Question 1

(Consider This)Credits cards are:

Accepted Answer

A)  the fastest growing component of the M1 money supply. 
B)  near-monies that are part of the M2 money supply but not the M1 money supply. 
C)  not money,as officially defined. 
D)  also known as time deposits. 
A)  the fastest growing component of the M1 money supply. 
B)  near-monies that are part of the M2 money supply but not the M1 money supply. 
C)  not money,as officially defined. 
D)  also known as time deposits.

Question 2

To say money is socially defined means that:

Accepted Answer

A)  money has been defined in a Constitutional amendment. 
B)  whatever performs the functions of money extremely well is considered to be money. 
C)  the money supply includes all public and private securities purchased by society. 
D)  society,acting through Congress,specifies what shall be included in the money supply. 
A)  money has been defined in a Constitutional amendment. 
B)  whatever performs the functions of money extremely well is considered to be money. 
C)  the money supply includes all public and private securities purchased by society. 
D)  society,acting through Congress,specifies what shall be included in the money supply.

Question 3

The group that sets the Federal Reserve System's policy on buying and selling government securities (bills,notes,and bonds)is the:

Accepted Answer

A)  Federal Deposit Insurance Corporation (FDI
C) . 
B)  Federal Bond Sale Authority. 
C)  Council of Economic Advisers. 
D)  Federal Open Market Committee (FOM
C) . 
A)  Federal Deposit Insurance Corporation (FDI
C) . 
B)  Federal Bond Sale Authority. 
C)  Council of Economic Advisers. 
D)  Federal Open Market Committee (FOM
C) .

Question 4

Assuming no other changes,if balances in money market deposit accounts increase by $50 billion and small-denominated time deposits decrease by $50 billion,the:

Accepted Answer

A)  M1 and M2 money supplies will not change. 
B)  M2 money supply will increase. 
C)  M1 money supply will decline. 
D)  M2 money supply will increase and the M1 money supply will decrease. 
A)  M1 and M2 money supplies will not change. 
B)  M2 money supply will increase. 
C)  M1 money supply will decline. 
D)  M2 money supply will increase and the M1 money supply will decrease.

Question 5

The U.S.Treasury is the only agency authorized to put money into circulation in the U.S.economy.

Accepted Answer

A) True 
 B)False

Question 6

A checking account entry is money because it:

Accepted Answer

A)  is ensured by the Federal Deposit Insurance Corporation. 
B)  has been declared as such by the federal government. 
C)  performs the functions of money. 
D)  can be sold for currency. 
A)  is ensured by the Federal Deposit Insurance Corporation. 
B)  has been declared as such by the federal government. 
C)  performs the functions of money. 
D)  can be sold for currency.

Question 7

An important routine function of the Federal Reserve Bank is to:

Accepted Answer

A)  supervise the liquidation of the assets of bankrupt state banks. 
B)  help large commercial banks develop correspondent relationships with smaller commercial banks. 
C)  advise commercial banks as to the most profitable ways of reinvesting profits. 
D)  provide facilities by which commercial banks and thrift institutions may collect checks. 
A)  supervise the liquidation of the assets of bankrupt state banks. 
B)  help large commercial banks develop correspondent relationships with smaller commercial banks. 
C)  advise commercial banks as to the most profitable ways of reinvesting profits. 
D)  provide facilities by which commercial banks and thrift institutions may collect checks.

Question 8

Which of the following does not explain what backs the money supply in the United States?

Accepted Answer

A)  It is backed by gold. 
B)  It is widely accepted in transactions. 
C)  It is designated "legal tender" by the federal government. 
D)  It is relatively scarce. 
A)  It is backed by gold. 
B)  It is widely accepted in transactions. 
C)  It is designated "legal tender" by the federal government. 
D)  It is relatively scarce.

Question 9

During periods of rapid inflation,money may cease to work as a medium of exchange:

Accepted Answer

A)  unless it has been designated legal tender. 
B)  unless it is backed by gold. 
C)  because it is too scarce for everyone to have enough for transactions. 
D)  because people and businesses will not want to accept it in transactions. 
A)  unless it has been designated legal tender. 
B)  unless it is backed by gold. 
C)  because it is too scarce for everyone to have enough for transactions. 
D)  because people and businesses will not want to accept it in transactions.

Question 10

Banks lost money during the mortgage default crisis because:

Accepted Answer

A)  of defaulted loans to investors in mortgage-backed securities. 
B)  they held mortgage-backed securities they had purchased from investment firms. 
C)  homebuyers defaulted on mortgages held by the banks. 
D)  of all of these reasons. 
A)  of defaulted loans to investors in mortgage-backed securities. 
B)  they held mortgage-backed securities they had purchased from investment firms. 
C)  homebuyers defaulted on mortgages held by the banks. 
D)  of all of these reasons.

Question 11

Small-denominated time deposits,by definition:

Accepted Answer

A)  mature in one month or less. 
B)  mature in one year or less. 
C)  are less than $100,000. 
D)  are held by state and local banks only. 
A)  mature in one month or less. 
B)  mature in one year or less. 
C)  are less than $100,000. 
D)  are held by state and local banks only.

Question 12

Answer the question on the basis of the following table: $\begin{array}{ccc}
\underline{\text { Year }} &\underline{ \text { Price Level} } &\underline{ \text { Value of Dollar }} \
1& 1.00 & \$ 1.00 \
2 & 1.25 & \
3 & 0.80 & \
4& 0.50 &
\end{array}$
 Refer to the table.The value of the dollar in year 4 is:

Accepted Answer

A)  $1.50. 
B)  $0.33. 
C)  $0.50. 
D)  $2.00. 
A)  $1.50. 
B)  $0.33. 
C)  $0.50. 
D)  $2.00.

Question 13

The members of the Federal Reserve Board:

Accepted Answer

A)  serve seven-year terms. 
B)  are appointed by the American Economic Association. 
C)  are elected by votes of the 12 presidents of the Federal Reserve Banks. 
D)  are appointed for 14-year terms. 
A)  serve seven-year terms. 
B)  are appointed by the American Economic Association. 
C)  are elected by votes of the 12 presidents of the Federal Reserve Banks. 
D)  are appointed for 14-year terms.

Question 14

Money market deposit accounts are included in:

Accepted Answer

A)  M1 only. 
B)  M2 only. 
C)  neither M1 nor M2. 
D)  both M1 and M2. 
A)  M1 only. 
B)  M2 only. 
C)  neither M1 nor M2. 
D)  both M1 and M2.

Question 15

Paper money (currency)in the United States is issued by the:

Accepted Answer

A)  U.S.Mint. 
B)  Federal Reserve Banks. 
C)  U.S.Treasury. 
D)  national banks. 
A)  U.S.Mint. 
B)  Federal Reserve Banks. 
C)  U.S.Treasury. 
D)  national banks.

Question 16

The Board of Governors of the Federal Reserve has ____ members.

Accepted Answer

A)  5 
B)  7 
C)  9 
D)  14 
A)  5 
B)  7 
C)  9 
D)  14

Question 17

The various lender-of-last-resort programs implemented by the Fed in response to the financial crisis of 2007 and 2008:

Accepted Answer

A)  severely depleted the assets of the Federal Reserve. 
B)  have been little used,and therefore are ineffective. 
C)  increased the moral hazard problem by limiting losses from bad financial decisions. 
D)  were designed to offset the moral hazard created by the TARP and other bailout programs. 
A)  severely depleted the assets of the Federal Reserve. 
B)  have been little used,and therefore are ineffective. 
C)  increased the moral hazard problem by limiting losses from bad financial decisions. 
D)  were designed to offset the moral hazard created by the TARP and other bailout programs.

Question 18

Research involving industrially advanced countries suggests that:

Accepted Answer

A)  the more independent the central bank,the lower the average annual growth of real GDP. 
B)  the more independent the central bank,the higher the average annual growth of real GDP. 
C)  there is no relationship between the degree of independence of a country's central bank and the growth rate of its real GDP. 
D)  the less independent the central bank,the higher the average annual rate of inflation. 
A)  the more independent the central bank,the lower the average annual growth of real GDP. 
B)  the more independent the central bank,the higher the average annual growth of real GDP. 
C)  there is no relationship between the degree of independence of a country's central bank and the growth rate of its real GDP. 
D)  the less independent the central bank,the higher the average annual rate of inflation.

Question 19

Charter One,Pentagon Federal Credit Union,and Boeing Employees Credit Union are all primarily:

Accepted Answer

A)  commercial banks. 
B)  thrifts. 
C)  insurance companies. 
D)  pension funds. 
A)  commercial banks. 
B)  thrifts. 
C)  insurance companies. 
D)  pension funds.

Question 20

The purchasing power of money and the price level vary:

Accepted Answer

A)  inversely. 
B)  directly during recessions but inversely during inflations. 
C)  directly but not proportionately. 
D)  directly and proportionately. 
A)  inversely. 
B)  directly during recessions but inversely during inflations. 
C)  directly but not proportionately. 
D)  directly and proportionately.

Exam 33: Money, Banking, and Financial Institutions

(Consider This)Credits cards are:

To say money is socially defined means that:

The group that sets the Federal Reserve System's policy on buying and selling government securities (bills,notes,and bonds)is the:

Assuming no other changes,if balances in money market deposit accounts increase by $50 billion and small-denominated time deposits decrease by $50 billion,the:

The U.S.Treasury is the only agency authorized to put money into circulation in the U.S.economy.

A checking account entry is money because it:

An important routine function of the Federal Reserve Bank is to:

Which of the following does not explain what backs the money supply in the United States?

During periods of rapid inflation,money may cease to work as a medium of exchange:

Banks lost money during the mortgage default crisis because:

Small-denominated time deposits,by definition:

Answer the question on the basis of the following table: 1 1.00 \ 1.00 2 1.25 3 0.80 4 0.50 Refer to the table.The value of the dollar in year 4 is:

The members of the Federal Reserve Board:

Money market deposit accounts are included in:

Paper money (currency)in the United States is issued by the:

The Board of Governors of the Federal Reserve has ____ members.

The various lender-of-last-resort programs implemented by the Fed in response to the financial crisis of 2007 and 2008:

Research involving industrially advanced countries suggests that:

Charter One,Pentagon Federal Credit Union,and Boeing Employees Credit Union are all primarily:

The purchasing power of money and the price level vary:

Income Inequality Poverty and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

The Balance of Payments, Exchange Rates, and Trade Deficits

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

The United States and the Global Economy

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