Question 1

Total bank reserves equal

Accepted Answer

A)  checkable deposits + vault cash + traveler's checks. 
B)  vault cash + currency in the hands of the nonbanking public. 
C)  bank deposits at the Federal Reserve. 
D)  bank deposits at the Federal Reserve + vault cash. 
A)  checkable deposits + vault cash + traveler's checks. 
B)  vault cash + currency in the hands of the nonbanking public. 
C)  bank deposits at the Federal Reserve. 
D)  bank deposits at the Federal Reserve + vault cash.

Question 2

M2 includes M1 plus all of the following except

Accepted Answer

A)  savings deposits. 
B)  retail money market mutual funds. 
C)  short-term U.S.government securities. 
D)  small-denomination time deposits. 
A)  savings deposits. 
B)  retail money market mutual funds. 
C)  short-term U.S.government securities. 
D)  small-denomination time deposits.

Question 3

In the history of banking,warehouse receipts refer to receipts

Accepted Answer

A)  that goldsmiths once issued acknowledging that they held a customer's gold. 
B)  for storing furniture in a warehouse. 
C)  goldsmiths issued to each other when they borrowed gold. 
D)  for storing food and other perishables in a warehouse. 
A)  that goldsmiths once issued acknowledging that they held a customer's gold. 
B)  for storing furniture in a warehouse. 
C)  goldsmiths issued to each other when they borrowed gold. 
D)  for storing food and other perishables in a warehouse.

Question 4

Bank ABC's reserve account at the Federal Reserve contains $44.5 million,its vault cash is $1.1 million,and its checkable deposits equal $400 million.If the required reserve ratio (r)is 10 percent,it follows that Bank ABC's required reserves equal __________ million,and its excess reserves equal __________ million.

Accepted Answer

A)  $4.45; $1.1 
B)  $40; $5.6 
C)  $0.11; $5.6 
D)  $40; $4.5 
A)  $4.45; $1.1 
B)  $40; $5.6 
C)  $0.11; $5.6 
D)  $40; $4.5

Question 5

The term federal reserve notes refers to coins minted by the U.S.Treasury.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following illustrates a barter transaction?

Accepted Answer

A)  A bushel of oranges is traded for a bushel of apples. 
B)  Someone buys a pizza for the special price of $4. 
C)  Someone buys a house for $100,000. 
D)  b and c 
E)  a,b,and c 
A)  A bushel of oranges is traded for a bushel of apples. 
B)  Someone buys a pizza for the special price of $4. 
C)  Someone buys a house for $100,000. 
D)  b and c 
E)  a,b,and c

Question 7

In general,it is reasonable to assume that the average person's standard of living is ____________ in a ____________ economy than in a ____________ economy.

Accepted Answer

A)  higher; money; barter 
B)  lower; barter; money 
C)  higher;barter; money 
D)  lower; money; barter 
E)  a and b 
A)  higher; money; barter 
B)  lower; barter; money 
C)  higher;barter; money 
D)  lower; money; barter 
E)  a and b

Question 8

Describe the circumstances under which the M1 money supply could fall while the M2 money supply remains constant at the same time.

Accepted Answer

In order for the M1 money supply to fall

Question 9

​
   ​
-Refer to Exhibit 12-1.The required reserve ratio is

Accepted Answer

A)  0.10. 
B)  0.15. 
C)  0.20. 
D)  0.25. 
E)  0.30. 
A)  0.10. 
B)  0.15. 
C)  0.20. 
D)  0.25. 
E)  0.30.

Question 10

Compared to barter,money __________ transaction costs,making transactions __________ time-consuming.

Accepted Answer

A)  increases; more 
B)  increases; less 
C)  reduces; more 
D)  reduces; less 
A)  increases; more 
B)  increases; less 
C)  reduces; more 
D)  reduces; less

Question 11

The M2 money supply

Accepted Answer

A)  includes M1. 
B)  is commonly referred to as the broad definition of the money supply. 
C)  includes savings deposits. 
D)  is larger than M1. 
E)  all of the above 
A)  includes M1. 
B)  is commonly referred to as the broad definition of the money supply. 
C)  includes savings deposits. 
D)  is larger than M1. 
E)  all of the above

Question 12

Money evolved out of the self-interested actions of

Accepted Answer

A)  economists. 
B)  governments. 
C)  a few kings and queens. 
D)  individuals. 
A)  economists. 
B)  governments. 
C)  a few kings and queens. 
D)  individuals.

Question 13

The sum of currency held outside banks,traveler's checks,and checkable deposits is

Accepted Answer

A)  credit cards 
B)  M1. 
C)  M2. 
D)  total reserves. 
A)  credit cards 
B)  M1. 
C)  M2. 
D)  total reserves.

Question 14

If reserves equal $29 million and vault cash equals $29 million,it follows that

Accepted Answer

A)  bank deposits at the Federal Reserve equal $29 million. 
B)  currency in the hands of the public equals $29 million. 
C)  excess reserves equal $10 million. 
D)  bank deposits at the Federal Reserve equal $0. 
E)  There is not enough information to answer the question. 
A)  bank deposits at the Federal Reserve equal $29 million. 
B)  currency in the hands of the public equals $29 million. 
C)  excess reserves equal $10 million. 
D)  bank deposits at the Federal Reserve equal $0. 
E)  There is not enough information to answer the question.

Question 15

Bank A has checkable deposits of $510 million and total reserves of $55.2 million.The required reserve ratio is 9 percent.The bank has excess reserves of ______________ million.

Accepted Answer

A)  $9.3 
B)  $50.2 
C)  $454.8 
D)  $45.9 
E)  There is not enough information provided to answer this question. 
A)  $9.3 
B)  $50.2 
C)  $454.8 
D)  $45.9 
E)  There is not enough information provided to answer this question.

Question 16

If a person uses money to buy a pair of shoes,money is functioning 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 17

If M1 is $1,200 billion,currency held outside banks is $400 billion,and traveler's checks is $10 billion,then small-denomination time deposits equal

Accepted Answer

A)  $790 billion. 
B)  $390 billion. 
C)  $800 billion. 
D)  $1,190 billion. 
E)  There is not information to answer the question. 
A)  $790 billion. 
B)  $390 billion. 
C)  $800 billion. 
D)  $1,190 billion. 
E)  There is not information to answer the question.

Question 18

The two types of asymmetric information problems are moral hazard and insolvency.

Accepted Answer

A) True 
 B)False

Question 19

Bank deposits at the Federal Reserve = $40 billion,vault cash = $2 billion,the required reserve ratio = 0.10,and total checkable deposits = $400 billion.It follows that required reserves equal __________ billion,(total)reserves equal __________ billion and excess reserves equal __________ billion.

Accepted Answer

A)  $42; $42; $2 
B)  $42; $40; $2 
C)  $2; $40; $38 
D)  $38; $40; $2 
E)  $40; $42; $2 
A)  $42; $42; $2 
B)  $42; $40; $2 
C)  $2; $40; $38 
D)  $38; $40; $2 
E)  $40; $42; $2

Question 20

Bank A has $75,000 in total reserves,and zero excess reserves.The required reserve ratio is 12 percent.Bank A has checkable deposits of

Accepted Answer

A)  $84,000. 
B)  $62,500. 
C)  $625,000. 
D)  $6,250,000. 
E)  $840,000 
A)  $84,000. 
B)  $62,500. 
C)  $625,000. 
D)  $6,250,000. 
E)  $840,000

Exam 12: Government and Product Markets: Antitrust and Regulation

Total bank reserves equal

M2 includes M1 plus all of the following except

In the history of banking,warehouse receipts refer to receipts

The term federal reserve notes refers to coins minted by the U.S.Treasury.

Which of the following illustrates a barter transaction?

In general,it is reasonable to assume that the average person's standard of living is ____________ in a ____________ economy than in a ____________ economy.

Describe the circumstances under which the M1 money supply could fall while the M2 money supply remains constant at the same time.

​ ​ -Refer to Exhibit 12-1.The required reserve ratio is

Compared to barter,money __________ transaction costs,making transactions __________ time-consuming.

The M2 money supply

Money evolved out of the self-interested actions of

The sum of currency held outside banks,traveler's checks,and checkable deposits is

If reserves equal $29 million and vault cash equals $29 million,it follows that

Bank A has checkable deposits of $510 million and total reserves of $55.2 million.The required reserve ratio is 9 percent.The bank has excess reserves of ______________ million.

If a person uses money to buy a pair of shoes,money is functioning as

If M1 is $1,200 billion,currency held outside banks is $400 billion,and traveler's checks is $10 billion,then small-denomination time deposits equal

The two types of asymmetric information problems are moral hazard and insolvency.

Bank deposits at the Federal Reserve = $40 billion,vault cash = $2 billion,the required reserve ratio = 0.10,and total checkable deposits = $400 billion.It follows that required reserves equal __________ billion,(total)reserves equal __________ billion and excess reserves equal __________ billion.

Bank A has $75,000 in total reserves,and zero excess reserves.The required reserve ratio is 12 percent.Bank A has checkable deposits of

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

In general,it is reasonable to assume that the average person's standard of living is in a economy than in a economy.

-Refer to Exhibit 12-1.The required reserve ratio is

Compared to barter,money transaction costs,making transactions time-consuming.

Bank deposits at the Federal Reserve = $40 billion,vault cash = $2 billion,the required reserve ratio = 0.10,and total checkable deposits = $400 billion.It follows that required reserves equal billion,(total)reserves equal billion and excess reserves equal __ billion.