Question 1

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 2

What is barter? What is a double coincidence of wants? How does the existence of money affect barter?

Accepted Answer

Barter is the direct exchange of one goo

Question 3

The discount rate is the interest rate that

Accepted Answer

A)  the Federal Reserve charges when it loans reserves to depository institutions. 
B)  is the lowest rate that banks will charge when lending to their best customers. 
C)  the Federal Reserve charges when it loans to the U.S. Government. 
D)  banks charge when they lend to each other. 
A)  the Federal Reserve charges when it loans reserves to depository institutions. 
B)  is the lowest rate that banks will charge when lending to their best customers. 
C)  the Federal Reserve charges when it loans to the U.S. Government. 
D)  banks charge when they lend to each other.

Question 4

-In the balance sheet for the FBN bank above, the entries are in millions of dollars.. After FBN Bank loans the maximum amount it can, the loans have been spent, and the proceeds have been deposited in other banks, FBN Bank has excess reserves of

Accepted Answer

A)  $360 million. 
B)  $280 million. 
C)  $100 million. 
D)  $0. 
A)  $360 million. 
B)  $280 million. 
C)  $100 million. 
D)  $0.

Question 5

How would a widespread adoption of credit cards affect the demand for money and the demand for money curve?

Accepted Answer

The widespread adoption of cre

Question 6

When real GDP increases, the demand for money

Accepted Answer

A)  increases. 
B)  decreases. 
C)  stays the same. 
D)  we cannot make a prediction without additional information. 
A)  increases. 
B)  decreases. 
C)  stays the same. 
D)  we cannot make a prediction without additional information.

Question 7

Required reserves for a commercial bank

Accepted Answer

A)  are the minimum reserves that a bank must hold to back its deposits. 
B)  are the reserves that a bank plans to hold in the bank's vault. 
C)  are only the money used by the bank tellers. 
D)  consist only of the bank's deposits at the Fed. 
A)  are the minimum reserves that a bank must hold to back its deposits. 
B)  are the reserves that a bank plans to hold in the bank's vault. 
C)  are only the money used by the bank tellers. 
D)  consist only of the bank's deposits at the Fed.

Question 8

An open market operation involves

Accepted Answer

A)  the Federal Reserve's purchase or sale of securities. 
B)  the Federal Reserve's issuance of new stock. 
C)  changing federal income tax rates. 
D)  raising the debt limit of the United States. 
A)  the Federal Reserve's purchase or sale of securities. 
B)  the Federal Reserve's issuance of new stock. 
C)  changing federal income tax rates. 
D)  raising the debt limit of the United States.

Question 9

According to the quantity theory of money, in the long run, an increase in the quantity of money does not change real GDP but does raise the price level.

Accepted Answer

A) True 
 B)False

Question 10

An increase in the currency drain

Accepted Answer

A)  leads to an increase in excess reserves. 
B)  decreases the size of the money multiplier. 
C)  results in an increase in deposits. 
D)  results in an increase in required reserves. 
A)  leads to an increase in excess reserves. 
B)  decreases the size of the money multiplier. 
C)  results in an increase in deposits. 
D)  results in an increase in required reserves.

Question 11

In October of 20142, the interest rate on money market accounts was about 0.2 percent. In 2007, the interest rate on money market accounts was about 4.0 percent. What has been the impact on the demand for money curve from this fall in the interest rate?

Accepted Answer

A)  the money demand curve shifted to the right 
B)  the money demand curve shifted to the left 
C)  there was a downward movement along the demand for money curve 
D)  there was an upward movement along the demand for money curve 
A)  the money demand curve shifted to the right 
B)  the money demand curve shifted to the left 
C)  there was a downward movement along the demand for money curve 
D)  there was an upward movement along the demand for money curve

Question 12

-The above figure has the demand for money curve. Suppose the Fed initially sets the quantity of money equal to $0.6 trillion. Draw the supply of money curve in the figure. What is the equilibrium interest rate? Now suppose the Fed increases the quantity of money to $0.9 trillion. Draw the new supply curve. What is the new equilibrium interest rate?

Accepted Answer

@#IMG-DLM& The initial supply of money curve is MS

Question 13

The money supply, as measured by M1, consists almost entirely of currency.

Accepted Answer

A) True 
 B)False

Question 14

Which Federal Reserve Bank president is always on the Federal Open Market Committee?

Accepted Answer

A)  New York 
B)  Chicago 
C)  St. Louis 
D)  Boston 
A)  New York 
B)  Chicago 
C)  St. Louis 
D)  Boston

Question 15

If the Federal Reserve purchases government securities,

Accepted Answer

A)  banks' reserves will increase. 
B)  the federal funds rate will rise. 
C)  the discount rate will be forced higher. 
D)  None of the above answers is correct because none of the effects occur. 
A)  banks' reserves will increase. 
B)  the federal funds rate will rise. 
C)  the discount rate will be forced higher. 
D)  None of the above answers is correct because none of the effects occur.

Question 16

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

Accepted Answer

A)  currency 
B)  mortgage-backed securities 
C)  U.S. government securities 
D)  U.S. coins 
A)  currency 
B)  mortgage-backed securities 
C)  U.S. government securities 
D)  U.S. coins

Question 17

The quantity theory asserts that real GDP is

Accepted Answer

A)  not influenced by the quantity of money. 
B)  never different from potential GDP. 
C)  equal to nominal GDP multiplied by the quantity of money. 
D)  equal to nominal GDP divided by the quantity of money. 
A)  not influenced by the quantity of money. 
B)  never different from potential GDP. 
C)  equal to nominal GDP multiplied by the quantity of money. 
D)  equal to nominal GDP divided by the quantity of money.

Question 18

Reserves are ________.

Accepted Answer

A)  gold in a bank's vault plus its gold at Federal Reserve banks 
B)  cash in a bank's vault plus its deposits at Federal Reserve banks 
C)  cash in a bank's vault plus its gold at Federal Reserve banks 
D)  cash in a bank's vault plus the cash carried by its customers 
A)  gold in a bank's vault plus its gold at Federal Reserve banks 
B)  cash in a bank's vault plus its deposits at Federal Reserve banks 
C)  cash in a bank's vault plus its gold at Federal Reserve banks 
D)  cash in a bank's vault plus the cash carried by its customers

Question 19

Which of the following institutions is NOT part of the structure of the Federal Reserve system?

Accepted Answer

A)  The Federal Open Market Committee 
B)  The Federal Reserve Banks 
C)  The Board of Governors 
D)  The Federal Government 
A)  The Federal Open Market Committee 
B)  The Federal Reserve Banks 
C)  The Board of Governors 
D)  The Federal Government

Question 20

Which of the following is the most liquid asset?

Accepted Answer

A)  money 
B)  land 
C)  a government bond 
D)  a share of stock 
A)  money 
B)  land 
C)  a government bond 
D)  a share of stock

The Board of Governors of the Federal Reserve System is

What is barter? What is a double coincidence of wants? How does the existence of money affect barter?

The discount rate is the interest rate that

-In the balance sheet for the FBN bank above, the entries are in millions of dollars.. After FBN Bank loans the maximum amount it can, the loans have been spent, and the proceeds have been deposited in other banks, FBN Bank has excess reserves of

How would a widespread adoption of credit cards affect the demand for money and the demand for money curve?

When real GDP increases, the demand for money

Required reserves for a commercial bank

An open market operation involves

According to the quantity theory of money, in the long run, an increase in the quantity of money does not change real GDP but does raise the price level.

An increase in the currency drain

In October of 20142, the interest rate on money market accounts was about 0.2 percent. In 2007, the interest rate on money market accounts was about 4.0 percent. What has been the impact on the demand for money curve from this fall in the interest rate?

The money supply, as measured by M1, consists almost entirely of currency.

Which Federal Reserve Bank president is always on the Federal Open Market Committee?

If the Federal Reserve purchases government securities,

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

The quantity theory asserts that real GDP is

Reserves are ________.

Which of the following institutions is NOT part of the structure of the Federal Reserve system?

Which of the following is the most liquid asset?

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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 8: Money, the Price Level, and Inflation

The Board of Governors of the Federal Reserve System is

What is barter? What is a double coincidence of wants? How does the existence of money affect barter?

The discount rate is the interest rate that

-In the balance sheet for the FBN bank above, the entries are in millions of dollars.. After FBN Bank loans the maximum amount it can, the loans have been spent, and the proceeds have been deposited in other banks, FBN Bank has excess reserves of

How would a widespread adoption of credit cards affect the demand for money and the demand for money curve?

When real GDP increases, the demand for money

Required reserves for a commercial bank

An open market operation involves

According to the quantity theory of money, in the long run, an increase in the quantity of money does not change real GDP but does raise the price level.

An increase in the currency drain

In October of 20142, the interest rate on money market accounts was about 0.2 percent. In 2007, the interest rate on money market accounts was about 4.0 percent. What has been the impact on the demand for money curve from this fall in the interest rate?

The money supply, as measured by M1, consists almost entirely of currency.

Which Federal Reserve Bank president is always on the Federal Open Market Committee?

If the Federal Reserve purchases government securities,

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

The quantity theory asserts that real GDP is

Reserves are ________.

Which of the following institutions is NOT part of the structure of the Federal Reserve system?

Which of the following is the most liquid asset?

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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters