Question 1

When the market value of goods and services is expressed in prices,money is functioning as a:

Accepted Answer

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

Question 2

Only currency and coins serve as money in the United States economy.

Accepted Answer

A) True 
 B)False

Question 3

Savings accounts and certificates of deposit are called

Accepted Answer

A)  Transaction accounts. 
B)  Treasury accounts. 
C)  Store of value. 
D)  Near money. 
A)  Transaction accounts. 
B)  Treasury accounts. 
C)  Store of value. 
D)  Near money.

Question 4

When a bank makes a loan:

Accepted Answer

A)  It reduces the amount of money in the monetary system. 
B)  It creates a transactions-account balance for the borrower. 
C)  It usually gives the borrower cash. 
D)  It prints additional money for the borrower. 
A)  It reduces the amount of money in the monetary system. 
B)  It creates a transactions-account balance for the borrower. 
C)  It usually gives the borrower cash. 
D)  It prints additional money for the borrower.

Question 5

If there is no minimum reserve requirement in the banking system,the potential ability of banks to create money is:

Accepted Answer

A)  Zero. 
B)  Unlimited. 
C)  Limited by the amount of deposits. 
D)  Limited by the number of banks in the banking system. 
A)  Zero. 
B)  Unlimited. 
C)  Limited by the amount of deposits. 
D)  Limited by the number of banks in the banking system.

Question 6

Money is functioning as a medium of exchange if you:

Accepted Answer

A)  Compare book prices at the university bookstore versus online. 
B)  Spend less this week so you'll have money for a concert next month. 
C)  Purchase coffee at the local coffee shop before class. 
D)  Share a ride with your roommate instead of buying gas. 
A)  Compare book prices at the university bookstore versus online. 
B)  Spend less this week so you'll have money for a concert next month. 
C)  Purchase coffee at the local coffee shop before class. 
D)  Share a ride with your roommate instead of buying gas.

Question 7

The money multiplier represents the relationship between excess reserves and the number of deposit dollars the banking system can generate.

Accepted Answer

A) True 
 B)False

Question 8

Historically in the United States,money has included all of the following except:

Accepted Answer

A)  Grain. 
B)  Fish. 
C)  Milk. 
D)  Furs. 
A)  Grain. 
B)  Fish. 
C)  Milk. 
D)  Furs.

Question 9

If the banking system has a required reserve ratio of 20 percent,then the money multiplier is:

Accepted Answer

A)  0.2. 
B)  0.8. 
C)  1.25. 
D)  5.0 
A)  0.2. 
B)  0.8. 
C)  1.25. 
D)  5.0

Question 10

Even if an economy has a form of money,if the money loses its value then people may resort to barter.

Accepted Answer

A) True 
 B)False

Question 11

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 10 percent,Bank of the Universe can make new loans in the amount of:

Accepted Answer

A)  $10,000. 
B)  $50,000. 
C)  $100,000. 
D)  $1,000,000. 
A)  $10,000. 
B)  $50,000. 
C)  $100,000. 
D)  $1,000,000.

Question 12

Because the United States has a fractional reserve banking structure,banks are allowed to make loans which increase the money supply.

Accepted Answer

A) True 
 B)False

Question 13

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." Apparently:

Accepted Answer

A)  The price of glass is falling in terms of the Russian currency. 
B)  Barter is replacing the Russian currency. 
C)  There is deflation in Russia. 
D)  There is an excess supply of glass,which allows the excess to be used as a medium of exchange. 
A)  The price of glass is falling in terms of the Russian currency. 
B)  Barter is replacing the Russian currency. 
C)  There is deflation in Russia. 
D)  There is an excess supply of glass,which allows the excess to be used as a medium of exchange.

Question 14

If total reserves for a bank are $25,000,excess reserves are zero,and demand deposits are $100,000,then the money multiplier must be:

Accepted Answer

A)  0.25. 
B)  4.00. 
C)  20.00. 
D)  25.00 
A)  0.25. 
B)  4.00. 
C)  20.00. 
D)  25.00

Question 15

Suppose a bank has $2,000,000 in deposits,a minimum reserve requirement of 10 percent,and bank reserves of $250,000.Then the bank has excess reserves of:

Accepted Answer

A)  $50,000 
B)  $250,000 
C)  $450,000 
D)  $1,550,000 
A)  $50,000 
B)  $250,000 
C)  $450,000 
D)  $1,550,000

Question 16

Suppose a bank has $1,500,000 in deposits,a minimum reserve requirement of 20 percent,and total reserves of $350,000.Then the bank has excess reserves of:

Accepted Answer

A)  $1,850,000 
B)  $350,000 
C)  $300,000 
D)  $50,000 
A)  $1,850,000 
B)  $350,000 
C)  $300,000 
D)  $50,000

Question 17

Banks do all of the following except:

Accepted Answer

A)  Lend money to businesses for new plant and equipment. 
B)  Lend money to consumers for new homes and cars. 
C)  Print dollar bills. 
D)  Create money through lending. 
A)  Lend money to businesses for new plant and equipment. 
B)  Lend money to consumers for new homes and cars. 
C)  Print dollar bills. 
D)  Create money through lending.

Question 18

Ceteris paribus,the money supply becomes smaller when:

Accepted Answer

A)  The Federal Reserve reduces the reserve requirement. 
B)  An individual deposits currency into her transactions account. 
C)  An individual repays the money that he borrowed from a bank. 
D)  A bank reduces its excess reserves to make a loan. 
A)  The Federal Reserve reduces the reserve requirement. 
B)  An individual deposits currency into her transactions account. 
C)  An individual repays the money that he borrowed from a bank. 
D)  A bank reduces its excess reserves to make a loan.

Question 19

If excess reserves are $25,000,demand deposits are $100,000,and the minimum reserve requirement is 20 percent,then total reserves are:

Accepted Answer

A)  $20,000 
B)  $25,000 
C)  $45,000 
D)  $125,000 
A)  $20,000 
B)  $25,000 
C)  $45,000 
D)  $125,000

Question 20

Which of the following does not constrain deposit creation?

Accepted Answer

A)  Consumers and businesses decide to take money out of transactions accounts and hold it as cash. 
B)  Consumers,businesses,and governments decide to stop borrowing. 
C)  Banks decide to stop lending money to qualified borrowers. 
D)  The Federal Reserve decides to reduce the minimum reserve requirement. 
A)  Consumers and businesses decide to take money out of transactions accounts and hold it as cash. 
B)  Consumers,businesses,and governments decide to stop borrowing. 
C)  Banks decide to stop lending money to qualified borrowers. 
D)  The Federal Reserve decides to reduce the minimum reserve requirement.

When the market value of goods and services is expressed in prices,money is functioning as a:

Only currency and coins serve as money in the United States economy.

Savings accounts and certificates of deposit are called

When a bank makes a loan:

If there is no minimum reserve requirement in the banking system,the potential ability of banks to create money is:

Money is functioning as a medium of exchange if you:

The money multiplier represents the relationship between excess reserves and the number of deposit dollars the banking system can generate.

Historically in the United States,money has included all of the following except:

If the banking system has a required reserve ratio of 20 percent,then the money multiplier is:

Even if an economy has a form of money,if the money loses its value then people may resort to barter.

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 10 percent,Bank of the Universe can make new loans in the amount of:

Because the United States has a fractional reserve banking structure,banks are allowed to make loans which increase the money supply.

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." Apparently:

If total reserves for a bank are $25,000,excess reserves are zero,and demand deposits are $100,000,then the money multiplier must be:

Suppose a bank has $2,000,000 in deposits,a minimum reserve requirement of 10 percent,and bank reserves of $250,000.Then the bank has excess reserves of:

Suppose a bank has $1,500,000 in deposits,a minimum reserve requirement of 20 percent,and total reserves of $350,000.Then the bank has excess reserves of:

Banks do all of the following except:

Ceteris paribus,the money supply becomes smaller when:

If excess reserves are $25,000,demand deposits are $100,000,and the minimum reserve requirement is 20 percent,then total reserves are:

Which of the following does not constrain deposit creation?

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

When the market value of goods and services is expressed in prices,money is functioning as a:

Only currency and coins serve as money in the United States economy.

Savings accounts and certificates of deposit are called

When a bank makes a loan:

If there is no minimum reserve requirement in the banking system,the potential ability of banks to create money is:

Money is functioning as a medium of exchange if you:

The money multiplier represents the relationship between excess reserves and the number of deposit dollars the banking system can generate.

Historically in the United States,money has included all of the following except:

If the banking system has a required reserve ratio of 20 percent,then the money multiplier is:

Even if an economy has a form of money,if the money loses its value then people may resort to barter.

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 10 percent,Bank of the Universe can make new loans in the amount of:

Because the United States has a fractional reserve banking structure,banks are allowed to make loans which increase the money supply.

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." Apparently:

If total reserves for a bank are $25,000,excess reserves are zero,and demand deposits are $100,000,then the money multiplier must be:

Suppose a bank has $2,000,000 in deposits,a minimum reserve requirement of 10 percent,and bank reserves of $250,000.Then the bank has excess reserves of:

Suppose a bank has $1,500,000 in deposits,a minimum reserve requirement of 20 percent,and total reserves of $350,000.Then the bank has excess reserves of:

Banks do all of the following except:

Ceteris paribus,the money supply becomes smaller when:

If excess reserves are $25,000,demand deposits are $100,000,and the minimum reserve requirement is 20 percent,then total reserves are:

Which of the following does not constrain deposit creation?

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