Question 1

If an increase in the monetary base of $8 billion increases the quantity of money by $64 billion,then the money multiplier is equal to ________.

Accepted Answer

A)  $64 billion 
B)  8 
C)  $8 billion 
D)  1/8 
A)  $64 billion 
B)  8 
C)  $8 billion 
D)  1/8

Question 2

Money is created by

Accepted Answer

A)  government taxation. 
B)  banks taking in deposits. 
C)  banks making loans. 
D)  banks paying for depositor's insurance. 
A)  government taxation. 
B)  banks taking in deposits. 
C)  banks making loans. 
D)  banks paying for depositor's insurance.

Question 3

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Interest rate } \
\text { (percent) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { money } \
\text { (billions of } \
\text { dollars) }
\end{array} & \begin{array} { c } 
\text { Money demand } \
\text { (billions of } \
\text { dollars) }
\end{array} \
\hline 2 & 500 & 575 \
\hline 3 & 500 & 550 \
\hline 4 & 500 & 525 \
\hline 5 & 500 & 500 \
\hline 6 & 500 & 475 \
\hline 7 & 500 & 450 \
\hline
\end{array}$$
-The table above gives the quantity of money and money demand schedules.Suppose that the interest rate is equal to 3 percent.The effect of this interest rate in the money market is that

Accepted Answer

A)  the money market is in equilibrium. 
B)  people buy bonds and the interest rate falls. 
C)  people sell bonds and the interest rate rises. 
D)  bond prices rise so that the interest rate rises. 
A)  the money market is in equilibrium. 
B)  people buy bonds and the interest rate falls. 
C)  people sell bonds and the interest rate rises. 
D)  bond prices rise so that the interest rate rises.

Question 4

The most direct way in which money eliminates the need for a double coincidence of wants is through its use as a medium of exchange.

Accepted Answer

A) True 
 B)False

Question 5

The Board of Governors of the Federal Reserve System is

Accepted Answer

A)  appointed by the Congress. 
B)  elected by the public. 
C)  appointed by the President of the United States and confirmed by the U.S. Senate. 
D)  elected by members of the American Banking Association. 
A)  appointed by the Congress. 
B)  elected by the public. 
C)  appointed by the President of the United States and confirmed by the U.S. Senate. 
D)  elected by members of the American Banking Association.

Question 6

$\begin{array}{|l|c|}
\hline {\text { Component }} & \begin{array}{c}
\text { Amount } \
\text { (billions of dollars) }
\end{array} \
\hline \text { Money market mutual } & 4,400 \
\hline \text { fund deposits } & 1,237 \
\hline \text { Time deposits } & 1,589 \
\hline \text { Savings deposits } & 752 \
\hline \text { Checking deposits } & 609\
\hline 
\end{array}$
-Based on the data in the table above,what is the value of M1?

Accepted Answer

A)  $2,950 billion 
B)  $1,361 billion 
C)  $752 billion 
D)  $609 billion 
A)  $2,950 billion 
B)  $1,361 billion 
C)  $752 billion 
D)  $609 billion

Question 7

Are the members of the Board of Governors of the Federal Reserve System elected officials?

Accepted Answer

No,the members are not elected

Question 8

Which of the following is true regarding the required reserve ratio?

Accepted Answer

A)  The ratio determines the legally required amount of reserves a bank must hold. 
B)  The ratio determines the amount of excess reserves a bank must hold. 
C)  The ratio is only enforced against banks that are operating in a risky manner. 
D)  None of the above answers is correct. 
A)  The ratio determines the legally required amount of reserves a bank must hold. 
B)  The ratio determines the amount of excess reserves a bank must hold. 
C)  The ratio is only enforced against banks that are operating in a risky manner. 
D)  None of the above answers is correct.

Question 9

Which of the following does NOT describe a function of money?

Accepted Answer

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

Question 10

A credit union is

Accepted Answer

A)  a combination of credit card corporations. 
B)  an depository institution owned by members of a particular group. 
C)  a thrift institution that issues credit cards. 
D)  a commercial bank owned by its depositors. 
A)  a combination of credit card corporations. 
B)  an depository institution owned by members of a particular group. 
C)  a thrift institution that issues credit cards. 
D)  a commercial bank owned by its depositors.

Question 11

The Fed buys $50,000 of government securities from Commerce Bank.The desired reserve ratio is 25 percent.What is the change in Commerce Bank's total reserves and its excess reserves?

Accepted Answer

When the Fed buys $50,000 of government

Question 12

What assets are included in M1?
In M2?
Is all of M1 and M2 money?
If some assets of M1 or M2 are not money,why are they included in M1 or M2?

Accepted Answer

M1 is the sum of currency outside of the

Question 13

In Zealand,banks' desired reserve ratio is 20 percent and there is no currency drain.The money multiplier equals ________.

Accepted Answer

A)  0.50 
B)  0.20 
C)  20.0 
D)  5.0 
A)  0.50 
B)  0.20 
C)  20.0 
D)  5.0

Question 14

The Federal Reserve System

Accepted Answer

A)  has officers that are elected, like members of Congress. 
B)  controls the amount of currency in circulation. 
C)  is headquartered in San Francisco. 
D)  was recently declared unconstitutional by the Supreme Court. 
A)  has officers that are elected, like members of Congress. 
B)  controls the amount of currency in circulation. 
C)  is headquartered in San Francisco. 
D)  was recently declared unconstitutional by the Supreme Court.

Question 15

What are the economic functions of depository institutions?

Accepted Answer

Depository institutions provide four eco

Question 16

If Bank A holds $200 in reserves,deposits are $1000,and the desired reserve ratio is 15 percent,how much are excess reserves?

Accepted Answer

A)  zero, because banks never hold excess reserves 
B)  $200 
C)  $50 
D)  $150 
A)  zero, because banks never hold excess reserves 
B)  $200 
C)  $50 
D)  $150

Question 17

As a "central bank," which of the following is true regarding the Fed?
I. The Fed is a public authority that regulates the nation's banks.
II. The Fed is not allowed to provide services to commercial banks like Citibank.
III. The Fed is required to provide banking services to private citizens.

Accepted Answer

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

Question 18

The nation is divided into ________ Federal Reserve districts,each having a Federal Reserve Bank.

Accepted Answer

A)  10 
B)  50 
C)  12 
D)  7 
A)  10 
B)  50 
C)  12 
D)  7

Question 19

$\begin{array}{l|l}
{\text { Assets }} & {\text { Liabilities }} \
\hline \text { Reserves } & \
\$ 30 & \text { Deposits } \
\text { Loans } & \$ 1,000 \
\$ 970 & \
\text { Total } & \text { Total } \
\$ 1,000 & \$ 1,000
\end{array}$ 
-The above table gives the initial balance sheet for Mega Bank.Mega Bank's desired reserves equal its required reserves.Based on the initial balance sheet,what is the required reserve ratio for Mega Bank?

Accepted Answer

A)  3 percent 
B)  10 percent 
C)  30 percent 
D)  1.4 percent 
A)  3 percent 
B)  10 percent 
C)  30 percent 
D)  1.4 percent

Question 20

If the price level doubles,the

Accepted Answer

A)  nominal demand for money increases. 
B)  nominal demand for money decreases. 
C)  real demand for money decreases. 
D)  real demand for money increases. 
A)  nominal demand for money increases. 
B)  nominal demand for money decreases. 
C)  real demand for money decreases. 
D)  real demand for money increases.

If an increase in the monetary base of $8 billion increases the quantity of money by $64 billion,then the money multiplier is equal to ________.

Money is created by

The most direct way in which money eliminates the need for a double coincidence of wants is through its use as a medium of exchange.

The Board of Governors of the Federal Reserve System is

Component Amount (billions of dollars) Money market mutual 4,400 fund deposits 1,237 Time deposits 1,589 Savings deposits 752 Checking deposits 609 -Based on the data in the table above,what is the value of M1?

Are the members of the Board of Governors of the Federal Reserve System elected officials?

Which of the following is true regarding the required reserve ratio?

Which of the following does NOT describe a function of money?

A credit union is

The Fed buys $50,000 of government securities from Commerce Bank.The desired reserve ratio is 25 percent.What is the change in Commerce Bank's total reserves and its excess reserves?

What assets are included in M1? In M2? Is all of M1 and M2 money? If some assets of M1 or M2 are not money,why are they included in M1 or M2?

In Zealand,banks' desired reserve ratio is 20 percent and there is no currency drain.The money multiplier equals ________.

The Federal Reserve System

What are the economic functions of depository institutions?

If Bank A holds $200 in reserves,deposits are $1000,and the desired reserve ratio is 15 percent,how much are excess reserves?

As a "central bank," which of the following is true regarding the Fed? I. The Fed is a public authority that regulates the nation's banks. II. The Fed is not allowed to provide services to commercial banks like Citibank. III. The Fed is required to provide banking services to private citizens.

The nation is divided into ________ Federal Reserve districts,each having a Federal Reserve Bank.

Assets Liabilities Reserves \ 30 Deposits Loans \ 1,000 \ 970 Total Total \ 1,000 \ 1,000 -The above table gives the initial balance sheet for Mega Bank.Mega Bank's desired reserves equal its required reserves.Based on the initial balance sheet,what is the required reserve ratio for Mega Bank?

If the price level doubles,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

If an increase in the monetary base of $8 billion increases the quantity of money by $64 billion,then the money multiplier is equal to ________.

Money is created by

The most direct way in which money eliminates the need for a double coincidence of wants is through its use as a medium of exchange.

The Board of Governors of the Federal Reserve System is

Component Amount (billions of dollars) Money market mutual 4,400 fund deposits 1,237 Time deposits 1,589 Savings deposits 752 Checking deposits 609 -Based on the data in the table above,what is the value of M1?

Are the members of the Board of Governors of the Federal Reserve System elected officials?

Which of the following is true regarding the required reserve ratio?

Which of the following does NOT describe a function of money?

A credit union is

The Fed buys $50,000 of government securities from Commerce Bank.The desired reserve ratio is 25 percent.What is the change in Commerce Bank's total reserves and its excess reserves?

What assets are included in M1? In M2? Is all of M1 and M2 money? If some assets of M1 or M2 are not money,why are they included in M1 or M2?

In Zealand,banks' desired reserve ratio is 20 percent and there is no currency drain.The money multiplier equals ________.

The Federal Reserve System

What are the economic functions of depository institutions?

If Bank A holds $200 in reserves,deposits are $1000,and the desired reserve ratio is 15 percent,how much are excess reserves?

As a "central bank," which of the following is true regarding the Fed? I. The Fed is a public authority that regulates the nation's banks. II. The Fed is not allowed to provide services to commercial banks like Citibank. III. The Fed is required to provide banking services to private citizens.

The nation is divided into ________ Federal Reserve districts,each having a Federal Reserve Bank.

Assets Liabilities Reserves \ 30 Deposits Loans \ 1,000 \ 970 Total Total \ 1,000 \ 1,000 -The above table gives the initial balance sheet for Mega Bank.Mega Bank's desired reserves equal its required reserves.Based on the initial balance sheet,what is the required reserve ratio for Mega Bank?

If the price level doubles,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