Question 1

According to the article "Why Gold?', silver may be used as money. One problem with using silver as money is that

Accepted Answer

A)  silver is too abundant. 
B)  silver tarnishes over time. 
C)  it is not a precious metal. 
D)  it has a high melting point. 
A)  silver is too abundant. 
B)  silver tarnishes over time. 
C)  it is not a precious metal. 
D)  it has a high melting point.

Question 2

Suppose banks desire to hold no excess reserves and that the Fed has set a reserve requirement of 6 percent. If you deposit $8,000 into First Raven Bank,

Accepted Answer

A)  First Raven's required reserves increase by $480. 
B)  First Raven will be able to lend out $7,520. 
C)  First Raven's assets and liabilities both will increase by $8,000. 
D)  All of the above are correct. 
A)  First Raven's required reserves increase by $480. 
B)  First Raven will be able to lend out $7,520. 
C)  First Raven's assets and liabilities both will increase by $8,000. 
D)  All of the above are correct.

Question 3

If the Fed raised the reserve requirement, the demand for reserves would

Accepted Answer

A)  increase, so the federal funds rate would fall. 
B)  increase, so the federal funds rate would rise. 
C)  decrease, so the federal funds rate would fall. 
D)  decrease, so the federal funds rate would rise. 
A)  increase, so the federal funds rate would fall. 
B)  increase, so the federal funds rate would rise. 
C)  decrease, so the federal funds rate would fall. 
D)  decrease, so the federal funds rate would rise.

Question 4

If people decide to hold more currency relative to deposits, the money supply

Accepted Answer

A)  falls. The Fed could lessen the impact of this by buying Treasury bonds. 
B)  falls. The Fed could lessen the impact of this by selling Treasury bonds. 
C)  rises. The Fed could lessen the impact of this by buying Treasury bonds. 
D)  rises. The Fed could lessen the impact of the by selling Treasury bonds. 
A)  falls. The Fed could lessen the impact of this by buying Treasury bonds. 
B)  falls. The Fed could lessen the impact of this by selling Treasury bonds. 
C)  rises. The Fed could lessen the impact of this by buying Treasury bonds. 
D)  rises. The Fed could lessen the impact of the by selling Treasury bonds.

Question 5

Given the following information, what are the values of M1 and M2?
Small time deposits $2,200 billion
Demand deposits and other checkable deposits $1,700 billion
Savings deposits $2,600 billion
Money market mutual funds $1,500 billion
Traveler's checks $60 billion
Large time deposits $1,500 billion
Currency $350 billion
Miscellaneous categories in M2 $75 billion

Accepted Answer

A)  M1 = $4,310 billion, M2 = $6,285 billion. 
B)  M1 = $2,050 billion, M2 = $9,985 billion. 
C)  M1 = $2,110 billion, M2 = $8,485 billion. 
D)  M1 = $3,610 billion, M2 = $9,985 billion. 
A)  M1 = $4,310 billion, M2 = $6,285 billion. 
B)  M1 = $2,050 billion, M2 = $9,985 billion. 
C)  M1 = $2,110 billion, M2 = $8,485 billion. 
D)  M1 = $3,610 billion, M2 = $9,985 billion.

Question 6

Fiat money

Accepted Answer

A)  is worthless. 
B)  has no intrinsic value. 
C)  may be used as a medium of exchange, but is not legal tender. 
D)  refers to highly liquid assets that do not serve as a medium of exchange. 
A)  is worthless. 
B)  has no intrinsic value. 
C)  may be used as a medium of exchange, but is not legal tender. 
D)  refers to highly liquid assets that do not serve as a medium of exchange.

Question 7

If the central bank in some country raised the reserve requirement, then the money multiplier for that country

Accepted Answer

A)  would increase. 
B)  would not change. 
C)  would decrease. 
D)  could do any of the above. 
A)  would increase. 
B)  would not change. 
C)  would decrease. 
D)  could do any of the above.

Question 8

If the reserve ratio is 4 percent, then the money multiplier is

Accepted Answer

A)  24. 
B)  25. 
C)  26. 
D)  4. 
A)  24. 
B)  25. 
C)  26. 
D)  4.

Question 9

If the Fed decreases reserve requirements, the money supply will increase.

Accepted Answer

A) True 
 B)False

Question 10

When a bank loans out $1,000, the money supply

Accepted Answer

A)  does not change. 
B)  decreases. 
C)  increases. 
D)  may do any of the above. 
A)  does not change. 
B)  decreases. 
C)  increases. 
D)  may do any of the above.

Question 11

An increase in the money supply might indicate that the Fed had

Accepted Answer

A)  purchased bonds in an attempt to increase the federal funds rate. 
B)  purchased bonds in an attempt to reduce the federal funds rate. 
C)  sold bonds in an attempt to increase the federal funds rate. 
D)  sold bonds in an attempt to reduce the federal funds rate. 
A)  purchased bonds in an attempt to increase the federal funds rate. 
B)  purchased bonds in an attempt to reduce the federal funds rate. 
C)  sold bonds in an attempt to increase the federal funds rate. 
D)  sold bonds in an attempt to reduce the federal funds rate.

Question 12

Table 29-8
  
-Refer to Table 29-8. The required reserve ratio is 12 percent. Which of the following is true?

Accepted Answer

A)  This banks reserve ratio is 12 percent. Its excess reserves are $0. 
B)  This banks reserve ratio is 13.3 percent. Its excess reserves are $120. 
C)  This banks reserve ratio is 15 percent. Its excess reserves are $240. 
D)  This banks reserve ratio is 10 percent. Its excess reserves are $300. 
A)  This banks reserve ratio is 12 percent. Its excess reserves are $0. 
B)  This banks reserve ratio is 13.3 percent. Its excess reserves are $120. 
C)  This banks reserve ratio is 15 percent. Its excess reserves are $240. 
D)  This banks reserve ratio is 10 percent. Its excess reserves are $300.

Question 13

If banks hold any amount of their deposits in reserve, then they do not have the ability to influence the money supply.

Accepted Answer

A) True 
 B)False

Question 14

Money, such as gold, with some intrinsic value is called . Money with no intrinsic value is called .

Accepted Answer

commodity

Question 15

Who was reappointed Chair of the Board of Governors in 2009 by President Barrack Obama?

Accepted Answer

A)  Ben Bernanke 
B)  Christina Romer 
C)  Timothy Geithner 
D)  Bernie Madoff 
A)  Ben Bernanke 
B)  Christina Romer 
C)  Timothy Geithner 
D)  Bernie Madoff

Question 16

Which of the following statements is correct?

Accepted Answer

A)  All items that are included in M1 are included also in M2. 
B)  All items that are included in M2 are included also in M1. 
C)  Credit cards are included in both M1 and M2. 
D)  Savings deposits are included in both M1 and M2. 
A)  All items that are included in M1 are included also in M2. 
B)  All items that are included in M2 are included also in M1. 
C)  Credit cards are included in both M1 and M2. 
D)  Savings deposits are included in both M1 and M2.

Question 17

During a bank run, depositors decide to hold more currency relative to deposits and banks decide to hold more excess reserves relative to deposits.

Accepted Answer

A)  Both the decision to hold relatively more currency and the decision to hold relatively more excess reserves would make the money supply increase. 
B)  Both the decision to hold relatively more currency and the decision to hold relatively more excess reserves would make the money supply decrease. 
C)  The decision to hold relatively more currency would make the money supply increase. The decision to hold relatively more excess reserves would make the money supply decrease. 
D)  The decision to hold relatively more currency would make the money supply increase. The decision to hold relatively more excess reserves would make the money supply decrease 
A)  Both the decision to hold relatively more currency and the decision to hold relatively more excess reserves would make the money supply increase. 
B)  Both the decision to hold relatively more currency and the decision to hold relatively more excess reserves would make the money supply decrease. 
C)  The decision to hold relatively more currency would make the money supply increase. The decision to hold relatively more excess reserves would make the money supply decrease. 
D)  The decision to hold relatively more currency would make the money supply increase. The decision to hold relatively more excess reserves would make the money supply decrease

Question 18

The Federal Reserve

Accepted Answer

A)  is responsible for conducting the nation's monetary policy, and it plays a role in regulating banks. 
B)  is responsible for conducing the nation's monetary policy, but it plays no role in regulating banks. 
C)  is not responsible for conducting the nation's monetary policy, and it plays a role in regulating banks. 
D)  is not responsible for conducing the nation's monetary policy, and it plays no role in regulating banks. 
A)  is responsible for conducting the nation's monetary policy, and it plays a role in regulating banks. 
B)  is responsible for conducing the nation's monetary policy, but it plays no role in regulating banks. 
C)  is not responsible for conducting the nation's monetary policy, and it plays a role in regulating banks. 
D)  is not responsible for conducing the nation's monetary policy, and it plays no role in regulating banks.

Question 19

If a bank desires to hold no excess reserves, the reserve requirement is 8 percent, and it receives a new deposit of $500,

Accepted Answer

A)  its required reserves increase by $40. 
B)  its total reserves initially increase by $460. 
C)  it will be able to make a new loan of up to $492. 
D)  All of the above are correct. 
A)  its required reserves increase by $40. 
B)  its total reserves initially increase by $460. 
C)  it will be able to make a new loan of up to $492. 
D)  All of the above are correct.

Question 20

What is the change in the money supply when the Fed purchases $700 worth of bonds and the required reserve ratio is 14 percent assuming banks hold no excess reserves?

Accepted Answer

The answer of What is the change in the money...

According to the article "Why Gold?', silver may be used as money. One problem with using silver as money is that

Suppose banks desire to hold no excess reserves and that the Fed has set a reserve requirement of 6 percent. If you deposit $8,000 into First Raven Bank,

If the Fed raised the reserve requirement, the demand for reserves would

If people decide to hold more currency relative to deposits, the money supply

Fiat money

If the central bank in some country raised the reserve requirement, then the money multiplier for that country

If the reserve ratio is 4 percent, then the money multiplier is

If the Fed decreases reserve requirements, the money supply will increase.

When a bank loans out $1,000, the money supply

An increase in the money supply might indicate that the Fed had

Table 29-8 -Refer to Table 29-8. The required reserve ratio is 12 percent. Which of the following is true?

If banks hold any amount of their deposits in reserve, then they do not have the ability to influence the money supply.

Money, such as gold, with some intrinsic value is called . Money with no intrinsic value is called .

Who was reappointed Chair of the Board of Governors in 2009 by President Barrack Obama?

Which of the following statements is correct?

During a bank run, depositors decide to hold more currency relative to deposits and banks decide to hold more excess reserves relative to deposits.

The Federal Reserve

If a bank desires to hold no excess reserves, the reserve requirement is 8 percent, and it receives a new deposit of $500,

What is the change in the money supply when the Fed purchases $700 worth of bonds and the required reserve ratio is 14 percent assuming banks hold no excess reserves?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment and Its Natural Rate

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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Exam 11: The Monetary System

According to the article "Why Gold?', silver may be used as money. One problem with using silver as money is that

Suppose banks desire to hold no excess reserves and that the Fed has set a reserve requirement of 6 percent. If you deposit $8,000 into First Raven Bank,

If the Fed raised the reserve requirement, the demand for reserves would

If people decide to hold more currency relative to deposits, the money supply

Fiat money

If the central bank in some country raised the reserve requirement, then the money multiplier for that country

If the reserve ratio is 4 percent, then the money multiplier is

If the Fed decreases reserve requirements, the money supply will increase.

When a bank loans out $1,000, the money supply

An increase in the money supply might indicate that the Fed had

Table 29-8 -Refer to Table 29-8. The required reserve ratio is 12 percent. Which of the following is true?

If banks hold any amount of their deposits in reserve, then they do not have the ability to influence the money supply.

Money, such as gold, with some intrinsic value is called . Money with no intrinsic value is called .

Who was reappointed Chair of the Board of Governors in 2009 by President Barrack Obama?

Which of the following statements is correct?

During a bank run, depositors decide to hold more currency relative to deposits and banks decide to hold more excess reserves relative to deposits.

The Federal Reserve

If a bank desires to hold no excess reserves, the reserve requirement is 8 percent, and it receives a new deposit of $500,

What is the change in the money supply when the Fed purchases $700 worth of bonds and the required reserve ratio is 14 percent assuming banks hold no excess reserves?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment and Its Natural Rate

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters