Question 1

Which of the following statements is false?

Accepted Answer

A)  Money is the only good that can (or does)serve as a store of value. 
B)  In a barter economy,there is no good that serves as a unit of account. 
C)  There are higher transaction costs of making exchanges in a barter economy than in a money economy. 
D)  Money functions as a medium of exchange,unit of account,and store of value. 
A)  Money is the only good that can (or does)serve as a store of value. 
B)  In a barter economy,there is no good that serves as a unit of account. 
C)  There are higher transaction costs of making exchanges in a barter economy than in a money economy. 
D)  Money functions as a medium of exchange,unit of account,and store of value.

Question 2

If checkable deposits in Bank A total $620 million and the required reserve ratio is 9 percent,then required reserves at Bank A equal

Accepted Answer

A)  $564.2 million. 
B)  $468 million. 
C)  $28.8 million. 
D)  $55.8 million. 
E)  $558 million. 
A)  $564.2 million. 
B)  $468 million. 
C)  $28.8 million. 
D)  $55.8 million. 
E)  $558 million.

Question 3

Which of the following words are synonyms for the word "money"?

Accepted Answer

A)  "income" 
B)  "wealth" 
C)  "credit" 
D)  all of the above are synonyms for the word "money" 
E)  none of the above 
A)  "income" 
B)  "wealth" 
C)  "credit" 
D)  all of the above are synonyms for the word "money" 
E)  none of the above

Question 4

When economists say that banks must hold a percentage of their total deposits in reserve form,what does this mean?

Accepted Answer

A)  It means that banks must hold a fraction of their customers' deposits either as bank deposits at the Federal Reserve,or as vault cash,or both. 
B)  It means that banks reserve the right to turn away customers a certain percentage of the time. 
C)  It means that the fraction of vault cash a bank has cannot be greater than the fraction of bank deposits (it has)at the Federal Reserve. 
D)  Essentially,it means that total reserves are greater than required reserves. 
E)  none of the above 
A)  It means that banks must hold a fraction of their customers' deposits either as bank deposits at the Federal Reserve,or as vault cash,or both. 
B)  It means that banks reserve the right to turn away customers a certain percentage of the time. 
C)  It means that the fraction of vault cash a bank has cannot be greater than the fraction of bank deposits (it has)at the Federal Reserve. 
D)  Essentially,it means that total reserves are greater than required reserves. 
E)  none of the above

Question 5

The existence and use of the Internet has lowered the transaction costs of making some exchanges.

Accepted Answer

A) True 
 B)False

Question 6

A bank has $132,000 in excess reserves and the required reserve ratio is 11 percent.This means the bank could have __________ in checkable deposit liabilities and __________ in (total)reserves.

Accepted Answer

A)  $4,000,000; $590,000 
B)  $1,000,000; $110,000 
C)  $5,000,000; $5,869,000 
D)  $4,700,000; $869,000 
A)  $4,000,000; $590,000 
B)  $1,000,000; $110,000 
C)  $5,000,000; $5,869,000 
D)  $4,700,000; $869,000

Question 7

In direct finance,funds are loaned and borrowed through a financial intermediary.

Accepted Answer

A) True 
 B)False

Question 8

In a barter economy,people are _________ to specialize in the production of one good or service,compared to in a money economy.

Accepted Answer

A)  more likely 
B)  less likely 
C)  equally likely 
D)  almost always going 
A)  more likely 
B)  less likely 
C)  equally likely 
D)  almost always going

Question 9

The store of value function of money refers to the ability of money to

Accepted Answer

A)  facilitate the exchange of goods and services. 
B)  maintain its value over time. 
C)  express relative scarcity. 
D)  earn interest over time. 
E)  increase its value over time. 
A)  facilitate the exchange of goods and services. 
B)  maintain its value over time. 
C)  express relative scarcity. 
D)  earn interest over time. 
E)  increase its value over time.

Question 10

The Fed pays banks interest on bank deposits held on reserve at the Fed.

Accepted Answer

A) True 
 B)False

Question 11

A savings deposit is a type of

Accepted Answer

A)  time deposit that is payable on demand. 
B)  time deposit that earns interest and allows the depositor to write checks payable to other persons. 
C)  time deposit that does not earn interest but does offer limited check-writing services. 
D)  interest-earning account at a bank or thrift institution in which funds can be withdrawn at any time without a penalty payment. 
E)  checkable deposit that also pays interest. 
A)  time deposit that is payable on demand. 
B)  time deposit that earns interest and allows the depositor to write checks payable to other persons. 
C)  time deposit that does not earn interest but does offer limited check-writing services. 
D)  interest-earning account at a bank or thrift institution in which funds can be withdrawn at any time without a penalty payment. 
E)  checkable deposit that also pays interest.

Question 12

The risk of specializing (in the production of one good or service)is

Accepted Answer

A)  lower in a barter economy than in a money economy. 
B)  lower in a money economy than in a barter economy. 
C)  the same in both a money and barter economy. 
D)  greater the less likely you and the person you want to trade with have a double coincidence of wants. 
E)  b and d 
A)  lower in a barter economy than in a money economy. 
B)  lower in a money economy than in a barter economy. 
C)  the same in both a money and barter economy. 
D)  greater the less likely you and the person you want to trade with have a double coincidence of wants. 
E)  b and d

Question 13

When a country imposes capital controls,it is controlling the

Accepted Answer

A)  amount of money flowing in or out of the country. 
B)  amount of reserves that banks must hold. 
C)  portion of bank deposits that must be held at its central bank. 
D)  portion of bank deposits that must be used for loans to the government. 
A)  amount of money flowing in or out of the country. 
B)  amount of reserves that banks must hold. 
C)  portion of bank deposits that must be held at its central bank. 
D)  portion of bank deposits that must be used for loans to the government.

Question 14

When money is used to buy a computer,it is functioning as a

Accepted Answer

A)  unit of account. 
B)  store of value. 
C)  medium of exchange. 
D)  none of the above 
A)  unit of account. 
B)  store of value. 
C)  medium of exchange. 
D)  none of the above

Question 15

A bank's business is to turn its liabilities into assets.

Accepted Answer

A) True 
 B)False

Question 16

Ninth National Bank holds $200 million in checkable deposits and $18,000,000 in total reserves.With a required reserve ratio of 8 percent,how much in excess reserves is Ninth National holding?

Accepted Answer

A)  $1,440,000 
B)  $218,000,000 
C)  $17,440,000 
D)  $16,000,000 
E)  $2,000,000 
A)  $1,440,000 
B)  $218,000,000 
C)  $17,440,000 
D)  $16,000,000 
E)  $2,000,000

Question 17

In which situation are transaction costs most likely to be the lowest?

Accepted Answer

A)  Rodney buys antiques; he is currently looking for an eighteenth-century table. 
B)  Cathy is looking for someone who is willing to trade accounting services (in return)for law services. 
C)  Rodriguez wants to buy a house with two master bedrooms. 
D)  Melinda wants to buy a McDonald's Big Mac (she will not be asking for a special order). 
A)  Rodney buys antiques; he is currently looking for an eighteenth-century table. 
B)  Cathy is looking for someone who is willing to trade accounting services (in return)for law services. 
C)  Rodriguez wants to buy a house with two master bedrooms. 
D)  Melinda wants to buy a McDonald's Big Mac (she will not be asking for a special order).

Question 18

The first bankers were

Accepted Answer

A)  sheriffs. 
B)  goldsmiths. 
C)  clergy. 
D)  innkeepers. 
E)  economists. 
A)  sheriffs. 
B)  goldsmiths. 
C)  clergy. 
D)  innkeepers. 
E)  economists.

Question 19

A savings account functions as

Accepted Answer

A)  a unit of account. 
B)  a store of value. 
C)  a medium of exchange. 
D)  none of the above 
A)  a unit of account. 
B)  a store of value. 
C)  a medium of exchange. 
D)  none of the above

Question 20

A bank has $50,000 in excess reserves and the required reserve ratio is 10 percent.This means the bank could have __________ in checkable deposit liabilities and __________ in (total)reserves.

Accepted Answer

A)  $500,000; $90,000 
B)  $100,000; $20,000 
C)  $50,000; $25,000 
D)  $250,000; $75,000 
A)  $500,000; $90,000 
B)  $100,000; $20,000 
C)  $50,000; $25,000 
D)  $250,000; $75,000

Exam 12: Government and Product Markets: Antitrust and Regulation

Which of the following statements is false?

If checkable deposits in Bank A total $620 million and the required reserve ratio is 9 percent,then required reserves at Bank A equal

Which of the following words are synonyms for the word "money"?

When economists say that banks must hold a percentage of their total deposits in reserve form,what does this mean?

The existence and use of the Internet has lowered the transaction costs of making some exchanges.

A bank has $132,000 in excess reserves and the required reserve ratio is 11 percent.This means the bank could have __________ in checkable deposit liabilities and __________ in (total)reserves.

In direct finance,funds are loaned and borrowed through a financial intermediary.

In a barter economy,people are _________ to specialize in the production of one good or service,compared to in a money economy.

The store of value function of money refers to the ability of money to

The Fed pays banks interest on bank deposits held on reserve at the Fed.

A savings deposit is a type of

The risk of specializing (in the production of one good or service)is

When a country imposes capital controls,it is controlling the

When money is used to buy a computer,it is functioning as a

A bank's business is to turn its liabilities into assets.

Ninth National Bank holds $200 million in checkable deposits and $18,000,000 in total reserves.With a required reserve ratio of 8 percent,how much in excess reserves is Ninth National holding?

In which situation are transaction costs most likely to be the lowest?

The first bankers were

A savings account functions as

A bank has $50,000 in excess reserves and the required reserve ratio is 10 percent.This means the bank could have __________ in checkable deposit liabilities and __________ in (total)reserves.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free,controlled,and Relative

Supply,demand,and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, oligopoly, and Game Theory

Factor Markets: With Emphasis on the Labor Market

Wages,union,and Labor

The Distribution of Income and Poverty

Interest,rent,and Profit

Market Failure: Externalities, public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks,bonds,futures,and Options

Stocks,bonds,futures,and Options

Filters

A bank has $132,000 in excess reserves and the required reserve ratio is 11 percent.This means the bank could have in checkable deposit liabilities and in (total)reserves.

A bank has $50,000 in excess reserves and the required reserve ratio is 10 percent.This means the bank could have in checkable deposit liabilities and in (total)reserves.