Question 1

Money-market mutual funds are:

Accepted Answer

A)  Pools of money used to buy interest-bearing securities. 
B)  Sources of readily available cash at low interest rates. 
C)  Demand deposits earning high interest rates. 
D)  A component of M1. 
A)  Pools of money used to buy interest-bearing securities. 
B)  Sources of readily available cash at low interest rates. 
C)  Demand deposits earning high interest rates. 
D)  A component of M1.

Question 2

Money is functioning as a standard of value if you:

Accepted Answer

A)  Buy a college T-shirt to support the athletic teams. 
B)  Skip lunch all week so you'll have enough money for the weekend. 
C)  Scan your own groceries in the "self" checkout line so that you can see the prices. 
D)  Compare the prices of running shoes online to those in a sporting goods store. 
A)  Buy a college T-shirt to support the athletic teams. 
B)  Skip lunch all week so you'll have enough money for the weekend. 
C)  Scan your own groceries in the "self" checkout line so that you can see the prices. 
D)  Compare the prices of running shoes online to those in a sporting goods store.

Question 3

The distinguishing feature of transactions accounts is that they allow for direct payment to a third party.

Accepted Answer

A) True 
 B)False

Question 4

Most market transactions are made using:

Accepted Answer

A)  Cash. 
B)  Transactions accounts. 
C)  Credit cards. 
D)  Traveler's checks. 
A)  Cash. 
B)  Transactions accounts. 
C)  Credit cards. 
D)  Traveler's checks.

Question 5

Which of the following is not true about barter?

Accepted Answer

A)  It involves the direct exchange of one good or service for another. 
B)  It is more likely to occur if people lose faith in a nation's currency. 
C)  It is considered to be less efficient for an economy than the use of money. 
D)  It allows people to obtain more goods than they can using money. 
A)  It involves the direct exchange of one good or service for another. 
B)  It is more likely to occur if people lose faith in a nation's currency. 
C)  It is considered to be less efficient for an economy than the use of money. 
D)  It allows people to obtain more goods than they can using money.

Question 6

LaTressa takes $230 from under her mattress and deposits it in her checking account.The immediate result of this transaction is that M1:

Accepted Answer

A)  Increases by $230. 
B)  Increases by more than $230. 
C)  Decreases by $230. 
D)  Does not change in value. 
A)  Increases by $230. 
B)  Increases by more than $230. 
C)  Decreases by $230. 
D)  Does not change in value.

Question 7

When you purchase jeans at the mall,money is serving as a medium of exchange.

Accepted Answer

A) True 
 B)False

Question 8

Money is functioning as a store of value when you:

Accepted Answer

A)  Buy a rare baseball card that you expect to increase in value. 
B)  Use it to compare the cost of a pair of shoes to the cost of a shirt. 
C)  Decide to save your cash to pay for tuition next semester. 
D)  Pay more than the minimum due on your credit card bill. 
A)  Buy a rare baseball card that you expect to increase in value. 
B)  Use it to compare the cost of a pair of shoes to the cost of a shirt. 
C)  Decide to save your cash to pay for tuition next semester. 
D)  Pay more than the minimum due on your credit card bill.

Question 9

Why are people willing to accept printed paper as money?

Accepted Answer

The paper dollar has value bec

Question 10

If the banking system has a required reserve ratio of 15 percent,then the money multiplier is:

Accepted Answer

A)  1.5. 
B)  6.67. 
C)  5.0. 
D)  15.0 
A)  1.5. 
B)  6.67. 
C)  5.0. 
D)  15.0

Question 11

If the required reserve ratio is 10 percent,the money multiplier is:

Accepted Answer

A)  0.05. 
B)  5.0. 
C)  10.0. 
D)  20.0 
A)  0.05. 
B)  5.0. 
C)  10.0. 
D)  20.0

Question 12

Potential deposit creation for the entire banking system is without limit because when lending takes place,the excess reserves of one bank become deposits for another bank.

Accepted Answer

A) True 
 B)False

Question 13

Constraints on deposit creation include all of the following except:

Accepted Answer

A)  An increase in the money multiplier. 
B)  The lack of interest in borrowing money on the part of individuals. 
C)  The decision by individuals to stop depositing money in transaction accounts. 
D)  An increase in the reserve requirement. 
A)  An increase in the money multiplier. 
B)  The lack of interest in borrowing money on the part of individuals. 
C)  The decision by individuals to stop depositing money in transaction accounts. 
D)  An increase in the reserve requirement.

Question 14

The basic money supply includes:

Accepted Answer

A)  Currency,transactions accounts,and traveler's checks. 
B)  Currency,transactions accounts,and savings account balances. 
C)  Currency,transactions accounts,and credit card balances. 
D)  Currency,savings account balances,and traveler's checks. 
A)  Currency,transactions accounts,and traveler's checks. 
B)  Currency,transactions accounts,and savings account balances. 
C)  Currency,transactions accounts,and credit card balances. 
D)  Currency,savings account balances,and traveler's checks.

Question 15

If the required reserve ratio is 25 percent,the money multiplier is:

Accepted Answer

A)  0.25. 
B)  4.0. 
C)  25.0. 
D)  40.0 
A)  0.25. 
B)  4.0. 
C)  25.0. 
D)  40.0

Question 16

Use the following balance sheet for Bank of the Universe,which is one of many banks in a banking system.
Table 13.2-Bank of the Universe Balance Sheet  
-Refer to Table 13.2.With a required reserve ratio of 15 percent,Bank of the Universe would have excess reserves of:

Accepted Answer

A)  $150,000. 
B)  $850,000. 
C)  $1,000,000. 
D)  Zero. 
A)  $150,000. 
B)  $850,000. 
C)  $1,000,000. 
D)  Zero.

Question 17

Suppose the entire banking system has a required reserve ratio of 0.20.How much can the money supply increase in response to a $1 billion increase in excess reserves for the whole banking system?

Accepted Answer

A)  $20 billion. 
B)  $5 billion. 
C)  $1 billion. 
D)  $200 million. 
A)  $20 billion. 
B)  $5 billion. 
C)  $1 billion. 
D)  $200 million.

Question 18

Money is functioning as a standard of value when you:

Accepted Answer

A)  Use it to compare two houses in different price ranges. 
B)  Buy jeans at the mall. 
C)  Buy an original painting that you expect will increase in value. 
D)  Save the money you earn during the summer to pay for fall tuition. 
A)  Use it to compare two houses in different price ranges. 
B)  Buy jeans at the mall. 
C)  Buy an original painting that you expect will increase in value. 
D)  Save the money you earn during the summer to pay for fall tuition.

Question 19

The assets held by a bank to fulfill its deposit obligations are known as:

Accepted Answer

A)  Excess reserves. 
B)  Bank reserves. 
C)  The reserve ratio. 
D)  The deposit ratio. 
A)  Excess reserves. 
B)  Bank reserves. 
C)  The reserve ratio. 
D)  The deposit ratio.

Question 20

Which of the following is not true about money?

Accepted Answer

A)  It promotes the specialization of labor. 
B)  It is a mechanism for transforming current income into future purchases. 
C)  It must be minted by the government in order to have value. 
D)  It facilitates the continuous series of exchanges that characterize a market economy. 
A)  It promotes the specialization of labor. 
B)  It is a mechanism for transforming current income into future purchases. 
C)  It must be minted by the government in order to have value. 
D)  It facilitates the continuous series of exchanges that characterize a market economy.

Money-market mutual funds are:

Money is functioning as a standard of value if you:

The distinguishing feature of transactions accounts is that they allow for direct payment to a third party.

Most market transactions are made using:

Which of the following is not true about barter?

LaTressa takes $230 from under her mattress and deposits it in her checking account.The immediate result of this transaction is that M1:

When you purchase jeans at the mall,money is serving as a medium of exchange.

Money is functioning as a store of value when you:

Why are people willing to accept printed paper as money?

If the banking system has a required reserve ratio of 15 percent,then the money multiplier is:

If the required reserve ratio is 10 percent,the money multiplier is:

Potential deposit creation for the entire banking system is without limit because when lending takes place,the excess reserves of one bank become deposits for another bank.

Constraints on deposit creation include all of the following except:

The basic money supply includes:

If the required reserve ratio is 25 percent,the money multiplier is:

Use the following balance sheet for Bank of the Universe,which is one of many banks in a banking system. Table 13.2-Bank of the Universe Balance Sheet -Refer to Table 13.2.With a required reserve ratio of 15 percent,Bank of the Universe would have excess reserves of:

Suppose the entire banking system has a required reserve ratio of 0.20.How much can the money supply increase in response to a $1 billion increase in excess reserves for the whole banking system?

Money is functioning as a standard of value when you:

The assets held by a bank to fulfill its deposit obligations are known as:

Which of the following is not true about money?

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

Money-market mutual funds are:

Money is functioning as a standard of value if you:

The distinguishing feature of transactions accounts is that they allow for direct payment to a third party.

Most market transactions are made using:

Which of the following is not true about barter?

LaTressa takes $230 from under her mattress and deposits it in her checking account.The immediate result of this transaction is that M1:

When you purchase jeans at the mall,money is serving as a medium of exchange.

Money is functioning as a store of value when you:

Why are people willing to accept printed paper as money?

If the banking system has a required reserve ratio of 15 percent,then the money multiplier is:

If the required reserve ratio is 10 percent,the money multiplier is:

Potential deposit creation for the entire banking system is without limit because when lending takes place,the excess reserves of one bank become deposits for another bank.

Constraints on deposit creation include all of the following except:

The basic money supply includes:

If the required reserve ratio is 25 percent,the money multiplier is:

Use the following balance sheet for Bank of the Universe,which is one of many banks in a banking system. Table 13.2-Bank of the Universe Balance Sheet -Refer to Table 13.2.With a required reserve ratio of 15 percent,Bank of the Universe would have excess reserves of:

Suppose the entire banking system has a required reserve ratio of 0.20.How much can the money supply increase in response to a $1 billion increase in excess reserves for the whole banking system?

Money is functioning as a standard of value when you:

The assets held by a bank to fulfill its deposit obligations are known as:

Which of the following is not true about money?

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