Question 1

Which of the following defer payments?

Accepted Answer

A)  credit cards and debit cards 
B)  neither credit cards nor debit cards 
C)  credit cards but not debit cards 
D)  debit cards but not credit cards 
A)  credit cards and debit cards 
B)  neither credit cards nor debit cards 
C)  credit cards but not debit cards 
D)  debit cards but not credit cards

Question 2

If an economy used gold as money,its money would be

Accepted Answer

A)  commodity money,but not fiat money. 
B)  fiat money,but not commodity money. 
C)  both fiat and commodity money. 
D)  functioning as a store of value and as a unit of account,but not as a medium of exchange. 
A)  commodity money,but not fiat money. 
B)  fiat money,but not commodity money. 
C)  both fiat and commodity money. 
D)  functioning as a store of value and as a unit of account,but not as a medium of exchange.

Question 3

Today,bank runs are not a major problem for the U.S.banking system because

Accepted Answer

A)  bank runs are now illegal. 
B)  banks now hold 100 percent of their deposits in reserve. 
C)  banks are now all government-operated. 
D)  the federal government now guarantees the safety of deposits at most banks. 
A)  bank runs are now illegal. 
B)  banks now hold 100 percent of their deposits in reserve. 
C)  banks are now all government-operated. 
D)  the federal government now guarantees the safety of deposits at most banks.

Question 4

Which of the following is an example of barter?

Accepted Answer

A)  A parent gives a teenager a $10 bill in exchange for her babysitting services. 
B)  A homeowner gives an exterminator a check for $50 in exchange for extermination services. 
C)  A barber gives a plumber a haircut in exchange for the plumber fixing the barber's leaky faucet. 
D)  All of the above are examples of barter. 
A)  A parent gives a teenager a $10 bill in exchange for her babysitting services. 
B)  A homeowner gives an exterminator a check for $50 in exchange for extermination services. 
C)  A barber gives a plumber a haircut in exchange for the plumber fixing the barber's leaky faucet. 
D)  All of the above are examples of barter.

Question 5

If the reserve ratio is 8 percent,banks do not hold excess reserves,and people do not hold currency,then when the Fed purchases $20 million of government bonds,bank reserves

Accepted Answer

A)  increase by $20 million and the money supply eventually increases by $250 million. 
B)  decrease by $20 million and the money supply eventually increases by $250 million. 
C)  increase by $20 million and the money supply eventually decreases by $250 million. 
D)  decrease by $20 million and the money supply eventually decreases by $250 million. 
A)  increase by $20 million and the money supply eventually increases by $250 million. 
B)  decrease by $20 million and the money supply eventually increases by $250 million. 
C)  increase by $20 million and the money supply eventually decreases by $250 million. 
D)  decrease by $20 million and the money supply eventually decreases by $250 million.

Question 6

When we say that trade is roundabout we mean that

Accepted Answer

A)  people sometimes trade goods for goods. 
B)  trades require a double coincidence of wants. 
C)  currency is accepted primarily to make further trades. 
D)  people must spend time searching for the products they wish to purchase. 
A)  people sometimes trade goods for goods. 
B)  trades require a double coincidence of wants. 
C)  currency is accepted primarily to make further trades. 
D)  people must spend time searching for the products they wish to purchase.

Question 7

Are credit cards and debit cards money? What's the difference between credit and debit cards?

Accepted Answer

Neither credit cards nor debit cards are

Question 8

Under a fractional-reserve banking system,banks

Accepted Answer

A)  hold more reserves than deposits. 
B)  generally lend out a majority of the funds deposited. 
C)  cause the money supply to fall by lending out reserves. 
D)  All of the above are correct. 
A)  hold more reserves than deposits. 
B)  generally lend out a majority of the funds deposited. 
C)  cause the money supply to fall by lending out reserves. 
D)  All of the above are correct.

Question 9

Suppose a bank has a 10 percent reserve requirement,$5,000 in deposits,and has loaned out all it can given the reserve requirement.

Accepted Answer

A)  It has $50 in reserves and $4,950 in loans. 
B)  It has $500 in reserves and $4,500 in loans. 
C)  It has $555 in reserves and $4,445 in loans. 
D)  None of the above is correct. 
A)  It has $50 in reserves and $4,950 in loans. 
B)  It has $500 in reserves and $4,500 in loans. 
C)  It has $555 in reserves and $4,445 in loans. 
D)  None of the above is correct.

Question 10

Demand deposits are a type of

Accepted Answer

A)  checking account. 
B)  time deposit. 
C)  money market mutual fund. 
D)  savings deposit. 
A)  checking account. 
B)  time deposit. 
C)  money market mutual fund. 
D)  savings deposit.

Question 11

Commodity money is

Accepted Answer

A)  backed by gold. 
B)  the principal type of money in use today. 
C)  money with intrinsic value. 
D)  receipts created in international trade that are used as a medium of exchange. 
A)  backed by gold. 
B)  the principal type of money in use today. 
C)  money with intrinsic value. 
D)  receipts created in international trade that are used as a medium of exchange.

Question 12

Which of the following statements about the Federal Reserve is not correct?

Accepted Answer

A)  The members of the Board of Governors are also presidents of the Federal Reserve's regional banks. 
B)  The Federal Open Market Committee makes monetary policy. 
C)  All members of the Board of Governors sit on the Federal Open Market Committee. 
D)  The Federal Reserve serves as a bank regulator. 
A)  The members of the Board of Governors are also presidents of the Federal Reserve's regional banks. 
B)  The Federal Open Market Committee makes monetary policy. 
C)  All members of the Board of Governors sit on the Federal Open Market Committee. 
D)  The Federal Reserve serves as a bank regulator.

Question 13

A sale of government bonds by the Fed

Accepted Answer

A)  increases the money supply and increases the federal funds rate. 
B)  increases the money supply and decreases the federal funds rate. 
C)  decreases the money supply and increases the federal funds rate. 
D)  decreases the money supply and decreases the federal funds rate. 
A)  increases the money supply and increases the federal funds rate. 
B)  increases the money supply and decreases the federal funds rate. 
C)  decreases the money supply and increases the federal funds rate. 
D)  decreases the money supply and decreases the federal funds rate.

Question 14

Which individuals among the following serve four-year terms?

Accepted Answer

A)  the members of the Board of Governors 
B)  the Chair of the Board of Governors 
C)  the members of the FOMC 
D)  All of the above are correct. 
A)  the members of the Board of Governors 
B)  the Chair of the Board of Governors 
C)  the members of the FOMC 
D)  All of the above are correct.

Question 15

The interest rate that the Fed charges banks that borrow reserves from it is the

Accepted Answer

A)  federal funds rate. 
B)  discount rate. 
C)  reserve requirement. 
D)  prime rate. 
A)  federal funds rate. 
B)  discount rate. 
C)  reserve requirement. 
D)  prime rate.

Question 16

Liquidity refers to

Accepted Answer

A)  the ease with which an asset is converted to the medium of exchange. 
B)  a measurement of the intrinsic value of commodity money. 
C)  the suitability of an asset to serve as a store of value. 
D)  how many time a dollar circulates in a given year. 
A)  the ease with which an asset is converted to the medium of exchange. 
B)  a measurement of the intrinsic value of commodity money. 
C)  the suitability of an asset to serve as a store of value. 
D)  how many time a dollar circulates in a given year.

Question 17

Other things the same if reserve requirements are decreased,the reserve ratio

Accepted Answer

A)  decreases,the money multiplier increases,and the money supply decreases. 
B)  increases,the money multiplier increases,and the money supply increases. 
C)  decreases,the money multiplier increases,and the money supply increases. 
D)  increases,the money multiplier increases,and the money supply decreases. 
A)  decreases,the money multiplier increases,and the money supply decreases. 
B)  increases,the money multiplier increases,and the money supply increases. 
C)  decreases,the money multiplier increases,and the money supply increases. 
D)  increases,the money multiplier increases,and the money supply decreases.

Question 18

When the Soviet Union began breaking up in the late 1980s,cigarettes began replacing the ruble as the medium of exchange even though the ruble was legal tender.The cigarettes provide an example of fiat money.

Accepted Answer

A) True 
 B)False

Question 19

On a T-account for a bank,

Accepted Answer

A)  reserves and deposits are both assets. 
B)  reserves are assets and deposits are liabilities. 
C)  deposits are assets and reserves are liabilities. 
D)  reserves and deposits are both liabilities. 
A)  reserves and deposits are both assets. 
B)  reserves are assets and deposits are liabilities. 
C)  deposits are assets and reserves are liabilities. 
D)  reserves and deposits are both liabilities.

Question 20

If people decide to hold more currency relative to deposits,the money supply

Accepted Answer

A)  falls.The Fed could lessen the impact of this by buying Treasury bonds. 
B)  falls.The Fed could lessen the impact of this by selling Treasury bonds. 
C)  rises.The Fed could lessen the impact of this by buying Treasury bonds. 
D)  rises.The Fed could lessen the impact of the by selling Treasury bonds. 
A)  falls.The Fed could lessen the impact of this by buying Treasury bonds. 
B)  falls.The Fed could lessen the impact of this by selling Treasury bonds. 
C)  rises.The Fed could lessen the impact of this by buying Treasury bonds. 
D)  rises.The Fed could lessen the impact of the by selling Treasury bonds.

Exam 29: The Monetary System

Which of the following defer payments?

If an economy used gold as money,its money would be

Today,bank runs are not a major problem for the U.S.banking system because

Which of the following is an example of barter?

If the reserve ratio is 8 percent,banks do not hold excess reserves,and people do not hold currency,then when the Fed purchases $20 million of government bonds,bank reserves

When we say that trade is roundabout we mean that

Are credit cards and debit cards money? What's the difference between credit and debit cards?

Under a fractional-reserve banking system,banks

Suppose a bank has a 10 percent reserve requirement,$5,000 in deposits,and has loaned out all it can given the reserve requirement.

Demand deposits are a type of

Commodity money is

Which of the following statements about the Federal Reserve is not correct?

A sale of government bonds by the Fed

Which individuals among the following serve four-year terms?

The interest rate that the Fed charges banks that borrow reserves from it is the

Liquidity refers to

Other things the same if reserve requirements are decreased,the reserve ratio

When the Soviet Union began breaking up in the late 1980s,cigarettes began replacing the ruble as the medium of exchange even though the ruble was legal tender.The cigarettes provide an example of fiat money.

On a T-account for a bank,

If people decide to hold more currency relative to deposits,the money supply

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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