Question 1

Almost all Internet purchases are paid for by:

Accepted Answer

A)  Cash. 
B)  Check. 
C)  Money order. 
D)  Credit card. 
A)  Cash. 
B)  Check. 
C)  Money order. 
D)  Credit card.

Question 2

A reduction in the money supply should shift the aggregate:

Accepted Answer

A)  Supply curve to the left. 
B)  Supply curve to the right. 
C)  Demand curve to the left. 
D)  Demand curve to the right. 
A)  Supply curve to the left. 
B)  Supply curve to the right. 
C)  Demand curve to the left. 
D)  Demand curve to the right.

Question 3

Suppose a bank has $200,000 in deposits and a minimum reserve requirement of 15 percent.Then required reserves are:

Accepted Answer

A)  $3,000 
B)  $30,000 
C)  $200,000 
D)  $330,000 
A)  $3,000 
B)  $30,000 
C)  $200,000 
D)  $330,000

Question 4

Use the following balance sheet for XYZ Bank,which is one of many banks in a banking system.
Table 13.1-XYZ Bank balance sheet  
-Refer to Table 13.1.If XYZ Bank has a required reserve ratio of 20 percent,it can legally increase its loans by:

Accepted Answer

A)  $10,000. 
B)  $20,000. 
C)  $40,000. 
D)  $50,000. 
A)  $10,000. 
B)  $20,000. 
C)  $40,000. 
D)  $50,000.

Question 5

The reserve ratio is the:

Accepted Answer

A)  Percentage of excess reserves held by banks. 
B)  Fraction of deposits that banks hold as excess reserves. 
C)  Number of deposit dollars the banking system can create. 
D)  Percentage of total deposits that are held as bank reserves. 
A)  Percentage of excess reserves held by banks. 
B)  Fraction of deposits that banks hold as excess reserves. 
C)  Number of deposit dollars the banking system can create. 
D)  Percentage of total deposits that are held as bank reserves.

Question 6

If Edgar takes $100 out of his savings account and deposits it into his checking account,the immediate result of this transaction is that M1:

Accepted Answer

A)  Increases by $100. 
B)  Decreases by $100. 
C)  Decreases by more than $100. 
D)  Does not change. 
A)  Increases by $100. 
B)  Decreases by $100. 
C)  Decreases by more than $100. 
D)  Does not change.

Question 7

Ceteris paribus,an increase in the money supply will cause an increase in aggregate demand.

Accepted Answer

A) True 
 B)False

Question 8

Money is anything that:

Accepted Answer

A)  Can be used to barter. 
B)  Is generally accepted as a medium of exchange. 
C)  Has value. 
D)  A government declares to have value. 
A)  Can be used to barter. 
B)  Is generally accepted as a medium of exchange. 
C)  Has value. 
D)  A government declares to have value.

Question 9

One News Wire article about Russia stated,"Workers are paid in glass,receive their social benefits in glass and must sell the glass to stay alive." According to this quotation:

Accepted Answer

A)  There is strong demand for glass in Russia. 
B)  Barter is not allowed in Russia. 
C)  The Russian currency is increasing in value. 
D)  Glass is functioning as a medium of exchange. 
A)  There is strong demand for glass in Russia. 
B)  Barter is not allowed in Russia. 
C)  The Russian currency is increasing in value. 
D)  Glass is functioning as a medium of exchange.

Question 10

When you put $50 in your savings account,money is serving as a standard of value.

Accepted Answer

A) True 
 B)False

Question 11

If excess reserves are $30,000,demand deposits are $500,000,and the minimum reserve requirement is 10 percent,then total reserves are:

Accepted Answer

A)  $20,000 
B)  $30,000 
C)  $50,000 
D)  $80,000 
A)  $20,000 
B)  $30,000 
C)  $50,000 
D)  $80,000

Question 12

If there is only one bank in an economy:

Accepted Answer

A)  Reserves never leave the bank. 
B)  Transactions accounts equal bank reserves. 
C)  Loans equal bank reserves. 
D)  Loans equal transaction accounts. 
A)  Reserves never leave the bank. 
B)  Transactions accounts equal bank reserves. 
C)  Loans equal bank reserves. 
D)  Loans equal transaction accounts.

Question 13

Use the following balance sheet for XYZ Bank,which is one of many banks in a banking system.
Table 13.1-XYZ Bank balance sheet  
-Refer to Table 13.1.With a required reserve ratio of 15 percent,XYZ Bank would have excess reserves of:

Accepted Answer

A)  $15,000. 
B)  $20,000. 
C)  $50,000. 
D)  $150,000. 
A)  $15,000. 
B)  $20,000. 
C)  $50,000. 
D)  $150,000.

Question 14

Suppose a bank has $400,000 in deposits,a minimum reserve requirement of 25 percent,and bank reserves of $100,000.Then the bank can make new loans in the amount of:

Accepted Answer

A)  $100,000 
B)  $75,000 
C)  $25,000 
D)  $0 
A)  $100,000 
B)  $75,000 
C)  $25,000 
D)  $0

Question 15

The creation of transactions deposits by bank lending is the definition of:

Accepted Answer

A)  Counterfeit money. 
B)  Money laundering. 
C)  Loan creation. 
D)  Deposit creation. 
A)  Counterfeit money. 
B)  Money laundering. 
C)  Loan creation. 
D)  Deposit creation.

Question 16

If Justin takes $75 from his cookie jar and deposits it in his checking account,the immediate result is that:

Accepted Answer

A)  The value of M1 stays the same. 
B)  M1 increases by more than $75. 
C)  M1 increases by less than $75. 
D)  M1 increases by exactly $75. 
A)  The value of M1 stays the same. 
B)  M1 increases by more than $75. 
C)  M1 increases by less than $75. 
D)  M1 increases by exactly $75.

Question 17

Banks try to keep their holdings of excess reserves low in order to:

Accepted Answer

A)  Create as much money as possible for the economy. 
B)  Keep the money multiplier low. 
C)  Escape Fed penalties. 
D)  Maximize profits. 
A)  Create as much money as possible for the economy. 
B)  Keep the money multiplier low. 
C)  Escape Fed penalties. 
D)  Maximize profits.

Question 18

The amount a single bank,in a multibank system,can lend is greater than its excess reserves.

Accepted Answer

A) True 
 B)False

Question 19

Reggie fixes his friend's car and the friend cleans his house instead of paying him.In economics,this is referred to as:

Accepted Answer

A)  A market transaction. 
B)  An efficient exchange. 
C)  Barter. 
D)  A swap. 
A)  A market transaction. 
B)  An efficient exchange. 
C)  Barter. 
D)  A swap.

Question 20

Initially a bank has a minimum reserve requirement of 10 percent and no excess reserves.If $10,000 is deposited in the bank,then ceteris paribus:

Accepted Answer

A)  The bank can increase its loans by $10,000. 
B)  The bank can increase its loans by $9,000. 
C)  Total reserves will increase by $9,000. 
D)  Required reserves will increase by $10,000. 
A)  The bank can increase its loans by $10,000. 
B)  The bank can increase its loans by $9,000. 
C)  Total reserves will increase by $9,000. 
D)  Required reserves will increase by $10,000.

Almost all Internet purchases are paid for by:

A reduction in the money supply should shift the aggregate:

Suppose a bank has $200,000 in deposits and a minimum reserve requirement of 15 percent.Then required reserves are:

Use the following balance sheet for XYZ Bank,which is one of many banks in a banking system. Table 13.1-XYZ Bank balance sheet -Refer to Table 13.1.If XYZ Bank has a required reserve ratio of 20 percent,it can legally increase its loans by:

The reserve ratio is the:

If Edgar takes $100 out of his savings account and deposits it into his checking account,the immediate result of this transaction is that M1:

Ceteris paribus,an increase in the money supply will cause an increase in aggregate demand.

Money is anything that:

One News Wire article about Russia stated,"Workers are paid in glass,receive their social benefits in glass and must sell the glass to stay alive." According to this quotation:

When you put $50 in your savings account,money is serving as a standard of value.

If excess reserves are $30,000,demand deposits are $500,000,and the minimum reserve requirement is 10 percent,then total reserves are:

If there is only one bank in an economy:

Use the following balance sheet for XYZ Bank,which is one of many banks in a banking system. Table 13.1-XYZ Bank balance sheet -Refer to Table 13.1.With a required reserve ratio of 15 percent,XYZ Bank would have excess reserves of:

Suppose a bank has $400,000 in deposits,a minimum reserve requirement of 25 percent,and bank reserves of $100,000.Then the bank can make new loans in the amount of:

The creation of transactions deposits by bank lending is the definition of:

If Justin takes $75 from his cookie jar and deposits it in his checking account,the immediate result is that:

Banks try to keep their holdings of excess reserves low in order to:

The amount a single bank,in a multibank system,can lend is greater than its excess reserves.

Reggie fixes his friend's car and the friend cleans his house instead of paying him.In economics,this is referred to as:

Initially a bank has a minimum reserve requirement of 10 percent and no excess reserves.If $10,000 is deposited in the bank,then ceteris paribus:

The Challenge of Economics

The US Economy

Supply and Demand

Consumer Demand

Supply Decisions

Competition

Monopoly

The Labor Market

Government Intervention

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Monetary Policy

Economic Growth

Theory and Reality

International Trade

Filters

Exam 13: Money and Banks

Almost all Internet purchases are paid for by:

A reduction in the money supply should shift the aggregate:

Suppose a bank has $200,000 in deposits and a minimum reserve requirement of 15 percent.Then required reserves are:

Use the following balance sheet for XYZ Bank,which is one of many banks in a banking system. Table 13.1-XYZ Bank balance sheet -Refer to Table 13.1.If XYZ Bank has a required reserve ratio of 20 percent,it can legally increase its loans by:

The reserve ratio is the:

If Edgar takes $100 out of his savings account and deposits it into his checking account,the immediate result of this transaction is that M1:

Ceteris paribus,an increase in the money supply will cause an increase in aggregate demand.

Money is anything that:

One News Wire article about Russia stated,"Workers are paid in glass,receive their social benefits in glass and must sell the glass to stay alive." According to this quotation:

When you put $50 in your savings account,money is serving as a standard of value.

If excess reserves are $30,000,demand deposits are $500,000,and the minimum reserve requirement is 10 percent,then total reserves are:

If there is only one bank in an economy:

Use the following balance sheet for XYZ Bank,which is one of many banks in a banking system. Table 13.1-XYZ Bank balance sheet -Refer to Table 13.1.With a required reserve ratio of 15 percent,XYZ Bank would have excess reserves of:

Suppose a bank has $400,000 in deposits,a minimum reserve requirement of 25 percent,and bank reserves of $100,000.Then the bank can make new loans in the amount of:

The creation of transactions deposits by bank lending is the definition of:

If Justin takes $75 from his cookie jar and deposits it in his checking account,the immediate result is that:

Banks try to keep their holdings of excess reserves low in order to:

The amount a single bank,in a multibank system,can lend is greater than its excess reserves.

Reggie fixes his friend's car and the friend cleans his house instead of paying him.In economics,this is referred to as:

Initially a bank has a minimum reserve requirement of 10 percent and no excess reserves.If $10,000 is deposited in the bank,then ceteris paribus:

The Challenge of Economics

The US Economy

Supply and Demand

Consumer Demand

Supply Decisions

Competition

Monopoly

The Labor Market

Government Intervention

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Monetary Policy

Economic Growth

Theory and Reality

International Trade

Filters