Question 1

Credit cards should be included in M1 because they are just like checks.

Accepted Answer

A) True 
 B)False

Question 2

From a new deposit in a checking account potential money creation is:

Accepted Answer

A) ​excess reserves times money multiplier. 
B) ​initial deposit times money multiplier. 
C) ​actual reserves times required reserve ratio. 
D) ​required reserves times money multiplier. 
A) ​excess reserves times money multiplier. 
B) ​initial deposit times money multiplier. 
C) ​actual reserves times required reserve ratio. 
D) ​required reserves times money multiplier.

Question 3

Money lowers the transaction cost when:

Accepted Answer

A) ​the economy is experiencing rapid inflation. 
B) ​its value is stable. 
C) ​the rate of inflation is uncertain. 
D) ​there is widespread deflation 
A) ​the economy is experiencing rapid inflation. 
B) ​its value is stable. 
C) ​the rate of inflation is uncertain. 
D) ​there is widespread deflation

Question 4

In general, a bank that held excess reserves would earn lower profits as a result.

Accepted Answer

A) True 
 B)False

Question 5

Fiat money has value because:

Accepted Answer

A) ​it is backed by gold. 
B) ​it is divisible. 
C) ​it can be used to buy things. 
D) ​it can be exchanged for a commodity backing it. 
A) ​it is backed by gold. 
B) ​it is divisible. 
C) ​it can be used to buy things. 
D) ​it can be exchanged for a commodity backing it.

Question 6

A bank receives a demand deposit of $5,000. The bank loans out $3,500 of this deposit and increases its excess reserves by $500. What is the required reserve ratio?

Accepted Answer

A) ​10% 
B) ​20% 
C) ​40% 
D) ​60% 
A) ​10% 
B) ​20% 
C) ​40% 
D) ​60%

Question 7

Federal funds market rate is:

Accepted Answer

A) ​the rate at which central bank provides funds to commercial banks. 
B) ​the rate charged by banks on loans to the public. 
C) ​the rate charged on loans from one bank to another provided to meet reserve requirement. 
D) ​higher than the discount rate. 
A) ​the rate at which central bank provides funds to commercial banks. 
B) ​the rate charged by banks on loans to the public. 
C) ​the rate charged on loans from one bank to another provided to meet reserve requirement. 
D) ​higher than the discount rate.

Question 8

If individuals will no longer accept a currency, is it still considered to be money?

Accepted Answer

A) ​No, because one of the main characteristics necessary for something to serve as money is that it must be generally acceptable. 
B) ​No, because of Gresham's Law. 
C) ​Yes, because the government identifies it as legal tender. 
D) ​Yes, because one of the main characteristics necessary for something to serve as money is that it must be generally acceptable. 
A) ​No, because one of the main characteristics necessary for something to serve as money is that it must be generally acceptable. 
B) ​No, because of Gresham's Law. 
C) ​Yes, because the government identifies it as legal tender. 
D) ​Yes, because one of the main characteristics necessary for something to serve as money is that it must be generally acceptable.

Question 9

Using money as a store of value rather than wheat is:

Accepted Answer

A) ​safer. 
B) ​less expensive. 
C) ​both safer and less expensive. 
D) ​neither safer nor less expensive. 
A) ​safer. 
B) ​less expensive. 
C) ​both safer and less expensive. 
D) ​neither safer nor less expensive.

Question 10

A reserve requirement of 10 percent means a money multiplier of:

Accepted Answer

A) ​1. 
B) ​9. 
C) ​10. 
D) ​11.1. 
A) ​1. 
B) ​9. 
C) ​10. 
D) ​11.1.

Question 11

If a bank had demand deposits of $50 million and it faced a 25 percent required reserve ratio, it would be required to have how many reserves?

Accepted Answer

A) ​$50 million 
B) ​$37.5 million 
C) ​$25 million 
D) ​$12.5 million 
A) ​$50 million 
B) ​$37.5 million 
C) ​$25 million 
D) ​$12.5 million

Question 12

A reserve requirement of 50 percent means a money multiplier of:

Accepted Answer

A) ​0.50. 
B) ​2. 
C) ​5. 
D) ​50. 
A) ​0.50. 
B) ​2. 
C) ​5. 
D) ​50.

Credit cards should be included in M1 because they are just like checks.

From a new deposit in a checking account potential money creation is:

Money lowers the transaction cost when:

In general, a bank that held excess reserves would earn lower profits as a result.

Fiat money has value because:

A bank receives a demand deposit of $5,000. The bank loans out $3,500 of this deposit and increases its excess reserves by $500. What is the required reserve ratio?

Federal funds market rate is:

If individuals will no longer accept a currency, is it still considered to be money?

Using money as a store of value rather than wheat is:

A reserve requirement of 10 percent means a money multiplier of:

If a bank had demand deposits of $50 million and it faced a 25 percent required reserve ratio, it would be required to have how many reserves?

A reserve requirement of 50 percent means a money multiplier of:

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

Exam 17: Income, Poverty and Health Care

Credit cards should be included in M1 because they are just like checks.

From a new deposit in a checking account potential money creation is:

Money lowers the transaction cost when:

In general, a bank that held excess reserves would earn lower profits as a result.

Fiat money has value because:

A bank receives a demand deposit of $5,000. The bank loans out $3,500 of this deposit and increases its excess reserves by $500. What is the required reserve ratio?

Federal funds market rate is:

If individuals will no longer accept a currency, is it still considered to be money?

Using money as a store of value rather than wheat is:

A reserve requirement of 10 percent means a money multiplier of:

If a bank had demand deposits of $50 million and it faced a 25 percent required reserve ratio, it would be required to have how many reserves?

A reserve requirement of 50 percent means a money multiplier of:

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters