Question 1

The quantity of money people want to hold increases if

Accepted Answer

A)  the price level falls. 
B)  the nominal interest rate rises. 
C)  real GDP increases. 
D)  All of the above answers are correct. 
A)  the price level falls. 
B)  the nominal interest rate rises. 
C)  real GDP increases. 
D)  All of the above answers are correct.

Question 2

The First National Bank of Townville has $125,000 in U.S.government securities,$200,000 in savings accounts,$300,000 in checking accounts,$50,000 in its reserve account at the Fed,$10,000 of currency in its vault,and loans of $250,000.What is the amount of its reserves?

Accepted Answer

Reserves include the bank's de

Question 3

A savings bank is a depository institution that ________.

Accepted Answer

A)  sells shares which it uses to purchase shares in U.S. Treasury bills 
B)  makes mostly home-purchase loans 
C)  is owned by a social or economic group 
D)  makes mostly consumer loans 
A)  sells shares which it uses to purchase shares in U.S. Treasury bills 
B)  makes mostly home-purchase loans 
C)  is owned by a social or economic group 
D)  makes mostly consumer loans

Question 4

The most direct way in which money replaces barter is through its use as a

Accepted Answer

A)  medium of exchange. 
B)  recording device. 
C)  store of value. 
D)  unit of account. 
A)  medium of exchange. 
B)  recording device. 
C)  store of value. 
D)  unit of account.

Question 5

-In the figure above,if the interest rate is 6 percent,

Accepted Answer

A)  there is a $0.1 trillion excess quantity of money and the interest rate will rise. 
B)  there is a $0.1 trillion excess quantity of money and the interest rate will fall. 
C)  the money market is in equilibrium and the interest rate will remain constant. 
D)  there is a $0.1 trillion excess demand for money and the interest rate will rise. 
A)  there is a $0.1 trillion excess quantity of money and the interest rate will rise. 
B)  there is a $0.1 trillion excess quantity of money and the interest rate will fall. 
C)  the money market is in equilibrium and the interest rate will remain constant. 
D)  there is a $0.1 trillion excess demand for money and the interest rate will rise.

Question 6

$\begin{array}{|l|l|}
\hline {\text { Assets }} &{\text { Liabilities }} \
\hline \text { Reserves } & \
\$ 400 & \text { Deposits } \
\text { Loans } & \$ 1,200 \
\$ 800 & \
\text { Total } & \text { Total } \
\$ 1,200 & \$ 1,200\
\hline 
\end{array}$ 
-In the balance sheet above,the entries are in millions of dollars for the FBN Bank.If the desired reserve ratio on deposits is 10 percent,FBN Bank can loan an additional

Accepted Answer

A)  $280 million. 
B)  $200 million. 
C)  $100 million. 
D)  $0. 
A)  $280 million. 
B)  $200 million. 
C)  $100 million. 
D)  $0.

Question 7

The banking system has just experienced an increase in deposits of $50,000. The currency drain ratio is 20 percent and the desired reserve ratio is 10 percent.What does the money multiplier equal?

Accepted Answer

A)  4.00 
B)  3.33 
C)  0.25 
D)  10.00 
A)  4.00 
B)  3.33 
C)  0.25 
D)  10.00

Question 8

An increase in ________ decreases the quantity of money people want to hold.

Accepted Answer

A)  the price level 
B)  real GDP 
C)  the interest rate 
D)  the quantity of money 
A)  the price level 
B)  real GDP 
C)  the interest rate 
D)  the quantity of money

Question 9

There is a movement along the demand for money curve if

Accepted Answer

A)  the nominal interest rate rises. 
B)  there is an economic expansion so that real GDP increases. 
C)  banking customers use ATM machines more. 
D)  the price level increases. 
A)  the nominal interest rate rises. 
B)  there is an economic expansion so that real GDP increases. 
C)  banking customers use ATM machines more. 
D)  the price level increases.

Question 10

A bank with $100 million in deposits has $15 million of cash in the bank,$10 million in deposits with the Fed,and $15 million in government securities in its vault.Its total reserves equal

Accepted Answer

A)  $10 million. 
B)  $15 million. 
C)  $25 million. 
D)  $40 million. 
A)  $10 million. 
B)  $15 million. 
C)  $25 million. 
D)  $40 million.

Question 11

The table below shows the data (in millions) for Wells Fargo Bank in September 2007 and September 2008.Suppose that the required reserve ratio is 3 percent. $$\begin{array} { | c | c | c | } 
\hline & 2007 & 2008 \
\hline \text { Loans } & 79 & 100 \
\hline \text { Reserves } & 11 & 11 \
\hline \text { Deposits } & 247 & 266 \
\hline
\end{array}$$
The data show that Wells Fargo

Accepted Answer

A)  the reserve ratio did not change. 
B)  had fewer excess reserves in 2007. 
C)  the reserve ratio increased as loans increased. 
D)  had fewer excess reserves in 2008. 
A)  the reserve ratio did not change. 
B)  had fewer excess reserves in 2007. 
C)  the reserve ratio increased as loans increased. 
D)  had fewer excess reserves in 2008.

Question 12

What is the discount rate?

Accepted Answer

The discount rate is the inter

Question 13

In comparing growth rates of money growth and inflation across countries,the long-run proposition of the quantity theory of money is supported.

Accepted Answer

A) True 
 B)False

Question 14

Most of the day-to-day power in monetary policy decisions lies with

Accepted Answer

A)  the President of the United States 
B)  the Senate Banking Committee 
C)  the chairman of the Board of Governors 
D)  large commercial banks 
A)  the President of the United States 
B)  the Senate Banking Committee 
C)  the chairman of the Board of Governors 
D)  large commercial banks

Question 15

What is the structure of the Federal Reserve Bank System?

Accepted Answer

The key elements in the structure of the

Question 16

How would a widespread adoption of credit cards affect the demand for money and the demand for money curve?

Accepted Answer

The widespread adoption of cre

Question 17

Define the quantity theory of money and show how it is related to the equation of exchange.

Accepted Answer

The quantity theory of money is the prop

Question 18

In October of 2012,the nominal interest rate earned on money market accounts was around 0.40 percent.This interest rate is a measure of which of the following?

Accepted Answer

A)  the opportunity cost of holding money 
B)  the inflation rate 
C)  the demand for money 
D)  the real interest rate 
A)  the opportunity cost of holding money 
B)  the inflation rate 
C)  the demand for money 
D)  the real interest rate

Question 19

The demand for money curve is the relationship between ________ and ________,other things remaining the same.

Accepted Answer

A)  the quantity of real money demanded; the quantity of real money supplied 
B)  the quantity of money demanded; the real interest rate 
C)  the money demanded; the money supplied 
D)  the quantity of real money demanded; the nominal interest rate 
A)  the quantity of real money demanded; the quantity of real money supplied 
B)  the quantity of money demanded; the real interest rate 
C)  the money demanded; the money supplied 
D)  the quantity of real money demanded; the nominal interest rate

Question 20

The main policy-making body of the Federal Reserve System is the Federal Open Market committee.

Accepted Answer

A) True 
 B)False

The quantity of money people want to hold increases if

The First National Bank of Townville has $125,000 in U.S.government securities,$200,000 in savings accounts,$300,000 in checking accounts,$50,000 in its reserve account at the Fed,$10,000 of currency in its vault,and loans of $250,000.What is the amount of its reserves?

A savings bank is a depository institution that ________.

The most direct way in which money replaces barter is through its use as a

-In the figure above,if the interest rate is 6 percent,

Assets Liabilities Reserves \ 400 Deposits Loans \ 1,200 \ 800 Total Total \ 1,200 \ 1,200 -In the balance sheet above,the entries are in millions of dollars for the FBN Bank.If the desired reserve ratio on deposits is 10 percent,FBN Bank can loan an additional

The banking system has just experienced an increase in deposits of $50,000. The currency drain ratio is 20 percent and the desired reserve ratio is 10 percent.What does the money multiplier equal?

An increase in ________ decreases the quantity of money people want to hold.

There is a movement along the demand for money curve if

A bank with $100 million in deposits has $15 million of cash in the bank,$10 million in deposits with the Fed,and $15 million in government securities in its vault.Its total reserves equal

The table below shows the data (in millions) for Wells Fargo Bank in September 2007 and September 2008.Suppose that the required reserve ratio is 3 percent. 2007 2008 Loans 79 100 Reserves 11 11 Deposits 247 266 The data show that Wells Fargo

What is the discount rate?

In comparing growth rates of money growth and inflation across countries,the long-run proposition of the quantity theory of money is supported.

Most of the day-to-day power in monetary policy decisions lies with

What is the structure of the Federal Reserve Bank System?

How would a widespread adoption of credit cards affect the demand for money and the demand for money curve?

Define the quantity theory of money and show how it is related to the equation of exchange.

In October of 2012,the nominal interest rate earned on money market accounts was around 0.40 percent.This interest rate is a measure of which of the following?

The demand for money curve is the relationship between and ,other things remaining the same.

The main policy-making body of the Federal Reserve System is 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 quantity of money people want to hold increases if

The First National Bank of Townville has $125,000 in U.S.government securities,$200,000 in savings accounts,$300,000 in checking accounts,$50,000 in its reserve account at the Fed,$10,000 of currency in its vault,and loans of $250,000.What is the amount of its reserves?

A savings bank is a depository institution that ________.

The most direct way in which money replaces barter is through its use as a

-In the figure above,if the interest rate is 6 percent,

Assets Liabilities Reserves \ 400 Deposits Loans \ 1,200 \ 800 Total Total \ 1,200 \ 1,200 -In the balance sheet above,the entries are in millions of dollars for the FBN Bank.If the desired reserve ratio on deposits is 10 percent,FBN Bank can loan an additional

The banking system has just experienced an increase in deposits of $50,000. The currency drain ratio is 20 percent and the desired reserve ratio is 10 percent.What does the money multiplier equal?

An increase in ________ decreases the quantity of money people want to hold.

There is a movement along the demand for money curve if

A bank with $100 million in deposits has $15 million of cash in the bank,$10 million in deposits with the Fed,and $15 million in government securities in its vault.Its total reserves equal

The table below shows the data (in millions) for Wells Fargo Bank in September 2007 and September 2008.Suppose that the required reserve ratio is 3 percent. 2007 2008 Loans 79 100 Reserves 11 11 Deposits 247 266 The data show that Wells Fargo

What is the discount rate?

In comparing growth rates of money growth and inflation across countries,the long-run proposition of the quantity theory of money is supported.

Most of the day-to-day power in monetary policy decisions lies with

What is the structure of the Federal Reserve Bank System?

How would a widespread adoption of credit cards affect the demand for money and the demand for money curve?

Define the quantity theory of money and show how it is related to the equation of exchange.

In October of 2012,the nominal interest rate earned on money market accounts was around 0.40 percent.This interest rate is a measure of which of the following?

The demand for money curve is the relationship between ________ and ________,other things remaining the same.

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

The demand for money curve is the relationship between and ,other things remaining the same.