Question 1

The functions of money are

Accepted Answer

A)  interest rates, prices and output. 
B)  M1, M2 or currency. 
C)  currency, deposits, and traveler's checks. 
D)  medium of exchange, unit of account, and store of value. 
A)  interest rates, prices and output. 
B)  M1, M2 or currency. 
C)  currency, deposits, and traveler's checks. 
D)  medium of exchange, unit of account, and store of value.

Question 2

Monetary policy is conducted

Accepted Answer

A)  only by the Federal Reserve. 
B)  by the Federal Reserve and the President of the United States. 
C)  by the Federal Reserve, the President of the United States, and Congress. 
D)  by the Federal Reserve with veto power residing with the President of the United States. 
A)  only by the Federal Reserve. 
B)  by the Federal Reserve and the President of the United States. 
C)  by the Federal Reserve, the President of the United States, and Congress. 
D)  by the Federal Reserve with veto power residing with the President of the United States.

Question 3

Financial innovations can have the effect of

Accepted Answer

A)  only decreasing the demand for money. 
B)  only increasing the demand for money. 
C)  either increasing or decreasing the demand for money depending on what the innovation is. 
D)  increasing the Fed's monetary policy. 
A)  only decreasing the demand for money. 
B)  only increasing the demand for money. 
C)  either increasing or decreasing the demand for money depending on what the innovation is. 
D)  increasing the Fed's monetary policy.

Question 4

If the Fed sells $100 million of U.S.government securities,what happens to the quantity of money?

Accepted Answer

If the Fed sells $100 million of U.S.gov

Question 5

The discount rate is the interest rate that

Accepted Answer

A)  the Federal Reserve charges when it loans reserves to depository institutions. 
B)  is the lowest rate that banks will charge when lending to their best customers. 
C)  the Federal Reserve charges when it loans to the U.S. Government. 
D)  banks charge when they lend to each other. 
A)  the Federal Reserve charges when it loans reserves to depository institutions. 
B)  is the lowest rate that banks will charge when lending to their best customers. 
C)  the Federal Reserve charges when it loans to the U.S. Government. 
D)  banks charge when they lend to each other.

Question 6

The table below shows data for Indonesia. $$\begin{array} { | l | c | c | } 
\hline & \mathbf { 2 0 0 9 } & \mathbf { 2 0 1 0 } \
\hline \text { Real GDP growth rate } & 4.5 & 6.0 \
\hline \text { Inflation rate } & 4.8 & 5.7 \
\hline
\end{array}$$
Assuming the rate of velocity change is constant,the money growth rate in Indonesia was

Accepted Answer

A)  0.3 percent in 2009. 
B)  11.7 percent in 2010. 
C)  -0.3 percent in 2009. 
D)  5.7 percent in 2010. 
A)  0.3 percent in 2009. 
B)  11.7 percent in 2010. 
C)  -0.3 percent in 2009. 
D)  5.7 percent in 2010.

Question 7

Federal Reserve policy tools include all of the following EXCEPT

Accepted Answer

A)  desired reserve ratios. 
B)  required reserve ratios. 
C)  the discount rate. 
D)  open market operations. 
A)  desired reserve ratios. 
B)  required reserve ratios. 
C)  the discount rate. 
D)  open market operations.

Question 8

Checks ________ money and credit cards ________ money.

Accepted Answer

A)  are; are 
B)  are not; are 
C)  are; are not 
D)  are not; are not 
A)  are; are 
B)  are not; are 
C)  are; are not 
D)  are not; are not

Question 9

A bank's reserves include

Accepted Answer

A)  the cash in its vault plus the value of its depositors' accounts. 
B)  the cash in its vault plus its deposits held at a Federal Reserve bank. 
C)  the cash in its vault plus any gold held for the bank at Fort Knox. 
D)  its common stock holdings, the cash in its vault, and any deposits at a Federal Reserve bank. 
A)  the cash in its vault plus the value of its depositors' accounts. 
B)  the cash in its vault plus its deposits held at a Federal Reserve bank. 
C)  the cash in its vault plus any gold held for the bank at Fort Knox. 
D)  its common stock holdings, the cash in its vault, and any deposits at a Federal Reserve bank.

Question 10

$$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Interest rate } \
\text { (percent per year) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { money demanded } \
\text { (trillions of 2005 } \
\text { dollars) }
\end{array} \
\hline 8 & 0.7 \
\hline 6 & 0.9 \
\hline 4 & 1.1 \
\hline 2 & 1.3 \
\hline
\end{array}$$
-The above table has the demand for money schedule.
a) If the Fed supplies $1.1 trillion dollars,what is the equilibrium interest rate?
b) Discuss how equilibrium is restored if the interest rate is greater than the equilibrium rate found in part (a).

Accepted Answer

a)The equilibrium interest rate is 4 per

Question 11

Cigarettes served as money in some POW camps during World War II.Given this fact,we would expect to observe

Accepted Answer

A)  no one ever smoking a cigarette. 
B)  people usually resorting to barter rather than using cigarettes as money. 
C)  prices of other goods expressed in terms of cigarettes. 
D)  only government-issued cigarettes being accepted as money. 
A)  no one ever smoking a cigarette. 
B)  people usually resorting to barter rather than using cigarettes as money. 
C)  prices of other goods expressed in terms of cigarettes. 
D)  only government-issued cigarettes being accepted as money.

Question 12

When Patty uses money to buy her lunch,she is showing the use of money as a "store of value."

Accepted Answer

A) True 
 B)False

Question 13

-In the figure above,if the interest rate is 4 percent,there is a $0.1 trillion excess

Accepted Answer

A)  quantity of money and bond prices will rise. 
B)  quantity of money and bond prices will fall. 
C)  demand for money and bond prices will fall. 
D)  demand for money and bond prices will rise. 
A)  quantity of money and bond prices will rise. 
B)  quantity of money and bond prices will fall. 
C)  demand for money and bond prices will fall. 
D)  demand for money and bond prices will rise.

Question 14

The Federal Open Market Committee

Accepted Answer

A)  meets weekly to set Fed policy. 
B)  has 7 voting members. 
C)  always includes the president of the Federal Reserve Bank of New York as a member. 
D)  does not include any members of the Board of Governors. 
A)  meets weekly to set Fed policy. 
B)  has 7 voting members. 
C)  always includes the president of the Federal Reserve Bank of New York as a member. 
D)  does not include any members of the Board of Governors.

Question 15

The initial impact of the Fed's open market sale of government securities to banks is

Accepted Answer

A)  an increase in the quantity of money by some multiple of the dollar volume of the sale. 
B)  an increase in bank deposits at the Fed. 
C)  a decrease in the quantity of money by some multiple of the dollar volume of the sale. 
D)  a decrease of the banking system's reserve deposits at the Fed. 
A)  an increase in the quantity of money by some multiple of the dollar volume of the sale. 
B)  an increase in bank deposits at the Fed. 
C)  a decrease in the quantity of money by some multiple of the dollar volume of the sale. 
D)  a decrease of the banking system's reserve deposits at the Fed.

Question 16

How has growth in M2 minus the growth in real GDP compared to the inflation rate in the United States?

Accepted Answer

Since 1960,M2 growth minus the growth in

Question 17

A bank can only make a loan if it has

Accepted Answer

A)  excess reserves. 
B)  a creditworthy customer willing to pay a high interest rate. 
C)  permission from the Federal Reserve. 
D)  reserves equal to its deposits. 
A)  excess reserves. 
B)  a creditworthy customer willing to pay a high interest rate. 
C)  permission from the Federal Reserve. 
D)  reserves equal to its deposits.

Question 18

Which function of money refers to the use of money to state the prices of goods and services?

Accepted Answer

A)  medium of exchange 
B)  unit of account 
C)  store of value 
D)  means of payment 
A)  medium of exchange 
B)  unit of account 
C)  store of value 
D)  means of payment

Question 19

-Use the figure above to answer this question.Suppose the economy is operating at point a.A move to ________ could be explained by ________.

Accepted Answer

A)  point c; an increase in the use of credit cards 
B)  point b; an increase in real GDP 
C)  point b; an increase in the nominal interest rate 
D)  point e; an increase in U.S. exports 
A)  point c; an increase in the use of credit cards 
B)  point b; an increase in real GDP 
C)  point b; an increase in the nominal interest rate 
D)  point e; an increase in U.S. exports

Question 20

Which Federal Reserve Bank president is always on the Federal Open Market Committee?

Accepted Answer

A)  New York 
B)  Chicago 
C)  St. Louis 
D)  Boston 
A)  New York 
B)  Chicago 
C)  St. Louis 
D)  Boston

The functions of money are

Monetary policy is conducted

Financial innovations can have the effect of

If the Fed sells $100 million of U.S.government securities,what happens to the quantity of money?

The discount rate is the interest rate that

The table below shows data for Indonesia. Real GDP growth rate 4.5 6.0 Inflation rate 4.8 5.7 Assuming the rate of velocity change is constant,the money growth rate in Indonesia was

Federal Reserve policy tools include all of the following EXCEPT

Checks money and credit cards money.

A bank's reserves include

Cigarettes served as money in some POW camps during World War II.Given this fact,we would expect to observe

When Patty uses money to buy her lunch,she is showing the use of money as a "store of value."

-In the figure above,if the interest rate is 4 percent,there is a $0.1 trillion excess

The Federal Open Market Committee

The initial impact of the Fed's open market sale of government securities to banks is

How has growth in M2 minus the growth in real GDP compared to the inflation rate in the United States?

A bank can only make a loan if it has

Which function of money refers to the use of money to state the prices of goods and services?

-Use the figure above to answer this question.Suppose the economy is operating at point a.A move to could be explained by .

Which Federal Reserve Bank president is always on the Federal Open Market Committee?

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

Exam 8: Money, The Price Level, and Inflation

The functions of money are

Monetary policy is conducted

Financial innovations can have the effect of

If the Fed sells $100 million of U.S.government securities,what happens to the quantity of money?

The discount rate is the interest rate that

The table below shows data for Indonesia. Real GDP growth rate 4.5 6.0 Inflation rate 4.8 5.7 Assuming the rate of velocity change is constant,the money growth rate in Indonesia was

Federal Reserve policy tools include all of the following EXCEPT

Checks ________ money and credit cards ________ money.

A bank's reserves include

Cigarettes served as money in some POW camps during World War II.Given this fact,we would expect to observe

When Patty uses money to buy her lunch,she is showing the use of money as a "store of value."

-In the figure above,if the interest rate is 4 percent,there is a $0.1 trillion excess

The Federal Open Market Committee

The initial impact of the Fed's open market sale of government securities to banks is

How has growth in M2 minus the growth in real GDP compared to the inflation rate in the United States?

A bank can only make a loan if it has

Which function of money refers to the use of money to state the prices of goods and services?

-Use the figure above to answer this question.Suppose the economy is operating at point a.A move to ________ could be explained by ________.

Which Federal Reserve Bank president is always on the Federal Open Market Committee?

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

Checks money and credit cards money.

-Use the figure above to answer this question.Suppose the economy is operating at point a.A move to could be explained by .