Question 1

Compared to traditional shopping,Internet sales are constrained because consumers are concerned about:

Accepted Answer

A)  The high cost of goods sold online. 
B)  Payment security. 
C)  Inflation and unemployment. 
D)  The lack of quality for goods sold online. 
A)  The high cost of goods sold online. 
B)  Payment security. 
C)  Inflation and unemployment. 
D)  The lack of quality for goods sold online.

Question 2

Suppose Students Bank and Trust has zero excess reserves.If the required reserve ratio decreases:

Accepted Answer

A)  Bank assets will increase. 
B)  Required reserves will increase. 
C)  The bank will be able to make more loans. 
D)  The money multiplier will decrease. 
A)  Bank assets will increase. 
B)  Required reserves will increase. 
C)  The bank will be able to make more loans. 
D)  The money multiplier will decrease.

Question 3

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 total reserves of $50,000 and a required reserve ratio of 10 percent,potential deposit creation for the banking system is equal to:

Accepted Answer

A)  $20,000. 
B)  $50,000. 
C)  $80,000. 
D)  $300,000. 
A)  $20,000. 
B)  $50,000. 
C)  $80,000. 
D)  $300,000.

Question 4

Initially a bank has a minimum reserve requirement of 15 percent and no excess reserves.If $200,000 is deposited in the bank,then ceteris paribus:

Accepted Answer

A)  The bank can increase its loans by $30,000. 
B)  The bank can increase its loans by $230,000. 
C)  Excess reserves will increase by $170,000. 
D)  Required reserves will increase by $200,000. 
A)  The bank can increase its loans by $30,000. 
B)  The bank can increase its loans by $230,000. 
C)  Excess reserves will increase by $170,000. 
D)  Required reserves will increase by $200,000.

Question 5

The level of excess reserves is used to determine the lending capacity of the banking system.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not a function performed by banks?

Accepted Answer

A)  Accepting deposits. 
B)  Offering check writing privileges. 
C)  Making loans. 
D)  Determining fiscal policy. 
A)  Accepting deposits. 
B)  Offering check writing privileges. 
C)  Making loans. 
D)  Determining fiscal policy.

Question 7

The Federal Reserve System requires banks to maintain a minimum reserve ratio.

Accepted Answer

A) True 
 B)False

Question 8

Deposit creation occurs when:

Accepted Answer

A)  A person puts cash in a bank and the bank holds all of it as reserves. 
B)  Someone deposits a payroll check into a transactions account at a bank. 
C)  Money enters the banking system and a portion of it is lent out. 
D)  A bank borrows reserves from the Federal Reserve. 
A)  A person puts cash in a bank and the bank holds all of it as reserves. 
B)  Someone deposits a payroll check into a transactions account at a bank. 
C)  Money enters the banking system and a portion of it is lent out. 
D)  A bank borrows reserves from the Federal Reserve.

Question 9

Which of the following is not true concerning the banking system?

Accepted Answer

A)  It lends funds to the Federal Reserve. 
B)  It creates money through lending. 
C)  It impacts aggregate demand through changes in the money supply. 
D)  It transfers money from savers to spenders. 
A)  It lends funds to the Federal Reserve. 
B)  It creates money through lending. 
C)  It impacts aggregate demand through changes in the money supply. 
D)  It transfers money from savers to spenders.

Question 10

How do banks create money?

Accepted Answer

Banks participate in the money-supply pr

Question 11

Suppose a bank has $50,000 in transactions accounts and a minimum reserve requirement of 10 percent.Then required reserves are:

Accepted Answer

A)  $5,000 
B)  $50,000 
C)  $55,000 
D)  $500,000 
A)  $5,000 
B)  $50,000 
C)  $55,000 
D)  $500,000

Question 12

One News Wire article in the text is titled "Goods Replace Rubles in Russia's Vast Web of Trade." According to this article,the Russian currency:

Accepted Answer

A)  Rations scarce commodities such as glass. 
B)  Serves as a medium of exchange in barter transactions. 
C)  Is falling in value. 
D)  Is likely to be hoarded as its value changes. 
A)  Rations scarce commodities such as glass. 
B)  Serves as a medium of exchange in barter transactions. 
C)  Is falling in value. 
D)  Is likely to be hoarded as its value changes.

Question 13

Since banks are required to keep only a fraction of total deposits as bank reserves,the reserve ratio is always greater than one.

Accepted Answer

A) True 
 B)False

Question 14

The money multiplier is:

Accepted Answer

A)  A bank's transaction deposits divided by its reserves. 
B)  The amount of a bank's excess reserves divided by its required reserves. 
C)  The amount of a bank's actual reserves divided by its required reserves. 
D)  1 divided by the required reserve ratio. 
A)  A bank's transaction deposits divided by its reserves. 
B)  The amount of a bank's excess reserves divided by its required reserves. 
C)  The amount of a bank's actual reserves divided by its required reserves. 
D)  1 divided by the required reserve ratio.

Question 15

Barter is the direct exchange of one good for another without the use of money.

Accepted Answer

A) True 
 B)False

Question 16

Money creation occurs when:

Accepted Answer

A)  A person puts cash in a bank. 
B)  A person deposits a payroll check in their checking account. 
C)  Banks make loans to borrowers. 
D)  The Federal Reserve increases the reserve requirement. 
A)  A person puts cash in a bank. 
B)  A person deposits a payroll check in their checking account. 
C)  Banks make loans to borrowers. 
D)  The Federal Reserve increases the reserve requirement.

Question 17

The total quantity of output demanded at alternative price levels in a given time period,ceteris paribus,is the definition of:

Accepted Answer

A)  Aggregate supply. 
B)  Aggregate demand. 
C)  Money supply. 
D)  Money demanD. 
A)  Aggregate supply. 
B)  Aggregate demand. 
C)  Money supply. 
D)  Money demanD.

Question 18

The money multiplier represents:

Accepted Answer

A)  The lending capacity of the banking system. 
B)  The number of deposit dollars the banking system can create from $1 of excess reserves. 
C)  Faith in the banking system. 
D)  The amount of a bank's excess reserves divided by its required reserves. 
A)  The lending capacity of the banking system. 
B)  The number of deposit dollars the banking system can create from $1 of excess reserves. 
C)  Faith in the banking system. 
D)  The amount of a bank's excess reserves divided by its required reserves.

Question 19

When money is used to pay for goods and services it is functioning as a:

Accepted Answer

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

Question 20

When an individual deposits cash or coins in a transactions account,there is:

Accepted Answer

A)  No change in either the composition or the size of the money supply. 
B)  A change in the size of the money supply,but not the composition. 
C)  A change in the composition of the money supply,but not the size. 
D)  A change in both the composition and the size of the money supply. 
A)  No change in either the composition or the size of the money supply. 
B)  A change in the size of the money supply,but not the composition. 
C)  A change in the composition of the money supply,but not the size. 
D)  A change in both the composition and the size of the money supply.

Compared to traditional shopping,Internet sales are constrained because consumers are concerned about:

Suppose Students Bank and Trust has zero excess reserves.If the required reserve ratio decreases:

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 total reserves of $50,000 and a required reserve ratio of 10 percent,potential deposit creation for the banking system is equal to:

Initially a bank has a minimum reserve requirement of 15 percent and no excess reserves.If $200,000 is deposited in the bank,then ceteris paribus:

The level of excess reserves is used to determine the lending capacity of the banking system.

Which of the following is not a function performed by banks?

The Federal Reserve System requires banks to maintain a minimum reserve ratio.

Deposit creation occurs when:

Which of the following is not true concerning the banking system?

How do banks create money?

Suppose a bank has $50,000 in transactions accounts and a minimum reserve requirement of 10 percent.Then required reserves are:

One News Wire article in the text is titled "Goods Replace Rubles in Russia's Vast Web of Trade." According to this article,the Russian currency:

Since banks are required to keep only a fraction of total deposits as bank reserves,the reserve ratio is always greater than one.

The money multiplier is:

Barter is the direct exchange of one good for another without the use of money.

Money creation occurs when:

The total quantity of output demanded at alternative price levels in a given time period,ceteris paribus,is the definition of:

The money multiplier represents:

When money is used to pay for goods and services it is functioning as a:

When an individual deposits cash or coins in a transactions account,there is:

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

Compared to traditional shopping,Internet sales are constrained because consumers are concerned about:

Suppose Students Bank and Trust has zero excess reserves.If the required reserve ratio decreases:

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 total reserves of $50,000 and a required reserve ratio of 10 percent,potential deposit creation for the banking system is equal to:

Initially a bank has a minimum reserve requirement of 15 percent and no excess reserves.If $200,000 is deposited in the bank,then ceteris paribus:

The level of excess reserves is used to determine the lending capacity of the banking system.

Which of the following is not a function performed by banks?

The Federal Reserve System requires banks to maintain a minimum reserve ratio.

Deposit creation occurs when:

Which of the following is not true concerning the banking system?

How do banks create money?

Suppose a bank has $50,000 in transactions accounts and a minimum reserve requirement of 10 percent.Then required reserves are:

One News Wire article in the text is titled "Goods Replace Rubles in Russia's Vast Web of Trade." According to this article,the Russian currency:

Since banks are required to keep only a fraction of total deposits as bank reserves,the reserve ratio is always greater than one.

The money multiplier is:

Barter is the direct exchange of one good for another without the use of money.

Money creation occurs when:

The total quantity of output demanded at alternative price levels in a given time period,ceteris paribus,is the definition of:

The money multiplier represents:

When money is used to pay for goods and services it is functioning as a:

When an individual deposits cash or coins in a transactions account,there is:

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