred value. 
A) medium of exchange. 
B) unit of accounting. 
C) store of value. 
D) standard of deferred value.

Question 14

To reach the maximum money multiplier, it is assumed that

Accepted Answer

A) commercial banks keep the amount of reserves. equal to total bank deposits. 
B) all loans get redeposited in a checkable account. 
C) there is insufficient loan demand. 
D) loans are diverted into circulating currency. 
A) commercial banks keep the amount of reserves. equal to total bank deposits. 
B) all loans get redeposited in a checkable account. 
C) there is insufficient loan demand. 
D) loans are diverted into circulating currency.

Question 15

When money is accepted as payment in a market transaction, it is functioning as a

Accepted Answer

A) store of value. 
B) unit of accounting. 
C) medium of exchange. 
D) unit of investment. 
A) store of value. 
B) unit of accounting. 
C) medium of exchange. 
D) unit of investment.

Question 16

A time deposit with a fixed maturity date offered by banks is called a

Accepted Answer

A) checking account. 
B) savings deposit. 
C) small-denomination certificate of deposit. 
D) corporate bond. 
A) checking account. 
B) savings deposit. 
C) small-denomination certificate of deposit. 
D) corporate bond.

Question 17

A system in which depository institutions hold reserves that are less than the amount of total deposits is

Accepted Answer

A) the Federal Reserve System. 
B) the federal funds market. 
C) sweep accounts. 
D) fractional reserve banking. 
A) the Federal Reserve System. 
B) the federal funds market. 
C) sweep accounts. 
D) fractional reserve banking.

Question 18

The direct exchange of goods and services for other goods and services without the use of money is

Accepted Answer

A) a standard of deferred payment. 
B) barter. 
C) a store of value. 
D) financial intermediaries. 
A) a standard of deferred payment. 
B) barter. 
C) a store of value. 
D) financial intermediaries.

Question 19

If an asset can be obtained or disposed of without much risk of losing its nominal value, it is said to be

Accepted Answer

A) fiduciary. 
B) liquid. 
C) wealth. 
D) valuable. 
A) fiduciary. 
B) liquid. 
C) wealth. 
D) valuable.

Question 20

Which of the following is NOT a function of money?

Accepted Answer

A) medium of exchange 
B) form of credit 
C) store of value 
D) standard of deferred payment 
A) medium of exchange 
B) form of credit 
C) store of value 
D) standard of deferred payment

If a bank receives a new transaction deposit of $10,000 and the reserve ratio is 15 percent, then the bank could expand its loans by as much as

One of the benefits of money as a medium of exchange is that

The largest component of M1 is

Which of the following is a financial intermediary?

Who appoints the Federal Reserve System's Board of Governors?

The transactions approach to measuring money stresses the role of money as a

Which function of money allows people to specialize in areas in which they have a comparative advantage?

How does the liquidity approach to measuring the money supply differ from the transaction approach?

A fiduciary monetary system means

When money serves as a standard for comparing values of different things, it is functioning as a

The level of reserves in the banking system is determined by

A barter arrangement essentially means

Giving the store clerk a $20 bill for a sweater priced at $20 is an example of money serving as a

To reach the maximum money multiplier, it is assumed that

When money is accepted as payment in a market transaction, it is functioning as a

A time deposit with a fixed maturity date offered by banks is called a

A system in which depository institutions hold reserves that are less than the amount of total deposits is

The direct exchange of goods and services for other goods and services without the use of money is

If an asset can be obtained or disposed of without much risk of losing its nominal value, it is said to be

Which of the following is NOT a function of money?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 14: Money Banking and Central Banking

If a bank receives a new transaction deposit of $10,000 and the reserve ratio is 15 percent, then the bank could expand its loans by as much as

One of the benefits of money as a medium of exchange is that

The largest component of M1 is

Which of the following is a financial intermediary?

Who appoints the Federal Reserve System's Board of Governors?

The transactions approach to measuring money stresses the role of money as a

Which function of money allows people to specialize in areas in which they have a comparative advantage?

How does the liquidity approach to measuring the money supply differ from the transaction approach?

A fiduciary monetary system means

When money serves as a standard for comparing values of different things, it is functioning as a

The level of reserves in the banking system is determined by

A barter arrangement essentially means

Giving the store clerk a $20 bill for a sweater priced at $20 is an example of money serving as a

To reach the maximum money multiplier, it is assumed that

When money is accepted as payment in a market transaction, it is functioning as a

A time deposit with a fixed maturity date offered by banks is called a

A system in which depository institutions hold reserves that are less than the amount of total deposits is

The direct exchange of goods and services for other goods and services without the use of money is

If an asset can be obtained or disposed of without much risk of losing its nominal value, it is said to be

Which of the following is NOT a function of money?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters