Question 1

Examples of thrift institutions include

Accepted Answer

A)  savings deposits and checking deposits. 
B)  commercial banks, savings and loan associations, and insurance companies. 
C)  savings and loan associations, savings banks, and credit unions. 
D)  money market mutual funds, commercial banks, and credit unions. 
A)  savings deposits and checking deposits. 
B)  commercial banks, savings and loan associations, and insurance companies. 
C)  savings and loan associations, savings banks, and credit unions. 
D)  money market mutual funds, commercial banks, and credit unions.

Question 2

A bank cannot create money unless its ________.

Accepted Answer

A)  required reserves are greater than actual reserves 
B)  excess reserves are zero 
C)  desired reserves are greater than actual reserves 
D)  excess reserves equal deposits multiplied by the reserve ratio 
A)  required reserves are greater than actual reserves 
B)  excess reserves are zero 
C)  desired reserves are greater than actual reserves 
D)  excess reserves equal deposits multiplied by the reserve ratio

Question 3

Which of the following is a liability of the Federal Reserve?

Accepted Answer

A)  Federal Reserve notes 
B)  loans to depository institutions 
C)  U.S. government securities 
D)  U.S. coins 
A)  Federal Reserve notes 
B)  loans to depository institutions 
C)  U.S. government securities 
D)  U.S. coins

Question 4

When the Fed buys securities from a bank,what happens to the monetary base and the quantity of money?
Which changes by more or do both change by the same amount?

Accepted Answer

When the Fed buys securities from a bank

Question 5

The risk of making a loan is

Accepted Answer

A)  earning profits that are too high and cause higher taxes. 
B)  the risk that lender does not pay. 
C)  the risk that the borrower does not pay. 
D)  called "default risk" when taxes are not paid. 
A)  earning profits that are too high and cause higher taxes. 
B)  the risk that lender does not pay. 
C)  the risk that the borrower does not pay. 
D)  called "default risk" when taxes are not paid.

Question 6

The demand for nominal money

Accepted Answer

A)  increases as the price level increases. 
B)  decreases as the price level increases. 
C)  depends on the quantity of money. 
D)  is the same as the demand for real money. 
A)  increases as the price level increases. 
B)  decreases as the price level increases. 
C)  depends on the quantity of money. 
D)  is the same as the demand for real money.

Question 7

When price levels rise,the quantity of nominal money demanded will ________ and the quantity of real money demanded will ________.

Accepted Answer

A)  increase; stay the same 
B)  increase; increase 
C)  increase; decrease 
D)  decrease; increase 
A)  increase; stay the same 
B)  increase; increase 
C)  increase; decrease 
D)  decrease; increase

Question 8

Which of the following counts as part of money?

Accepted Answer

A)  $10,000 of gold bars 
B)  $10,000 of government bonds 
C)  $10,000 in a checking account 
D)  $10,000 of corporate bonds 
A)  $10,000 of gold bars 
B)  $10,000 of government bonds 
C)  $10,000 in a checking account 
D)  $10,000 of corporate bonds

Question 9

Other things constant,the quantity theory of money concludes that any increase in the quantity of money

Accepted Answer

A)  decreases the demand for money. 
B)  decreases in the aggregate price level. 
C)  decreases the aggregate level of nominal income. 
D)  proportionally increases the price level. 
A)  decreases the demand for money. 
B)  decreases in the aggregate price level. 
C)  decreases the aggregate level of nominal income. 
D)  proportionally increases the price level.

Question 10

The quantity theory of money predicts how changes in

Accepted Answer

A)  the price level affect nominal GDP. 
B)  the price level affect real GDP. 
C)  the quantity of money affect the price level. 
D)  real GDP affect the nominal GDP. 
A)  the price level affect nominal GDP. 
B)  the price level affect real GDP. 
C)  the quantity of money affect the price level. 
D)  real GDP affect the nominal GDP.

Question 11

The monetary base consists of

Accepted Answer

A)  the quantity of money. 
B)  the sum of Federal Reserve notes, coins, and depository institutions' deposits at the Fed. 
C)  demand deposits and vault cash. 
D)  government securities held by the Fed. 
A)  the quantity of money. 
B)  the sum of Federal Reserve notes, coins, and depository institutions' deposits at the Fed. 
C)  demand deposits and vault cash. 
D)  government securities held by the Fed.

Question 12

When a bank has excess reserves

Accepted Answer

A)  it can create money. 
B)  it can make loans. 
C)  it has too many loans. 
D)  Both answers A and B are correct. 
A)  it can create money. 
B)  it can make loans. 
C)  it has too many loans. 
D)  Both answers A and B are correct.

Question 13

Which of the following is NOT part of the monetary base?

Accepted Answer

A)  Federal Reserve notes 
B)  reserves of depository institutions at the Fed 
C)  the public's checking deposits at commercial banks 
D)  coins 
A)  Federal Reserve notes 
B)  reserves of depository institutions at the Fed 
C)  the public's checking deposits at commercial banks 
D)  coins

Question 14

When a depository institution pools risk,it

Accepted Answer

A)  buys short and lends long. 
B)  borrows reserves from the Federal Reserve. 
C)  spreads loan losses across many depositors so that no one depositor faces a high degree of risk. 
D)  makes loans to just one firm. 
A)  buys short and lends long. 
B)  borrows reserves from the Federal Reserve. 
C)  spreads loan losses across many depositors so that no one depositor faces a high degree of risk. 
D)  makes loans to just one firm.

Question 15

"By definition,all parts of M2 are money." Is the previous statement correct or not?
Explain your answer.

Accepted Answer

The statement is incorrect.Many of the a

Question 16

-In the above figure,suppose the economy is at point a.If there is an increase in real GDP,there is a movement to point such as

Accepted Answer

A)  b. 
B)  c. 
C)  d. 
D)  e. 
A)  b. 
B)  c. 
C)  d. 
D)  e.

Question 17

The inflation rate in Venezuela has increased between 2005 and 2010,rising from 14 percent per year to 31 percent per year. At the same time,the growth rate of real GDP fell from 10 percent per year to -2.6 percent per year. The quantity theory of money

Accepted Answer

A)  states that the inflation rate over the period would average 4 percent. 
B)  predicts that the velocity of money will decrease over the period. 
C)  states that the growth rate of money must have increased over the period. 
D)  predicts that nominal GDP will decrease over the period. 
A)  states that the inflation rate over the period would average 4 percent. 
B)  predicts that the velocity of money will decrease over the period. 
C)  states that the growth rate of money must have increased over the period. 
D)  predicts that nominal GDP will decrease over the period.

Question 18

The ________ rate is the interest rate at which the Fed lends ________ to depository institutions.

Accepted Answer

A)  discount rate; reserves 
B)  discount rate; gold 
C)  federal funds rate; deposits 
D)  federal funds rate; reserves 
A)  discount rate; reserves 
B)  discount rate; gold 
C)  federal funds rate; deposits 
D)  federal funds rate; reserves

Question 19

The commercial banks in Lendland have
 $$\begin{array} { l l } 
\text { Reserves } & \$ 400 \text { million } \
\text { Loans } & \$ 3,600 \text { million } \
\text { Deposits } & \$ 4,000 \text { million } \
\text { Total assets } & \$ 4,600 \text { million }
\end{array}$$ 
The banks hold no excess reserves.
a) Calculate the banks' reserve ratio.
b) An immigrant arrives in Lendland with $5 million,which he deposits in a bank.How much does the immigrant's bank lend initially?

Accepted Answer

a)With no excess reserves,the desired re

Question 20

This group consists of seven members appointed by the President of the United States for 14-year terms:

Accepted Answer

A)  the presidents of the Federal Reserve Banks. 
B)  the members of the Federal Open Market Committee. 
C)  the members of the Board of Governors of the Federal Reserve System. 
D)  None of the above answers are correct. 
A)  the presidents of the Federal Reserve Banks. 
B)  the members of the Federal Open Market Committee. 
C)  the members of the Board of Governors of the Federal Reserve System. 
D)  None of the above answers are correct.

Examples of thrift institutions include

A bank cannot create money unless its ________.

Which of the following is a liability of the Federal Reserve?

When the Fed buys securities from a bank,what happens to the monetary base and the quantity of money? Which changes by more or do both change by the same amount?

The risk of making a loan is

The demand for nominal money

When price levels rise,the quantity of nominal money demanded will and the quantity of real money demanded will .

Which of the following counts as part of money?

Other things constant,the quantity theory of money concludes that any increase in the quantity of money

The quantity theory of money predicts how changes in

The monetary base consists of

When a bank has excess reserves

Which of the following is NOT part of the monetary base?

When a depository institution pools risk,it

"By definition,all parts of M2 are money." Is the previous statement correct or not? Explain your answer.

-In the above figure,suppose the economy is at point a.If there is an increase in real GDP,there is a movement to point such as

The inflation rate in Venezuela has increased between 2005 and 2010,rising from 14 percent per year to 31 percent per year. At the same time,the growth rate of real GDP fell from 10 percent per year to -2.6 percent per year. The quantity theory of money

The rate is the interest rate at which the Fed lends to depository institutions.

This group consists of seven members appointed by the President of the United States for 14-year terms:

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

Examples of thrift institutions include

A bank cannot create money unless its ________.

Which of the following is a liability of the Federal Reserve?

When the Fed buys securities from a bank,what happens to the monetary base and the quantity of money? Which changes by more or do both change by the same amount?

The risk of making a loan is

The demand for nominal money

When price levels rise,the quantity of nominal money demanded will ________ and the quantity of real money demanded will ________.

Which of the following counts as part of money?

Other things constant,the quantity theory of money concludes that any increase in the quantity of money

The quantity theory of money predicts how changes in

The monetary base consists of

When a bank has excess reserves

Which of the following is NOT part of the monetary base?

When a depository institution pools risk,it

"By definition,all parts of M2 are money." Is the previous statement correct or not? Explain your answer.

-In the above figure,suppose the economy is at point a.If there is an increase in real GDP,there is a movement to point such as

The inflation rate in Venezuela has increased between 2005 and 2010,rising from 14 percent per year to 31 percent per year. At the same time,the growth rate of real GDP fell from 10 percent per year to -2.6 percent per year. The quantity theory of money

The ________ rate is the interest rate at which the Fed lends ________ to depository institutions.

This group consists of seven members appointed by the President of the United States for 14-year terms:

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

When price levels rise,the quantity of nominal money demanded will and the quantity of real money demanded will .

The rate is the interest rate at which the Fed lends to depository institutions.