Question 1

If excess reserves are $50,000,demand deposits are $1,000,000,and the minimum reserve requirement is 5 percent,then total reserves are:

Accepted Answer

A)  $1,000,000 
B)  $100,000 
C)  $50,000 
D)  $2,500 
A)  $1,000,000 
B)  $100,000 
C)  $50,000 
D)  $2,500

Question 2

If businesses and individuals decide to stop borrowing money,this can reduce money creation.

Accepted Answer

A) True 
 B)False

Question 3

The money multiplier is equal to 1 divided by the required reserve ratio.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is true for U.S.banks?

Accepted Answer

A)  Banks must keep only a fraction of total deposits as reserves. 
B)  Banks create money by printing it. 
C)  Banks are allowed to lend as much money as they choose. 
D)  Banks transfer money from spenders to savers. 
A)  Banks must keep only a fraction of total deposits as reserves. 
B)  Banks create money by printing it. 
C)  Banks are allowed to lend as much money as they choose. 
D)  Banks transfer money from spenders to savers.

Question 5

An increase in the amount of bank loans 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 6

Which of the following has not served as a form of money for the United States?

Accepted Answer

A)  Eggs 
B)  Gun powder 
C)  Tobacco 
D)  Spanish gold coins 
A)  Eggs 
B)  Gun powder 
C)  Tobacco 
D)  Spanish gold coins

Question 7

Suppose a bank has $1,000,000 in deposits and a minimum reserve requirement of 20 percent.Then required reserves are:

Accepted Answer

A)  $1,000,000 
B)  $880,000 
C)  $200,000 
D)  $1,200,000 
A)  $1,000,000 
B)  $880,000 
C)  $200,000 
D)  $1,200,000

Question 8

Suppose a bank has $100,000 in deposits and a minimum reserve requirement of 7 percent.Then required reserves are:

Accepted Answer

A)  $100,000 
B)  $93,000 
C)  $70,000 
D)  $7,000 
A)  $100,000 
B)  $93,000 
C)  $70,000 
D)  $7,000

Question 9

Without money,the process of acquiring goods and services would be much more efficient.

Accepted Answer

A) True 
 B)False

Question 10

Suppose the entire banking system has $50 million in excess reserves and a required reserve ratio of 10 percent.The deposit-creation potential of the banking system is:

Accepted Answer

A)  $500 million 
B)  $50 million 
C)  $10 million 
D)  $5 million 
A)  $500 million 
B)  $50 million 
C)  $10 million 
D)  $5 million

Question 11

The amount of money in circulation can affect spending behavior,but it will not change aggregate demand.

Accepted Answer

A) True 
 B)False

Question 12

The smallest component of the basic money supply is in the form of:

Accepted Answer

A)  Savings accounts. 
B)  Transactions accounts. 
C)  Currency in circulation. 
D)  Traveler's checks. 
A)  Savings accounts. 
B)  Transactions accounts. 
C)  Currency in circulation. 
D)  Traveler's checks.

Question 13

Initially a bank has a minimum reserve requirement of 20 percent and no excess reserves.If $20,000 is deposited in the bank,then the bank can,ceteris paribus:

Accepted Answer

A)  Lend $20,000. 
B)  Lend $16,000. 
C)  Hold $20,000 less in excess reserves. 
D)  Reduce its required reserves by $20,000. 
A)  Lend $20,000. 
B)  Lend $16,000. 
C)  Hold $20,000 less in excess reserves. 
D)  Reduce its required reserves by $20,000.

Question 14

Excess reserves are calculated as:

Accepted Answer

A)  Total reserves minus required reserves. 
B)  Total reserves minus transaction accounts. 
C)  Required reserves minus transaction accounts. 
D)  Bank reserves minus vault cash. 
A)  Total reserves minus required reserves. 
B)  Total reserves minus transaction accounts. 
C)  Required reserves minus transaction accounts. 
D)  Bank reserves minus vault cash.

Question 15

Suppose a bank has $1,000,000 in deposits,a minimum reserve requirement of 15 percent,and bank reserves of $170,000.Then the bank can make new loans in the amount of:

Accepted Answer

A)  $15,000 
B)  $20,000 
C)  $170,000 
D)  $320,000 
A)  $15,000 
B)  $20,000 
C)  $170,000 
D)  $320,000

Question 16

Suppose the entire banking system has $10 million in excess reserves and a required reserve ratio of 5 percent.The deposit-creation potential of the banking system is:

Accepted Answer

A)  $5 million 
B)  $10 million 
C)  $100 million 
D)  $200 million 
A)  $5 million 
B)  $10 million 
C)  $100 million 
D)  $200 million

Question 17

When a bank makes a loan,transactions account balances are created but the money supply is not affected.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not part of M1 but is included in "near money" according to the text?

Accepted Answer

A)  Traveler's checks 
B)  Cash 
C)  Transactions accounts 
D)  Savings accounts 
A)  Traveler's checks 
B)  Cash 
C)  Transactions accounts 
D)  Savings accounts

Question 19

Barter:

Accepted Answer

A)  Makes market transactions easier and less time consuming. 
B)  Is considered to be an efficient process for an economy. 
C)  Is the direct exchange of one good or service for another. 
D)  Requires the use of gold to assess value. 
A)  Makes market transactions easier and less time consuming. 
B)  Is considered to be an efficient process for an economy. 
C)  Is the direct exchange of one good or service for another. 
D)  Requires the use of gold to assess value.

Question 20

If money is used to transform current income into future purchases,it is functioning as a:

Accepted Answer

A)  Medium of exchange. 
B)  Store of value. 
C)  Mechanism for barter. 
D)  Standard of value. 
A)  Medium of exchange. 
B)  Store of value. 
C)  Mechanism for barter. 
D)  Standard of value.

If excess reserves are $50,000,demand deposits are $1,000,000,and the minimum reserve requirement is 5 percent,then total reserves are:

If businesses and individuals decide to stop borrowing money,this can reduce money creation.

The money multiplier is equal to 1 divided by the required reserve ratio.

Which of the following is true for U.S.banks?

An increase in the amount of bank loans should shift the aggregate:

Which of the following has not served as a form of money for the United States?

Suppose a bank has $1,000,000 in deposits and a minimum reserve requirement of 20 percent.Then required reserves are:

Suppose a bank has $100,000 in deposits and a minimum reserve requirement of 7 percent.Then required reserves are:

Without money,the process of acquiring goods and services would be much more efficient.

Suppose the entire banking system has $50 million in excess reserves and a required reserve ratio of 10 percent.The deposit-creation potential of the banking system is:

The amount of money in circulation can affect spending behavior,but it will not change aggregate demand.

The smallest component of the basic money supply is in the form of:

Initially a bank has a minimum reserve requirement of 20 percent and no excess reserves.If $20,000 is deposited in the bank,then the bank can,ceteris paribus:

Excess reserves are calculated as:

Suppose a bank has $1,000,000 in deposits,a minimum reserve requirement of 15 percent,and bank reserves of $170,000.Then the bank can make new loans in the amount of:

Suppose the entire banking system has $10 million in excess reserves and a required reserve ratio of 5 percent.The deposit-creation potential of the banking system is:

When a bank makes a loan,transactions account balances are created but the money supply is not affected.

Which of the following is not part of M1 but is included in "near money" according to the text?

Barter:

If money is used to transform current income into future purchases,it is functioning as a:

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

If excess reserves are $50,000,demand deposits are $1,000,000,and the minimum reserve requirement is 5 percent,then total reserves are:

If businesses and individuals decide to stop borrowing money,this can reduce money creation.

The money multiplier is equal to 1 divided by the required reserve ratio.

Which of the following is true for U.S.banks?

An increase in the amount of bank loans should shift the aggregate:

Which of the following has not served as a form of money for the United States?

Suppose a bank has $1,000,000 in deposits and a minimum reserve requirement of 20 percent.Then required reserves are:

Suppose a bank has $100,000 in deposits and a minimum reserve requirement of 7 percent.Then required reserves are:

Without money,the process of acquiring goods and services would be much more efficient.

Suppose the entire banking system has $50 million in excess reserves and a required reserve ratio of 10 percent.The deposit-creation potential of the banking system is:

The amount of money in circulation can affect spending behavior,but it will not change aggregate demand.

The smallest component of the basic money supply is in the form of:

Initially a bank has a minimum reserve requirement of 20 percent and no excess reserves.If $20,000 is deposited in the bank,then the bank can,ceteris paribus:

Excess reserves are calculated as:

Suppose a bank has $1,000,000 in deposits,a minimum reserve requirement of 15 percent,and bank reserves of $170,000.Then the bank can make new loans in the amount of:

Suppose the entire banking system has $10 million in excess reserves and a required reserve ratio of 5 percent.The deposit-creation potential of the banking system is:

When a bank makes a loan,transactions account balances are created but the money supply is not affected.

Which of the following is not part of M1 but is included in "near money" according to the text?

Barter:

If money is used to transform current income into future purchases,it is functioning as a:

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