Question 1

According to the quantity theory of money,a 10 percent increase in the quantity of money ultimately leads to a 10 percent increase in

Accepted Answer

A)  real national income. 
B)  real GDP. 
C)  the price level. 
D)  velocity. 
A)  real national income. 
B)  real GDP. 
C)  the price level. 
D)  velocity.

Question 2

Barter eliminates the double coincidence of wants.

Accepted Answer

A) True 
 B)False

Question 3

The demand for money curve shifts rightward if

Accepted Answer

A)  the nominal interest rate falls. 
B)  financial innovation creates new substitutes for cash. 
C)  real GDP increases. 
D)  the price level falls. 
A)  the nominal interest rate falls. 
B)  financial innovation creates new substitutes for cash. 
C)  real GDP increases. 
D)  the price level falls.

Question 4

The discount rate is the interest rate

Accepted Answer

A)  that banks charge their best customers. 
B)  that the Fed charges on its last resort loans. 
C)  on interbank lending. 
D)  that bank insurers pay on insured deposits. 
A)  that banks charge their best customers. 
B)  that the Fed charges on its last resort loans. 
C)  on interbank lending. 
D)  that bank insurers pay on insured deposits.

Question 5

Checks and credit cards are NOT considered money because they

Accepted Answer

A)  are issued by banks, not the Federal Reserve. 
B)  are not the means of payment. 
C)  typically require an identification check, such as your driver's license. 
D)  are not backed by all commercial banks. 
A)  are issued by banks, not the Federal Reserve. 
B)  are not the means of payment. 
C)  typically require an identification check, such as your driver's license. 
D)  are not backed by all commercial banks.

Question 6

M2 ________.

Accepted Answer

A)  does not include currency 
B)  does not include traveler's checks 
C)  is a broader measure of money than M1 
D)  does not include checking deposits held at credit unions 
A)  does not include currency 
B)  does not include traveler's checks 
C)  is a broader measure of money than M1 
D)  does not include checking deposits held at credit unions

Question 7

An increase in the nominal interest rate creates a ________ the money demand curve,and an increase in real GDP creates a ________ the money demand curve.

Accepted Answer

A)  movement down along; leftward shift of 
B)  rightward shift of; movement up along 
C)  movement up along; rightward shift of 
D)  leftward shift of; rightward shift of 
A)  movement down along; leftward shift of 
B)  rightward shift of; movement up along 
C)  movement up along; rightward shift of 
D)  leftward shift of; rightward shift of

Question 8

Liquidity is the

Accepted Answer

A)  degree to which an asset acts as money without a loss of value. 
B)  ease with which an asset can be converted into a means of payment with little loss of value. 
C)  degree to which money can be converted into an asset with little loss of value. 
D)  ease with which credit cards are accepted as a means of payment. 
A)  degree to which an asset acts as money without a loss of value. 
B)  ease with which an asset can be converted into a means of payment with little loss of value. 
C)  degree to which money can be converted into an asset with little loss of value. 
D)  ease with which credit cards are accepted as a means of payment.

Question 9

The tools at the disposal of the Fed for changing the quantity of money do NOT include

Accepted Answer

A)  open market operations. 
B)  changing the required reserve ratio. 
C)  changing discount rates. 
D)  increasing the number of commercial banks. 
A)  open market operations. 
B)  changing the required reserve ratio. 
C)  changing discount rates. 
D)  increasing the number of commercial banks.

Question 10

The main policy-making organ of the Federal Reserve System is

Accepted Answer

A)  the Board of Governors. 
B)  the Federal Reserve branch banks. 
C)  the Federal Reserve chairman and the Federal Reserve branch bank presidents. 
D)  the Federal Open Market Committee. 
A)  the Board of Governors. 
B)  the Federal Reserve branch banks. 
C)  the Federal Reserve chairman and the Federal Reserve branch bank presidents. 
D)  the Federal Open Market Committee.

Question 11

What makes up M1?
Is M1 larger or smaller than real GDP?

Accepted Answer

M1 is the sum of currency outside of the

Question 12

A bank has reserves of $50,deposits of $100,loans of $20,and government securities of $30.Assume the desired reserve ratio is 20 percent.
a) How much does the bank have in excess reserves?
b) What can the bank do with its excess reserves?
Name two options.

Accepted Answer

a)The excess reserves are $30,equal to t

Question 13

In a barter system,we would see

Accepted Answer

A)  many different units of money. 
B)  money and goods exchanged for each other. 
C)  wide-spread depository institutions. 
D)  goods traded directly for other goods and services. 
A)  many different units of money. 
B)  money and goods exchanged for each other. 
C)  wide-spread depository institutions. 
D)  goods traded directly for other goods and services.

Question 14

Which of the following is the central bank of the United States?

Accepted Answer

A)  Comptroller of the Currency 
B)  Treasury Department 
C)  Federal Reserve System 
D)  Office of the Budget 
A)  Comptroller of the Currency 
B)  Treasury Department 
C)  Federal Reserve System 
D)  Office of the Budget

Question 15

When the interest rate falls in the money market,the quantity of money demanded ________ and the quantity of money supplied ________.

Accepted Answer

A)  increases; decreases 
B)  decreases; increases 
C)  stays the same; decreases 
D)  increases; stays the same 
A)  increases; decreases 
B)  decreases; increases 
C)  stays the same; decreases 
D)  increases; stays the same

Question 16

Between 2008 and 2009,U.S.real GDP decreased from $13.2 trillion to $12.9 trillion. As a result,the real demand for money ________ and the demand for money curve ________.

Accepted Answer

A)  decreased; shifted leftward 
B)  did not change; did not shift 
C)  increased; shifted leftward 
D)  decreased; shifted rightward. 
A)  decreased; shifted leftward 
B)  did not change; did not shift 
C)  increased; shifted leftward 
D)  decreased; shifted rightward.

Question 17

The Federal Open Market Committee (FOMC)

Accepted Answer

A)  consists of the 12 districts of the Federal Reserve. 
B)  is the 7-member group that oversees the Federal Reserve. 
C)  is the 12-member monetary policy committee of the Federal Reserve. 
D)  is the 50-member organization of state banking regulators of the Federal Reserve. 
A)  consists of the 12 districts of the Federal Reserve. 
B)  is the 7-member group that oversees the Federal Reserve. 
C)  is the 12-member monetary policy committee of the Federal Reserve. 
D)  is the 50-member organization of state banking regulators of the Federal Reserve.

Question 18

An increase in currency held outside the banks is ________.

Accepted Answer

A)  a currency drain 
B)  income 
C)  a currency surplus 
D)  wealth 
A)  a currency drain 
B)  income 
C)  a currency surplus 
D)  wealth

Question 19

The direct exchange of goods and services for other goods and services is known as

Accepted Answer

A)  primitive trade. 
B)  nonmarket trade. 
C)  barter. 
D)  purchasing power trading. 
A)  primitive trade. 
B)  nonmarket trade. 
C)  barter. 
D)  purchasing power trading.

Question 20

The main policy-making organ of the Federal Reserve System is the

Accepted Answer

A)  Board of Governors. 
B)  Federal Reserve bank presidents. 
C)  Federal Open Market Committee. 
D)  Joint Congressional Committee on Monetary Policy. 
A)  Board of Governors. 
B)  Federal Reserve bank presidents. 
C)  Federal Open Market Committee. 
D)  Joint Congressional Committee on Monetary Policy.

According to the quantity theory of money,a 10 percent increase in the quantity of money ultimately leads to a 10 percent increase in

Barter eliminates the double coincidence of wants.

The demand for money curve shifts rightward if

The discount rate is the interest rate

Checks and credit cards are NOT considered money because they

M2 ________.

An increase in the nominal interest rate creates a the money demand curve,and an increase in real GDP creates a the money demand curve.

Liquidity is the

The tools at the disposal of the Fed for changing the quantity of money do NOT include

The main policy-making organ of the Federal Reserve System is

What makes up M1? Is M1 larger or smaller than real GDP?

A bank has reserves of $50,deposits of $100,loans of $20,and government securities of $30.Assume the desired reserve ratio is 20 percent. a) How much does the bank have in excess reserves? b) What can the bank do with its excess reserves? Name two options.

In a barter system,we would see

Which of the following is the central bank of the United States?

When the interest rate falls in the money market,the quantity of money demanded and the quantity of money supplied .

Between 2008 and 2009,U.S.real GDP decreased from $13.2 trillion to $12.9 trillion. As a result,the real demand for money and the demand for money curve .

The Federal Open Market Committee (FOMC)

An increase in currency held outside the banks is ________.

The direct exchange of goods and services for other goods and services is known as

The main policy-making organ of the Federal Reserve System is the

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

According to the quantity theory of money,a 10 percent increase in the quantity of money ultimately leads to a 10 percent increase in

Barter eliminates the double coincidence of wants.

The demand for money curve shifts rightward if

The discount rate is the interest rate

Checks and credit cards are NOT considered money because they

M2 ________.

An increase in the nominal interest rate creates a ________ the money demand curve,and an increase in real GDP creates a ________ the money demand curve.

Liquidity is the

The tools at the disposal of the Fed for changing the quantity of money do NOT include

The main policy-making organ of the Federal Reserve System is

What makes up M1? Is M1 larger or smaller than real GDP?

A bank has reserves of $50,deposits of $100,loans of $20,and government securities of $30.Assume the desired reserve ratio is 20 percent. a) How much does the bank have in excess reserves? b) What can the bank do with its excess reserves? Name two options.

In a barter system,we would see

Which of the following is the central bank of the United States?

When the interest rate falls in the money market,the quantity of money demanded ________ and the quantity of money supplied ________.

Between 2008 and 2009,U.S.real GDP decreased from $13.2 trillion to $12.9 trillion. As a result,the real demand for money ________ and the demand for money curve ________.

The Federal Open Market Committee (FOMC)

An increase in currency held outside the banks is ________.

The direct exchange of goods and services for other goods and services is known as

The main policy-making organ of the Federal Reserve System is the

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

An increase in the nominal interest rate creates a the money demand curve,and an increase in real GDP creates a the money demand curve.

When the interest rate falls in the money market,the quantity of money demanded and the quantity of money supplied .

Between 2008 and 2009,U.S.real GDP decreased from $13.2 trillion to $12.9 trillion. As a result,the real demand for money and the demand for money curve .