Question 1

Mia puts money into a piggy bank so she can spend it later.What function of money does this illustrate?

Accepted Answer

A)  store of value 
B)  medium of exchange 
C)  unit of account 
D)  None of the above is correct. 
A)  store of value 
B)  medium of exchange 
C)  unit of account 
D)  None of the above is correct.

Question 2

Other things the same,if the Fed raises the discount rate,then banks choose to borrow

Accepted Answer

A)  more from the Fed so reserves increase. 
B)  more from the Fed so reserves decrease. 
C)  less from the Fed so reserves increase. 
D)  less from the Fed so reserves decrease. 
A)  more from the Fed so reserves increase. 
B)  more from the Fed so reserves decrease. 
C)  less from the Fed so reserves increase. 
D)  less from the Fed so reserves decrease.

Question 3

Which of the following lists two things that both decrease the money supply?

Accepted Answer

A)  make open market purchases,raise the reserve requirement 
B)  make open market purchases,lower the reserve requirement 
C)  make open market sales,raise the reserve requirement 
D)  make open market sales,lower the reserve requirement 
A)  make open market purchases,raise the reserve requirement 
B)  make open market purchases,lower the reserve requirement 
C)  make open market sales,raise the reserve requirement 
D)  make open market sales,lower the reserve requirement

Question 4

Scenario 29-2.
The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi.The local unit of currency is the Taz.Aggregate banking statistics show that collectively the banks of Tazi hold 300 million Tazes of required reserves,75 million Tazes of excess reserves,have issued 7,500 million Tazes of deposits,and hold 225 million Tazes of Tazian Treasury bonds.Tazians prefer to use only demand deposits and so all money is on deposit at the bank.
-Refer to Scenario 29-2.Assume that banks desire to continue holding the same ratio of excess reserves to deposits.What is the reserve requirement and the reserve ratio for Tazian Banks?

Accepted Answer

A)  5 percent,8 percent 
B)  4 percent,8 percent 
C)  4 percent,5 percent 
D)  None of the above is correct. 
A)  5 percent,8 percent 
B)  4 percent,8 percent 
C)  4 percent,5 percent 
D)  None of the above is correct.

Question 5

When the Federal Reserve sells assets from its portfolio to the public with the intent of changing the money supply,

Accepted Answer

A)  those assets are government bonds and the Fed's reason for selling them is to increase the money supply. 
B)  those assets are government bonds and the Fed's reason for selling them is to decrease the money supply. 
C)  those assets are items that are included in M2 and the Fed's reason for selling them is to increase the money supply. 
D)  those assets are items that are included in M2 and the Fed's reason for selling them is to decrease the money supply. 
A)  those assets are government bonds and the Fed's reason for selling them is to increase the money supply. 
B)  those assets are government bonds and the Fed's reason for selling them is to decrease the money supply. 
C)  those assets are items that are included in M2 and the Fed's reason for selling them is to increase the money supply. 
D)  those assets are items that are included in M2 and the Fed's reason for selling them is to decrease the money supply.

Question 6

When an economy uses silver as money,then that economy's money

Accepted Answer

A)  serves as a store of value but not as a medium of exchange. 
B)  serves as a medium of exchange but not as a unit of account. 
C)  is fiat money. 
D)  has intrinsic value. 
A)  serves as a store of value but not as a medium of exchange. 
B)  serves as a medium of exchange but not as a unit of account. 
C)  is fiat money. 
D)  has intrinsic value.

Exam 29: The Monetary System

Mia puts money into a piggy bank so she can spend it later.What function of money does this illustrate?

Other things the same,if the Fed raises the discount rate,then banks choose to borrow

Which of the following lists two things that both decrease the money supply?

When the Federal Reserve sells assets from its portfolio to the public with the intent of changing the money supply,

When an economy uses silver as money,then that economy's money

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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