Question 1

Which of the following is NOT included in M1?

Accepted Answer

A)  currency 
B)  checking deposits owned by individuals 
C)  saving deposits 
D)  traveler's checks 
A)  currency 
B)  checking deposits owned by individuals 
C)  saving deposits 
D)  traveler's checks

Question 2

Whenever a bank's actual reserves exceed its desired reserves,the bank

Accepted Answer

A)  can lend out additional funds. 
B)  needs to call in loans. 
C)  will go out of business. 
D)  must increase the amount of its required reserves by obtaining more cash. 
A)  can lend out additional funds. 
B)  needs to call in loans. 
C)  will go out of business. 
D)  must increase the amount of its required reserves by obtaining more cash.

Question 3

Suppose that the interest rate is greater than the equilibrium interest rate.Which of the following occurs?
I. There is an excess quantity of money.
II. The quantity of money automatically increases.
III. The interest rate falls.

Accepted Answer

A)  I 
B)  I and II 
C)  I and III 
D)  I, II and III 
A)  I 
B)  I and II 
C)  I and III 
D)  I, II and III

Question 4

The Board of Governors of the Federal Reserve System consists of

Accepted Answer

A)  7 members appointed by Congress and 7 appointed by the President. 
B)  the presidents of each regional Federal Reserve bank. 
C)  12 members appointed by Congress. 
D)  7 members appointed by the President of the United States. 
A)  7 members appointed by Congress and 7 appointed by the President. 
B)  the presidents of each regional Federal Reserve bank. 
C)  12 members appointed by Congress. 
D)  7 members appointed by the President of the United States.

Question 5

The Chairman of the Fed is appointed by ________.

Accepted Answer

A)  the Board of Governors of the Federal Reserve System 
B)  the President of the United States 
C)  Congress 
D)  the U.S. Senate 
A)  the Board of Governors of the Federal Reserve System 
B)  the President of the United States 
C)  Congress 
D)  the U.S. Senate

Question 6

In February,2010 the U.S.M1 money multiplier crashed to 0.786. Each $1 increase in the monetary base resulted in the quantity of money increasing by only $0.79. Where did the remaining $0.21 disappear?

Accepted Answer

A)  Banks held part of the $0.21 as excess reserves. 
B)  Banks loaned out the $0.21. 
C)  Consumers held part of the $0.21 as currency. 
D)  Both A and C are correct. 
A)  Banks held part of the $0.21 as excess reserves. 
B)  Banks loaned out the $0.21. 
C)  Consumers held part of the $0.21 as currency. 
D)  Both A and C are correct.

Question 7

The quantity theory of money asserts that an increase in the quantity of money

Accepted Answer

A)  will decrease the price level by an offsetting amount. 
B)  by n percent will lead to an increase in the price level by n + 1 percent. 
C)  will lead to an equal percentage increase in real GDP. 
D)  will lead to an equal percentage increase in the price level. 
A)  will decrease the price level by an offsetting amount. 
B)  by n percent will lead to an increase in the price level by n + 1 percent. 
C)  will lead to an equal percentage increase in real GDP. 
D)  will lead to an equal percentage increase in the price level.

Question 8

The demand for money curve shifts rightward if

Accepted Answer

A)  the price level increases. 
B)  real GDP increases. 
C)  the nominal interest rate increases. 
D)  the real interest rate decreases. 
A)  the price level increases. 
B)  real GDP increases. 
C)  the nominal interest rate increases. 
D)  the real interest rate decreases.

Question 9

The money aggregate M1 consists of

Accepted Answer

A)  currency and savings accounts. 
B)  currency and checking deposits, including traveler's checks. 
C)  only checking deposits and time deposits. 
D)  checking accounts, savings accounts and Treasury bills. 
A)  currency and savings accounts. 
B)  currency and checking deposits, including traveler's checks. 
C)  only checking deposits and time deposits. 
D)  checking accounts, savings accounts and Treasury bills.

Question 10

According to the quantity theory,in the long run,an increase in the growth rate of ________ leads to an increase in the ________.

Accepted Answer

A)  real GDP; inflation rate 
B)  the quantity of money; growth rate of real GDP 
C)  the quantity of money; inflation rate 
D)  real GDP; growth rate of velocity 
A)  real GDP; inflation rate 
B)  the quantity of money; growth rate of real GDP 
C)  the quantity of money; inflation rate 
D)  real GDP; growth rate of velocity

Question 11

Which of the following is an example of money functioning as a store of value?

Accepted Answer

A)  Comcast charging $99 for internet, phone and cable service. 
B)  McDonalds charging 99 cents for a burger. 
C)  Your saving your spare change in a jar in order to afford an end-of-term party. 
D)  Amazon.com charging $9.95 for shipping. 
A)  Comcast charging $99 for internet, phone and cable service. 
B)  McDonalds charging 99 cents for a burger. 
C)  Your saving your spare change in a jar in order to afford an end-of-term party. 
D)  Amazon.com charging $9.95 for shipping.

Question 12

-In the figure above,an increase in the monetary base would create a change such as a

Accepted Answer

A)  movement from point a to point b along the supply of money curve MS₀. 
B)  movement from point b to point a along the supply of money curve MS₀. 
C)  shift from the supply of money curve MS₀ to the supply of money curve MS₁. 
D)  shift from the supply of money curve MS₁ to the supply of money curve MS₀. 
A)  movement from point a to point b along the supply of money curve MS₀. 
B)  movement from point b to point a along the supply of money curve MS₀. 
C)  shift from the supply of money curve MS₀ to the supply of money curve MS₁. 
D)  shift from the supply of money curve MS₁ to the supply of money curve MS₀.

Question 13

If the Fed buys $100,000 in U.S.government securities from a commercial bank,the bank now has an additional $100,000 of

Accepted Answer

A)  total assets. 
B)  excess reserves. 
C)  actual reserves. 
D)  net worth. 
A)  total assets. 
B)  excess reserves. 
C)  actual reserves. 
D)  net worth.

Question 14

A decrease in ________ decreases the demand for money.

Accepted Answer

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

Question 15

The Fed buys $100 million of government securities from Bank A.What is the effect on Bank A's balance sheet?

Accepted Answer

A)  Securities decrease by $100 million and reserves increase by $100 million. 
B)  Securities decrease by $100 million and deposits decrease by $100 million. 
C)  Securities increase by $100 million and reserves decrease by $100 million. 
D)  Securities increase by $100 million and reserves increase by $100 million. 
A)  Securities decrease by $100 million and reserves increase by $100 million. 
B)  Securities decrease by $100 million and deposits decrease by $100 million. 
C)  Securities increase by $100 million and reserves decrease by $100 million. 
D)  Securities increase by $100 million and reserves increase by $100 million.

Question 16

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 17

Suppose the quantity of money is greater than the quantity of money demanded.In the short run,what occurs to set the quantity of money equal to the quantity of money demanded?

Accepted Answer

In the money market,the interaction betw

Question 18

In 2006,real GDP in Belgium grew at a 3 percent rate and inflation was 1.8 percent while the population did not change. As a result,there was ________ demand for money curve in Belgium.

Accepted Answer

A)  a rightward shift of the 
B)  a leftward shift of the 
C)  a movement up along the 
D)  no change in the 
A)  a rightward shift of the 
B)  a leftward shift of the 
C)  a movement up along the 
D)  no change in the

Question 19

After you finish your degree,suppose your salary is $52,000 per year. This is an example of using the function of money known as

Accepted Answer

A)  medium of exchange. 
B)  a unit of account. 
C)  a store of value. 
D)  M1. 
A)  medium of exchange. 
B)  a unit of account. 
C)  a store of value. 
D)  M1.

Question 20

TBK Bank Balance Sheet
Assets Liabilities
 $$\begin{array} { |l | l |} 
\hline  \text { Reserves } & \text { Deposits } \
\$120& \$ 600 \
\hline \text { Loans } & \text { Net worth } \
580 & 100 \
\hline \text { Total assets } & \text { Total liabilities } \
\$ 700 & \$ 700 \
\hline
\end{array}$$
-The above table presents the balance sheet of the TBK commercial bank.If the desired reserve ratio is 25 percent,what is this bank's desired reserves?

Accepted Answer

A)  $120 
B)  $150 
C)  $175 
D)  20 percent 
A)  $120 
B)  $150 
C)  $175 
D)  20 percent

Which of the following is NOT included in M1?

Whenever a bank's actual reserves exceed its desired reserves,the bank

Suppose that the interest rate is greater than the equilibrium interest rate.Which of the following occurs? I. There is an excess quantity of money. II. The quantity of money automatically increases. III. The interest rate falls.

The Board of Governors of the Federal Reserve System consists of

The Chairman of the Fed is appointed by ________.

In February,2010 the U.S.M1 money multiplier crashed to 0.786. Each $1 increase in the monetary base resulted in the quantity of money increasing by only $0.79. Where did the remaining $0.21 disappear?

The quantity theory of money asserts that an increase in the quantity of money

The demand for money curve shifts rightward if

The money aggregate M1 consists of

According to the quantity theory,in the long run,an increase in the growth rate of leads to an increase in the .

Which of the following is an example of money functioning as a store of value?

-In the figure above,an increase in the monetary base would create a change such as a

If the Fed buys $100,000 in U.S.government securities from a commercial bank,the bank now has an additional $100,000 of

A decrease in ________ decreases the demand for money.

The Fed buys $100 million of government securities from Bank A.What is the effect on Bank A's balance sheet?

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

Suppose the quantity of money is greater than the quantity of money demanded.In the short run,what occurs to set the quantity of money equal to the quantity of money demanded?

In 2006,real GDP in Belgium grew at a 3 percent rate and inflation was 1.8 percent while the population did not change. As a result,there was ________ demand for money curve in Belgium.

After you finish your degree,suppose your salary is $52,000 per year. This is an example of using the function of money known as

TBK Bank Balance Sheet Assets Liabilities Reserves Deposits \1 20 \ 600 Loans Net worth 580 100 Total assets Total liabilities \ 700 \ 700 -The above table presents the balance sheet of the TBK commercial bank.If the desired reserve ratio is 25 percent,what is this bank's desired reserves?

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

Which of the following is NOT included in M1?

Whenever a bank's actual reserves exceed its desired reserves,the bank

Suppose that the interest rate is greater than the equilibrium interest rate.Which of the following occurs? I. There is an excess quantity of money. II. The quantity of money automatically increases. III. The interest rate falls.

The Board of Governors of the Federal Reserve System consists of

The Chairman of the Fed is appointed by ________.

In February,2010 the U.S.M1 money multiplier crashed to 0.786. Each $1 increase in the monetary base resulted in the quantity of money increasing by only $0.79. Where did the remaining $0.21 disappear?

The quantity theory of money asserts that an increase in the quantity of money

The demand for money curve shifts rightward if

The money aggregate M1 consists of

According to the quantity theory,in the long run,an increase in the growth rate of ________ leads to an increase in the ________.

Which of the following is an example of money functioning as a store of value?

-In the figure above,an increase in the monetary base would create a change such as a

If the Fed buys $100,000 in U.S.government securities from a commercial bank,the bank now has an additional $100,000 of

A decrease in ________ decreases the demand for money.

The Fed buys $100 million of government securities from Bank A.What is the effect on Bank A's balance sheet?

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

Suppose the quantity of money is greater than the quantity of money demanded.In the short run,what occurs to set the quantity of money equal to the quantity of money demanded?

In 2006,real GDP in Belgium grew at a 3 percent rate and inflation was 1.8 percent while the population did not change. As a result,there was ________ demand for money curve in Belgium.

After you finish your degree,suppose your salary is $52,000 per year. This is an example of using the function of money known as

TBK Bank Balance Sheet Assets Liabilities Reserves Deposits \1 20 \ 600 Loans Net worth 580 100 Total assets Total liabilities \ 700 \ 700 -The above table presents the balance sheet of the TBK commercial bank.If the desired reserve ratio is 25 percent,what is this bank's desired reserves?

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

According to the quantity theory,in the long run,an increase in the growth rate of leads to an increase in the .