Question 1

To a bank,checkable deposits are classified as a liability.

Accepted Answer

A) True 
 B)False

Question 2

Money is defined by economists as

Accepted Answer

A) the market value of an asset. 
B) the funds one receives during a specified period of time. 
C) any good that is widely accepted in exchange and for the repayment of debts. 
D) both b and c 
E) all of the above 
A) the market value of an asset. 
B) the funds one receives during a specified period of time. 
C) any good that is widely accepted in exchange and for the repayment of debts. 
D) both b and c 
E) all of the above

Question 3

Tenth National Bank holds $285 million in checkable deposits and $35 million in reserves.With a required reserve ratio of 11 percent,how much in excess reserves is Tenth National holding?

Accepted Answer

A) $250 million 
B) $3.65 million 
C) $35.2 million 
D) 3.85 million 
A) $250 million 
B) $3.65 million 
C) $35.2 million 
D) 3.85 million

Question 4

When a bank makes a loan to one of its customers,to the bank the loan is classified as

Accepted Answer

A) an asset. 
B) a liability. 
C) neither an asset nor a liability. 
D) an asset in some cases and a liability in other cases,depending on the type of loan. 
A) an asset. 
B) a liability. 
C) neither an asset nor a liability. 
D) an asset in some cases and a liability in other cases,depending on the type of loan.

Question 5

In which setting are the transaction costs of making an exchange likely to be the highest?

Accepted Answer

A) buying cereal at the grocery store 
B) buying a house 
C) buying a computer over the Internet 
D) buying stock in a company 
E) buying a Big Mac at McDonald's 
A) buying cereal at the grocery store 
B) buying a house 
C) buying a computer over the Internet 
D) buying stock in a company 
E) buying a Big Mac at McDonald's

Question 6

A savings deposit is a type of

Accepted Answer

A) time deposit that is payable on demand. 
B) time deposit that earns interest and allows the depositor to write checks payable to other persons. 
C) time deposit that does not earn interest but does offer limited check-writing services. 
D) interest-earning account at a bank or thrift institution in which funds can be withdrawn at any time without a penalty payment. 
E) checkable deposit that also pays interest. 
A) time deposit that is payable on demand. 
B) time deposit that earns interest and allows the depositor to write checks payable to other persons. 
C) time deposit that does not earn interest but does offer limited check-writing services. 
D) interest-earning account at a bank or thrift institution in which funds can be withdrawn at any time without a penalty payment. 
E) checkable deposit that also pays interest.

Question 7

Historically,which of the following goods have evolved into money?

Accepted Answer

A) gold 
B) salt 
C) cattle 
D) cocoa beans 
E) all of the above 
A) gold 
B) salt 
C) cattle 
D) cocoa beans 
E) all of the above

Question 8

M1 is comprised of currency held outside banks + traveler's checks + __________.

Accepted Answer

A) credit cards 
B) savings deposits 
C) gold 
D) checkable deposits 
E) money market mutual funds 
A) credit cards 
B) savings deposits 
C) gold 
D) checkable deposits 
E) money market mutual funds

Question 9

To an economist,money is a synonym for which of the following?

Accepted Answer

A) income 
B) credit 
C) wealth 
D) salary 
E) none of the above 
A) income 
B) credit 
C) wealth 
D) salary 
E) none of the above

Question 10

A bank's assets are $400 million and its liabilities are $300 million,which means that the bank's net worth (bank capital)is ____________________.If the bank's assets rise by 8% at the same time that its liabilities rise by 5%,the bank's new net worth will then be _______________.

Accepted Answer

A) $700 million;$713 million 
B) $100 million;$117 million 
C) $100 million;$102 million 
D) $350 million;$360.5 million 
A) $700 million;$713 million 
B) $100 million;$117 million 
C) $100 million;$102 million 
D) $350 million;$360.5 million

Question 11

Describe the circumstances under which the M1 money supply could fall while the M2 money supply remains constant at the same time.

Accepted Answer

In order for the M1 money supply to fall

Question 12

In direct finance,funds are loaned and borrowed through a financial intermediary.

Accepted Answer

A) True 
 B)False

Question 13

Changing from a barter economy to a money economy can reduce transaction costs.

Accepted Answer

A) True 
 B)False

Question 14

The unit of account function of money refers to the

Accepted Answer

A) fact that money and income are the same thing. 
B) common denominator of measurement provided by money. 
C) characteristic that all money is intrinsically valuable. 
D) all of the above 
A) fact that money and income are the same thing. 
B) common denominator of measurement provided by money. 
C) characteristic that all money is intrinsically valuable. 
D) all of the above

Question 15

Describe the differences between M1 and M2.

Accepted Answer

M1 is the narrow definition of the money

Question 16

Which of the following is not a component of M1?

Accepted Answer

A) currency held outside banks 
B) traveler's checks 
C) savings deposits 
D) checkable deposits 
A) currency held outside banks 
B) traveler's checks 
C) savings deposits 
D) checkable deposits

Question 17

Bank A has $25,500 in required reserves.The required reserve ratio is 10 percent.Bank A has checkable deposits of

Accepted Answer

A) $2,550. 
B) $255,000. 
C) $2,550,000. 
D) $25,500. 
A) $2,550. 
B) $255,000. 
C) $2,550,000. 
D) $25,500.

Question 18

Excess reserves are the amount by which total reserves exceed required reserves.

Accepted Answer

A) True 
 B)False

Question 19

The risk of specializing (in the production of one good or service)is

Accepted Answer

A) lower in a barter economy than in a money economy. 
B) lower in a money economy than in a barter economy. 
C) the same in both a money and barter economy. 
D) greater the less likely you and the person you want to trade with have a double coincidence of wants. 
E) b and d 
A) lower in a barter economy than in a money economy. 
B) lower in a money economy than in a barter economy. 
C) the same in both a money and barter economy. 
D) greater the less likely you and the person you want to trade with have a double coincidence of wants. 
E) b and d

Question 20

The term federal reserve notes refers to coins minted by the U.S.Treasury.

Accepted Answer

A) True 
 B)False

Exam 12: Money,banking,and the Financial System

To a bank,checkable deposits are classified as a liability.

Money is defined by economists as

Tenth National Bank holds $285 million in checkable deposits and $35 million in reserves.With a required reserve ratio of 11 percent,how much in excess reserves is Tenth National holding?

When a bank makes a loan to one of its customers,to the bank the loan is classified as

In which setting are the transaction costs of making an exchange likely to be the highest?

A savings deposit is a type of

Historically,which of the following goods have evolved into money?

M1 is comprised of currency held outside banks + traveler's checks + __________.

To an economist,money is a synonym for which of the following?

A bank's assets are $400 million and its liabilities are $300 million,which means that the bank's net worth (bank capital)is ____________________.If the bank's assets rise by 8% at the same time that its liabilities rise by 5%,the bank's new net worth will then be _______________.

Describe the circumstances under which the M1 money supply could fall while the M2 money supply remains constant at the same time.

In direct finance,funds are loaned and borrowed through a financial intermediary.

Changing from a barter economy to a money economy can reduce transaction costs.

The unit of account function of money refers to the

Describe the differences between M1 and M2.

Which of the following is not a component of M1?

Bank A has $25,500 in required reserves.The required reserve ratio is 10 percent.Bank A has checkable deposits of

Excess reserves are the amount by which total reserves exceed required reserves.

The risk of specializing (in the production of one good or service)is

The term federal reserve notes refers to coins minted by the U.S.Treasury.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, controlled, and Relative

Supply,demand,and Price: Applications

Macroeconomic Measurements, part I: Prices and Unemployment

Macroeconomic Measurements, part II: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self-Regulating Economy

Keynesian Macroeconomics and Economic Instability: a Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, technology, ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case for and Against Government: Five Topics Considered

Stocks, bonds, futures, and Options

Filters

A bank's assets are $400 million and its liabilities are $300 million,which means that the bank's net worth (bank capital)is ______.If the bank's assets rise by 8% at the same time that its liabilities rise by 5%,the bank's new net worth will then be _.