Question 1

If M = $100, Y = $500 and P = $2, then V is equal to

Accepted Answer

A)  0.10 
B)  1. 
C)  10. 
D)  50. 
A)  0.10 
B)  1. 
C)  10. 
D)  50.

Question 2

The quantity theory of money addresses the

Accepted Answer

A)  long-run effect the quantity of money has on the price level. 
B)  determinants of potential GDP. 
C)  determinants of the equilibrium unemployment rate. 
D)  short-run effect the quantity of money has on the price level. 
A)  long-run effect the quantity of money has on the price level. 
B)  determinants of potential GDP. 
C)  determinants of the equilibrium unemployment rate. 
D)  short-run effect the quantity of money has on the price level.

Question 3

A money market mutual fund is

Accepted Answer

A)  essentially the same as a checking account. 
B)  a time deposit of $100,000 or less. 
C)  a time deposit of more than $100,000. 
D)  a depository institution that sells shares and buys securities such as U.S. Treasury bills. 
A)  essentially the same as a checking account. 
B)  a time deposit of $100,000 or less. 
C)  a time deposit of more than $100,000. 
D)  a depository institution that sells shares and buys securities such as U.S. Treasury bills.

Question 4

Which of the following is the most liquid?

Accepted Answer

A)  the U.S. dollars in your pocket 
B)  the funds in your checking account 
C)  your house 
D)  the funds in your savings account 
A)  the U.S. dollars in your pocket 
B)  the funds in your checking account 
C)  your house 
D)  the funds in your savings account

Question 5

The interest rate banks charge other banks for overnight loans is

Accepted Answer

A)  the federal funds rate. 
B)  targeted by the FDIC. 
C)  higher than interest rates for securities and loans. 
D)  lower than interest rates for loans, but higher than interest rates for securities. 
A)  the federal funds rate. 
B)  targeted by the FDIC. 
C)  higher than interest rates for securities and loans. 
D)  lower than interest rates for loans, but higher than interest rates for securities.

Question 6

The Federal Open Market Committee consists of the

Accepted Answer

A)  Federal Reserve chairman and the other six members of the Board of Governors. 
B)  Federal Reserve branch bank presidents. 
C)  Federal Reserve chairman and the Federal Reserve branch bank presidents. 
D)  Federal Reserve chairman, the other six members of the Board of Governors, and five of the Federal Reserve branch bank presidents. 
A)  Federal Reserve chairman and the other six members of the Board of Governors. 
B)  Federal Reserve branch bank presidents. 
C)  Federal Reserve chairman and the Federal Reserve branch bank presidents. 
D)  Federal Reserve chairman, the other six members of the Board of Governors, and five of the Federal Reserve branch bank presidents.

Question 7

International data supports the quantity theory of money conclusion that high money growth rates are associated with inflation.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is the central bank of the United States?

Accepted Answer

A)  Comptroller of the Currency 
B)  Treasury Department 
C)  Federal Reserve System 
D)  Office of the Budget 
A)  Comptroller of the Currency 
B)  Treasury Department 
C)  Federal Reserve System 
D)  Office of the Budget

Question 9

A decrease in the nominal interest rate ________ the opportunity cost of holding money.

Accepted Answer

A)  increases 
B)  decreases 
C)  can increase or decrease 
D)  None of the above answers is correct because the nominal interest rate does not affect the opportunity cost of holding money. 
A)  increases 
B)  decreases 
C)  can increase or decrease 
D)  None of the above answers is correct because the nominal interest rate does not affect the opportunity cost of holding money.

Question 10

If the interest rate is above the equilibrium interest rate, then

Accepted Answer

A)  there is an excess demand for money. 
B)  the quantity of money demanded exceeds the quantity supplied. 
C)  people will sell bonds and the interest rate will fall. 
D)  people will buy bonds and the interest rate will fall. 
A)  there is an excess demand for money. 
B)  the quantity of money demanded exceeds the quantity supplied. 
C)  people will sell bonds and the interest rate will fall. 
D)  people will buy bonds and the interest rate will fall.

Question 11

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 12

Cigarettes served as money in some POW camps during World War II. Given this fact, we would expect to observe

Accepted Answer

A)  no one ever smoking a cigarette. 
B)  people usually resorting to barter rather than using cigarettes as money. 
C)  prices of other goods expressed in terms of cigarettes. 
D)  only government-issued cigarettes being accepted as money. 
A)  no one ever smoking a cigarette. 
B)  people usually resorting to barter rather than using cigarettes as money. 
C)  prices of other goods expressed in terms of cigarettes. 
D)  only government-issued cigarettes being accepted as money.

Question 13

The opportunity cost of holding money is the nominal interest rate.

Accepted Answer

A) True 
 B)False

Question 14

The monetary policy-making body of the Federal Reserve is the

Accepted Answer

A)  Federal Open Market Committee. 
B)  New York Federal Reserve Bank. 
C)  regional Federal Reserve Banks. 
D)  Board of Governors. 
A)  Federal Open Market Committee. 
B)  New York Federal Reserve Bank. 
C)  regional Federal Reserve Banks. 
D)  Board of Governors.

Question 15

Suppose you cash in a Certificate of Deposit (a small time deposit)to acquire the traveler's checks you'll need for your vacation. What happens to M1 and M2?

Accepted Answer

A)  M1 and M2 both increase. 
B)  M1 stays the same and M2 increases. 
C)  M1 increases and M2 decreases. 
D)  M1 increases and M2 stays the same. 
A)  M1 and M2 both increase. 
B)  M1 stays the same and M2 increases. 
C)  M1 increases and M2 decreases. 
D)  M1 increases and M2 stays the same.

Question 16

The president of which Federal Reserve Bank is always a voting member of the FOMC?

Accepted Answer

The president of the New York Federal Re

Question 17

-In the figure above, if the interest rate is 8 percent, people demand $0.1 trillion

Accepted Answer

A)  less money than the quantity supplied and the interest rate will rise. 
B)  less money than the quantity supplied and the interest rate will fall. 
C)  more money than the quantity supplied and the interest rate will fall. 
D)  more money than the quantity supplied and the interest rate will rise. 
A)  less money than the quantity supplied and the interest rate will rise. 
B)  less money than the quantity supplied and the interest rate will fall. 
C)  more money than the quantity supplied and the interest rate will fall. 
D)  more money than the quantity supplied and the interest rate will rise.

Question 18

Which function of money represents a measure for stating the prices of goods and services?

Accepted Answer

A)  medium of exchange 
B)  unit of account 
C)  store of value 
D)  means of payment 
A)  medium of exchange 
B)  unit of account 
C)  store of value 
D)  means of payment

Question 19

Suppose the quantity of money is greater than the quantity of money demanded. In the short run, what occurs to set the quantity of money equal to the quantity of money demanded?

Accepted Answer

In the money market, the interaction bet

Question 20

In August 2007, Sun Trust Bank has $83 million in loans and $114 million in M1 deposits. If Sun Trust is holding $4 million in reserves, the bank's reserve ratio is

Accepted Answer

A)  $31 million. 
B)  4.8 percent 
C)  3.5 percent. 
D)  72.8 percent. 
A)  $31 million. 
B)  4.8 percent 
C)  3.5 percent. 
D)  72.8 percent.

If M = $100, Y = $500 and P = $2, then V is equal to

The quantity theory of money addresses the

A money market mutual fund is

Which of the following is the most liquid?

The interest rate banks charge other banks for overnight loans is

The Federal Open Market Committee consists of the

International data supports the quantity theory of money conclusion that high money growth rates are associated with inflation.

Which of the following is the central bank of the United States?

A decrease in the nominal interest rate ________ the opportunity cost of holding money.

If the interest rate is above the equilibrium interest rate, then

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.

Cigarettes served as money in some POW camps during World War II. Given this fact, we would expect to observe

The opportunity cost of holding money is the nominal interest rate.

The monetary policy-making body of the Federal Reserve is the

Suppose you cash in a Certificate of Deposit (a small time deposit)to acquire the traveler's checks you'll need for your vacation. What happens to M1 and M2?

The president of which Federal Reserve Bank is always a voting member of the FOMC?

-In the figure above, if the interest rate is 8 percent, people demand $0.1 trillion

Which function of money represents a measure for stating the prices of goods and services?

Suppose the quantity of money is greater than the quantity of money demanded. In the short run, what occurs to set the quantity of money equal to the quantity of money demanded?

In August 2007, Sun Trust Bank has $83 million in loans and $114 million in M1 deposits. If Sun Trust is holding $4 million in reserves, the bank's reserve ratio is

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

If M = $100, Y = $500 and P = $2, then V is equal to

The quantity theory of money addresses the

A money market mutual fund is

Which of the following is the most liquid?

The interest rate banks charge other banks for overnight loans is

The Federal Open Market Committee consists of the

International data supports the quantity theory of money conclusion that high money growth rates are associated with inflation.

Which of the following is the central bank of the United States?

A decrease in the nominal interest rate ________ the opportunity cost of holding money.

If the interest rate is above the equilibrium interest rate, then

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.

Cigarettes served as money in some POW camps during World War II. Given this fact, we would expect to observe

The opportunity cost of holding money is the nominal interest rate.

The monetary policy-making body of the Federal Reserve is the

Suppose you cash in a Certificate of Deposit (a small time deposit)to acquire the traveler's checks you'll need for your vacation. What happens to M1 and M2?

The president of which Federal Reserve Bank is always a voting member of the FOMC?

-In the figure above, if the interest rate is 8 percent, people demand $0.1 trillion

Which function of money represents a measure for stating the prices of goods and services?

Suppose the quantity of money is greater than the quantity of money demanded. In the short run, what occurs to set the quantity of money equal to the quantity of money demanded?

In August 2007, Sun Trust Bank has $83 million in loans and $114 million in M1 deposits. If Sun Trust is holding $4 million in reserves, the bank's reserve ratio is

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