Question 1

When you use dollar bills to pay for a purchase at a store,money is serving which function?

Accepted Answer

A) A medium of exchange 
B) A measure of value 
C) A store of value 
D) A barter facilitator 
E) All of the above 
A) A medium of exchange 
B) A measure of value 
C) A store of value 
D) A barter facilitator 
E) All of the above

Question 2

When a central bank wants to increase the money supply,it

Accepted Answer

A) Sells bonds 
B) Buys bonds 
C) Sells good and services 
D) Buys goods and services 
E) Does none of the above 
A) Sells bonds 
B) Buys bonds 
C) Sells good and services 
D) Buys goods and services 
E) Does none of the above

Question 3

The discount rate is the ratio of demand deposits to reserves that banks have to maintain.

Accepted Answer

A) True 
 B)False

Question 4

Suppose the legal reserve requirement is 0.20,and a bank has excess reserves of $1,000,000.The ultimate increase in the money supply will be

Accepted Answer

A) $2,000,000 
B) $200,000 
C) $800,000 
D) $5,000,000 
E) $500,000 
A) $2,000,000 
B) $200,000 
C) $800,000 
D) $5,000,000 
E) $500,000

Question 5

The basic money supply is

Accepted Answer

A) Composed of small denomination time deposits plus coin and currency held by the nonbank public 
B) Composed of assets that are completely liquid and easily accessible 
C) Our broadest measure of money 
D) Simply the coins and currency held by the nonbank public 
E) None of the above 
A) Composed of small denomination time deposits plus coin and currency held by the nonbank public 
B) Composed of assets that are completely liquid and easily accessible 
C) Our broadest measure of money 
D) Simply the coins and currency held by the nonbank public 
E) None of the above

Question 6

The US has,over its history,had only one national bank,that is,a Bank of the United States.

Accepted Answer

A) True 
 B)False

Question 7

Throughout the history of the U.S.,until the creation of the Federal Reserve System in 1913,the monetary system was

Accepted Answer

A) Characterized by a series of panics and periods of instability 
B) Under the control of the Second Bank of the United States 
C) The product of the work of President Andrew Jackson 
D) Based upon the English system 
E) Under the supervision of the US Mint 
A) Characterized by a series of panics and periods of instability 
B) Under the control of the Second Bank of the United States 
C) The product of the work of President Andrew Jackson 
D) Based upon the English system 
E) Under the supervision of the US Mint

Question 8

Interest rates increase or decrease so that an equilibrium exists in the money market.

Accepted Answer

A) True 
 B)False

Question 9

Corporations raise funds in

Accepted Answer

A) The money market 
B) The primary financial market 
C) The secondary financial market 
D) Both the primary and secondary financial markets 
E) None of the above 
A) The money market 
B) The primary financial market 
C) The secondary financial market 
D) Both the primary and secondary financial markets 
E) None of the above

Question 10

Money is "liquid" because

Accepted Answer

A) It loses value with inflation 
B) Coins can be melted to use their metal to make goods 
C) It serves as a measure of value 
D) It does not have to be sold to buy goods and services 
E) It is a valuable asset 
A) It loses value with inflation 
B) Coins can be melted to use their metal to make goods 
C) It serves as a measure of value 
D) It does not have to be sold to buy goods and services 
E) It is a valuable asset

Question 11

Prior to the creation of the Federal Reserve System,the money supply

Accepted Answer

A) Was very stable and highly valued 
B) Was comprised of currency printed by the Department of the Treasury 
C) Was produced by local banks and often traded at a discount 
D) Was available only to bank depositors 
E) Was comprised of gold 
A) Was very stable and highly valued 
B) Was comprised of currency printed by the Department of the Treasury 
C) Was produced by local banks and often traded at a discount 
D) Was available only to bank depositors 
E) Was comprised of gold

Question 12

The Open Market Committee of the Federal Reserve System meets regularly to determine the Required Reserve Ratio.

Accepted Answer

A) True 
 B)False

Question 13

The financial crisis that began in 2008 is a result of all of the following except

Accepted Answer

A) The bursting of the dot.com bubble 
B) Problems in the residential real estate market 
C) Changes in accounting rules about asset valuation 
D) Large firms taking on assets whose value was not well determined 
E) Policies that allowed many unqualified homebuyers to receive mortgages that they could not pay 
A) The bursting of the dot.com bubble 
B) Problems in the residential real estate market 
C) Changes in accounting rules about asset valuation 
D) Large firms taking on assets whose value was not well determined 
E) Policies that allowed many unqualified homebuyers to receive mortgages that they could not pay

Question 14

When a person buys a stock on a stock exchange they are participating in

Accepted Answer

A) The money market 
B) The primary financial market 
C) The secondary financial market 
D) Both the primary and secondary financial markets 
E) None of the above 
A) The money market 
B) The primary financial market 
C) The secondary financial market 
D) Both the primary and secondary financial markets 
E) None of the above

Question 15

The Discount Rate charged by the Federal Reserve,is lower for more creditworthy banks.

Accepted Answer

A) True 
 B)False

Question 16

Investment banks assist corporations in issuing stocks and bonds in the primary financial market.

Accepted Answer

A) True 
 B)False

Question 17

Many large banks and Wall Street investment firms got into financial problems due to

Accepted Answer

A) Investments in subprime mortgages 
B) Required payments on credit default swaps 
C) Failures of collateralized debt obligations resulting from home foreclosures 
D) Having to mark down a significant number of their assets due to the "mark to market" accounting requirement 
E) All of the above 
A) Investments in subprime mortgages 
B) Required payments on credit default swaps 
C) Failures of collateralized debt obligations resulting from home foreclosures 
D) Having to mark down a significant number of their assets due to the "mark to market" accounting requirement 
E) All of the above

Question 18

Policy actions that affect changes in the growth rate of the money supply to keep interest rates at levels that promote economic stability and growth are called "fine tuning" policies.

Accepted Answer

A) True 
 B)False

Question 19

Commercial banks are financial intermediaries but insurance companies are not.

Accepted Answer

A) True 
 B)False

Question 20

A subprime mortgage is a mortgage issued to a highly qualified borrower at reduced interest rates.

Accepted Answer

A) True 
 B)False

When you use dollar bills to pay for a purchase at a store,money is serving which function?

When a central bank wants to increase the money supply,it

The discount rate is the ratio of demand deposits to reserves that banks have to maintain.

Suppose the legal reserve requirement is 0.20,and a bank has excess reserves of $1,000,000.The ultimate increase in the money supply will be

The basic money supply is

The US has,over its history,had only one national bank,that is,a Bank of the United States.

Throughout the history of the U.S.,until the creation of the Federal Reserve System in 1913,the monetary system was

Interest rates increase or decrease so that an equilibrium exists in the money market.

Corporations raise funds in

Money is "liquid" because

Prior to the creation of the Federal Reserve System,the money supply

The Open Market Committee of the Federal Reserve System meets regularly to determine the Required Reserve Ratio.

The financial crisis that began in 2008 is a result of all of the following except

When a person buys a stock on a stock exchange they are participating in

The Discount Rate charged by the Federal Reserve,is lower for more creditworthy banks.

Investment banks assist corporations in issuing stocks and bonds in the primary financial market.

Many large banks and Wall Street investment firms got into financial problems due to

Policy actions that affect changes in the growth rate of the money supply to keep interest rates at levels that promote economic stability and growth are called "fine tuning" policies.

Commercial banks are financial intermediaries but insurance companies are not.

A subprime mortgage is a mortgage issued to a highly qualified borrower at reduced interest rates.

Alleviating Human Misery: The Role of Economic Reasoning

Economic Systems, Resource Allocation, and Social Well-Being: Lessons From Chinas Transition

Government Control of Prices in Mixed Systems: Who Are the Winners and Losers

Pollution Problems: Must We Foul Our Own Nests

Economics of Crime and Its Prevention: How Much Is Too Much

The Economics of Education: Crisis and Reform

Poverty Problems and Discrimination: Why Are so Many Still so Poor

The Economics of Monopoly Power: Can Markets Be Controlled

The Economics of Professional Sports: What Is the Real Score

Competition in the Global Market-Place: Should We Protect Ourselves From International Trade

Economic Growth: Why Is the Economic Road so Bumpy

Unemployment and Inflation: Can We Find a Balance

Government Spending,Taxation,and the National Debt: Who Wins and Who Loses

Social Security and Medicare: How Secure Is Our Safety Net for the Elderly

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Exam 12: Money,Banking and the Financial System: Old Problems With New Twists

When you use dollar bills to pay for a purchase at a store,money is serving which function?

When a central bank wants to increase the money supply,it

The discount rate is the ratio of demand deposits to reserves that banks have to maintain.

Suppose the legal reserve requirement is 0.20,and a bank has excess reserves of $1,000,000.The ultimate increase in the money supply will be

The basic money supply is

The US has,over its history,had only one national bank,that is,a Bank of the United States.

Throughout the history of the U.S.,until the creation of the Federal Reserve System in 1913,the monetary system was

Interest rates increase or decrease so that an equilibrium exists in the money market.

Corporations raise funds in

Money is "liquid" because

Prior to the creation of the Federal Reserve System,the money supply

The Open Market Committee of the Federal Reserve System meets regularly to determine the Required Reserve Ratio.

The financial crisis that began in 2008 is a result of all of the following except

When a person buys a stock on a stock exchange they are participating in

The Discount Rate charged by the Federal Reserve,is lower for more creditworthy banks.

Investment banks assist corporations in issuing stocks and bonds in the primary financial market.

Many large banks and Wall Street investment firms got into financial problems due to

Policy actions that affect changes in the growth rate of the money supply to keep interest rates at levels that promote economic stability and growth are called "fine tuning" policies.

Commercial banks are financial intermediaries but insurance companies are not.

A subprime mortgage is a mortgage issued to a highly qualified borrower at reduced interest rates.

Alleviating Human Misery: The Role of Economic Reasoning

Economic Systems, Resource Allocation, and Social Well-Being: Lessons From Chinas Transition

Government Control of Prices in Mixed Systems: Who Are the Winners and Losers

Pollution Problems: Must We Foul Our Own Nests

Economics of Crime and Its Prevention: How Much Is Too Much

The Economics of Education: Crisis and Reform

Poverty Problems and Discrimination: Why Are so Many Still so Poor

The Economics of Monopoly Power: Can Markets Be Controlled

The Economics of Professional Sports: What Is the Real Score

Competition in the Global Market-Place: Should We Protect Ourselves From International Trade

Economic Growth: Why Is the Economic Road so Bumpy

Unemployment and Inflation: Can We Find a Balance

Government Spending,Taxation,and the National Debt: Who Wins and Who Loses

Social Security and Medicare: How Secure Is Our Safety Net for the Elderly

Filters