Question 1

Fractional reserve banking refers to a banking system in which

Accepted Answer

A) bank deposits are less than bank reserves. 
B) bank reserves are only a fraction of total deposits. 
C) bank reserves are only a fraction of required reserves. 
D) bank loans are less than bank reserves. 
A) bank deposits are less than bank reserves. 
B) bank reserves are only a fraction of total deposits. 
C) bank reserves are only a fraction of required reserves. 
D) bank loans are less than bank reserves.

Question 2

What are the functions of money?

Accepted Answer

Money serves as a medium of exchange, wh

Question 3

What is a fractional reserve banking system?
 How long has the fractional reserve banking system been in existence?

Accepted Answer

A fractional reserve banking s

Question 4

Which of the following is NOT a part of the Federal Reserve System?

Accepted Answer

A) the Twelve District Federal Reserve banks 
B) the Federal Open Market Committee 
C) the Federal Deposit Insurance Corporation 
D) the Board of Governors 
A) the Twelve District Federal Reserve banks 
B) the Federal Open Market Committee 
C) the Federal Deposit Insurance Corporation 
D) the Board of Governors

Question 5

Money serves as a standard of value, which is another way of saying that money functions as

Accepted Answer

A) a medium of exchange. 
B) a unit of accounting. 
C) an opportunity cost of investment. 
D) standard of deferred payment. 
A) a medium of exchange. 
B) a unit of accounting. 
C) an opportunity cost of investment. 
D) standard of deferred payment.

Question 6

A decrease in the reserve ratio will

Accepted Answer

A) cause the money supply to decrease. 
B) cause the money supply to increase. 
C) not affect the money supply. 
D) decrease the money multiplier. 
A) cause the money supply to decrease. 
B) cause the money supply to increase. 
C) not affect the money supply. 
D) decrease the money multiplier.

Question 7

Which of the following institutions has the responsibility for distributing currency and coins to the U.S. banking system?

Accepted Answer

A) the Office of the Comptroller of the Currency 
B) the Federal Reserve System 
C) the U.S. Bureau of Engraving and Printing 
D) the U.S. Treasury Department 
A) the Office of the Comptroller of the Currency 
B) the Federal Reserve System 
C) the U.S. Bureau of Engraving and Printing 
D) the U.S. Treasury Department

Question 8

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

Accepted Answer

A) a fractional reserve banking system. 
B) a percentage reserve banking system. 
C) a ratio reserve banking system. 
D) a legal reserve banking system. 
A) a fractional reserve banking system. 
B) a percentage reserve banking system. 
C) a ratio reserve banking system. 
D) a legal reserve banking system.

Question 9

When Kate and Sam use dollars to compare the market values of their automobiles, money is acting as a

Accepted Answer

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

Question 10

By affecting the amount of reserves in the banking system, the Fed can

Accepted Answer

A) affect the size of the money supply. 
B) change the marginal tax rates. 
C) increase government purchases. 
D) reduce government purchases. 
A) affect the size of the money supply. 
B) change the marginal tax rates. 
C) increase government purchases. 
D) reduce government purchases.

Question 11

The M1 definition of the money supply includes all of the following EXCEPT

Accepted Answer

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

Question 12

What is the typical role of a central bank?

Accepted Answer

A) It serves as a bank for the national treasury. 
B) It regulates depository institutions. 
C) It serves as a lender of last resort. 
D) all of the above 
A) It serves as a bank for the national treasury. 
B) It regulates depository institutions. 
C) It serves as a lender of last resort. 
D) all of the above

Question 13

The transactions approach to measuring M1 includes all of the following EXCEPT

Accepted Answer

A) traveler's checks. 
B) certificates of deposit. 
C) checking accounts. 
D) currency. 
A) traveler's checks. 
B) certificates of deposit. 
C) checking accounts. 
D) currency.

Question 14

A method of measuring the money supply by looking at money as a medium of exchange is the

Accepted Answer

A) fiduciary monetary system. 
B) capital control. 
C) transactions approach. 
D) liquidity approach. 
A) fiduciary monetary system. 
B) capital control. 
C) transactions approach. 
D) liquidity approach.

Question 15

When the price level goes up, the purchasing power of the dollar

Accepted Answer

A) also increases. 
B) falls. 
C) remains constant. 
D) varies directly with the value of the euro. 
A) also increases. 
B) falls. 
C) remains constant. 
D) varies directly with the value of the euro.

Question 16

The part of the Federal Reserve System that determines monetary policy actions is the

Accepted Answer

A) District Bank Board. 
B) Federal Deposit Insurance Corporation (FDI
C) . 
C) Federal Open Market Committee. 
D) Comptroller's Office. 
A) District Bank Board. 
B) Federal Deposit Insurance Corporation (FDI
C) . 
C) Federal Open Market Committee. 
D) Comptroller's Office.

Question 17

In a fractional reserve banking system

Accepted Answer

A) banks are required to keep all deposits on hand so that they can pay their depositors when they desire to withdraw funds. 
B) banks are required to keep a fraction of deposits in bonds. 
C) banks are required to keep a fraction of all deposits on hand and send the rest to the Fed. 
D) banks do not keep sufficient reserves on hand to cover 100 percent of their depositors' accounts. 
A) banks are required to keep all deposits on hand so that they can pay their depositors when they desire to withdraw funds. 
B) banks are required to keep a fraction of deposits in bonds. 
C) banks are required to keep a fraction of all deposits on hand and send the rest to the Fed. 
D) banks do not keep sufficient reserves on hand to cover 100 percent of their depositors' accounts.

Question 18

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

Accepted Answer

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

Question 19

What type of intrinsic value or backing does U.S. currency have today?

Accepted Answer

A) gold 
B) government bonds 
C) none 
D) silver 
A) gold 
B) government bonds 
C) none 
D) silver

Question 20

Which one of the following would increase reserves for the banking system?

Accepted Answer

A) The Fed sells government securities on the open market. 
B) The Fed buys government securities on the open market. 
C) You purchase a newly-issued U.S. Treasury bond. 
D) You purchase a U.S. Treasury bond from a bond dealer. 
A) The Fed sells government securities on the open market. 
B) The Fed buys government securities on the open market. 
C) You purchase a newly-issued U.S. Treasury bond. 
D) You purchase a U.S. Treasury bond from a bond dealer.

Fractional reserve banking refers to a banking system in which

What are the functions of money?

What is a fractional reserve banking system? How long has the fractional reserve banking system been in existence?

Which of the following is NOT a part of the Federal Reserve System?

Money serves as a standard of value, which is another way of saying that money functions as

A decrease in the reserve ratio will

Which of the following institutions has the responsibility for distributing currency and coins to the U.S. banking system?

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

When Kate and Sam use dollars to compare the market values of their automobiles, money is acting as a

By affecting the amount of reserves in the banking system, the Fed can

The M1 definition of the money supply includes all of the following EXCEPT

What is the typical role of a central bank?

The transactions approach to measuring M1 includes all of the following EXCEPT

A method of measuring the money supply by looking at money as a medium of exchange is the

When the price level goes up, the purchasing power of the dollar

The part of the Federal Reserve System that determines monetary policy actions is the

In a fractional reserve banking system

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

What type of intrinsic value or backing does U.S. currency have today?

Which one of the following would increase reserves for the banking system?

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

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Exam 14: Money Banking and Central Banking

Fractional reserve banking refers to a banking system in which

What are the functions of money?

What is a fractional reserve banking system? How long has the fractional reserve banking system been in existence?

Which of the following is NOT a part of the Federal Reserve System?

Money serves as a standard of value, which is another way of saying that money functions as

A decrease in the reserve ratio will

Which of the following institutions has the responsibility for distributing currency and coins to the U.S. banking system?

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

When Kate and Sam use dollars to compare the market values of their automobiles, money is acting as a

By affecting the amount of reserves in the banking system, the Fed can

The M1 definition of the money supply includes all of the following EXCEPT

What is the typical role of a central bank?

The transactions approach to measuring M1 includes all of the following EXCEPT

A method of measuring the money supply by looking at money as a medium of exchange is the

When the price level goes up, the purchasing power of the dollar

The part of the Federal Reserve System that determines monetary policy actions is the

In a fractional reserve banking system

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

What type of intrinsic value or backing does U.S. currency have today?

Which one of the following would increase reserves for the banking system?

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