Question 1

Table 29-1.
The information in the table pertains to an imaginary economy.
  
-Refer to Table 29-1. What is the value of M2 in billions of dollars?

Accepted Answer

A)  $9,815 billion 
B)  $8,315 billion 
C)  $7,565 billion 
D)  $7,405 billion 
A)  $9,815 billion 
B)  $8,315 billion 
C)  $7,565 billion 
D)  $7,405 billion

Question 2

Which of the following increases when the Fed makes open-market sales?

Accepted Answer

A)  currency and reserves 
B)  currency but not reserves 
C)  reserves but not currency 
D)  neither currency nor reserves 
A)  currency and reserves 
B)  currency but not reserves 
C)  reserves but not currency 
D)  neither currency nor reserves

Question 3

Table 29-4.
  
-Refer to Table 29-4. The reserve ratio for this bank is

Accepted Answer

A)  8 percent. 
B)  12.5 percent. 
C)  87.5 percent. 
D)  25 percent. 
A)  8 percent. 
B)  12.5 percent. 
C)  87.5 percent. 
D)  25 percent.

Question 4

The Federal Reserve primarily uses open-market operations to change the money supply.

Accepted Answer

A) True 
 B)False

Question 5

The reserve requirement is 4 percent, banks hold no excess reserves and people hold no currency. If the Fed sells $10,000 worth of bonds, what happens to the money supply?

Accepted Answer

A)  it increases by $250,000 
B)  it increases by $200,000 
C)  it decreases by $200,000 
D)  it decreases by $250,000 
A)  it increases by $250,000 
B)  it increases by $200,000 
C)  it decreases by $200,000 
D)  it decreases by $250,000

Question 6

A bank has a 20 percent reserve requirement, $8,000 in loans, and has loaned out all it can given the reserve requirement.

Accepted Answer

A)  It has $6,400 in deposits. 
B)  It has $10,000 in deposits. 
C)  It has $9,600 in deposits. 
D)  It has $1,600 in deposits. 
A)  It has $6,400 in deposits. 
B)  It has $10,000 in deposits. 
C)  It has $9,600 in deposits. 
D)  It has $1,600 in deposits.

Question 7

The regional Federal Reserve Banks

Accepted Answer

A)  are not allowed to make loans to banks in their region. 
B)  regulate banks in their regions. 
C)  have more voting members on the FOMC than does the Board of Governors. 
D)  are each headed by a member of the Board of Governors. 
A)  are not allowed to make loans to banks in their region. 
B)  regulate banks in their regions. 
C)  have more voting members on the FOMC than does the Board of Governors. 
D)  are each headed by a member of the Board of Governors.

Question 8

Treasury Bonds are

Accepted Answer

A)  both a store of value and a medium of exchange. 
B)  a store of value, but not a medium of exchange 
C)  a medium of exchange, but not a store of value. 
D)  neither a store of value nor a medium of exchange. 
A)  both a store of value and a medium of exchange. 
B)  a store of value, but not a medium of exchange 
C)  a medium of exchange, but not a store of value. 
D)  neither a store of value nor a medium of exchange.

Question 9

Scenario 29-2.
The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi. The local unit of currency is the taz. Aggregate banking statistics show that collectively the banks of Tazi hold 300 million tazes of required reserves, 75 million tazes of excess reserves, have issued 7,500 million tazes of deposits, and hold 225 million tazes of Tazian Treasury bonds. Tazians prefer to use only demand deposits and so all money is on deposit at the bank.
-Refer to Scenario 29-2. Assume that banks desire to continue holding the same ratio of excess reserves to deposits. What is the reserve requirement and the reserve ratio for Tazian Banks?

Accepted Answer

A)  5 percent, 8 percent 
B)  4 percent, 8 percent 
C)  4 percent, 5 percent 
D)  None of the above is correct. 
A)  5 percent, 8 percent 
B)  4 percent, 8 percent 
C)  4 percent, 5 percent 
D)  None of the above is correct.

Question 10

All U.S. paper dollars read "This note is legal tender for all debts, public and private." This statement represents which characteristic of US currency?

Accepted Answer

A)  The U.S. operates under the gold standard. 
B)  U.S. paper money is commodity money. 
C)  U.S. paper money is fiat money. 
D)  U.S. paper money is a convenient store of wealth. 
A)  The U.S. operates under the gold standard. 
B)  U.S. paper money is commodity money. 
C)  U.S. paper money is fiat money. 
D)  U.S. paper money is a convenient store of wealth.

Question 11

In a 100-percent-reserve banking system, if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits, then

Accepted Answer

A)  M1 would increase. 
B)  M1 would decrease. 
C)  M1 would not change. 
D)  M1 might rise or fall. 
A)  M1 would increase. 
B)  M1 would decrease. 
C)  M1 would not change. 
D)  M1 might rise or fall.

Question 12

The money multiplier is when the reserve ratio is 12.5 percent.

Accepted Answer

The answer of The money multiplier is when the reserve...

Question 13

Table 29-1.
The information in the table pertains to an imaginary economy.
  
-Refer to Table 29-1. What is the value of M1 in billions of dollars?

Accepted Answer

A)  $1,915 billion 
B)  $1,900 billion 
C)  $2,665 billion 
D)  $2,825 billion 
A)  $1,915 billion 
B)  $1,900 billion 
C)  $2,665 billion 
D)  $2,825 billion

Question 14

You pay for cheese and bread from the deli with currency. Which function of money does this best illustrate?

Accepted Answer

A)  medium of exchange 
B)  unit of account 
C)  store of value 
D)  liquidity 
A)  medium of exchange 
B)  unit of account 
C)  store of value 
D)  liquidity

Question 15

Which of the following is not correct?

Accepted Answer

A)  The regional Federal Reserve Banks play a role in regulating banks and ensuring the health of the banking system. 
B)  The President of the New York Federal Reserve Regional Bank always gets to vote on the decisions made by the Federal Open Market Committee. 
C)  U.S. monetary policy is made by the Federal Open Market Committee. 
D)  The Federal Open Market Committee meets every 12 weeks. 
A)  The regional Federal Reserve Banks play a role in regulating banks and ensuring the health of the banking system. 
B)  The President of the New York Federal Reserve Regional Bank always gets to vote on the decisions made by the Federal Open Market Committee. 
C)  U.S. monetary policy is made by the Federal Open Market Committee. 
D)  The Federal Open Market Committee meets every 12 weeks.

Question 16

Which of the following can banks use to borrow from the Federal Reserve?

Accepted Answer

A)  the discount window or the term auction facility 
B)  the discount window but not the term auction facility 
C)  the term auction facility but not the discount window 
D)  Banks cannot borrow from the Federal Reserve, only the government can. 
A)  the discount window or the term auction facility 
B)  the discount window but not the term auction facility 
C)  the term auction facility but not the discount window 
D)  Banks cannot borrow from the Federal Reserve, only the government can.

Question 17

How does the Fed Open Market Committee increase the money supply?

Accepted Answer

The answer of How does the Fed Open Market Committee...

Question 18

To increase the money supply, the Fed could

Accepted Answer

A)  sell government bonds. 
B)  auction more loans to banks. 
C)  increase the reserve requirement. 
D)  None of the above is correct. 
A)  sell government bonds. 
B)  auction more loans to banks. 
C)  increase the reserve requirement. 
D)  None of the above is correct.

Question 19

If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold

Accepted Answer

A)  fewer reserves, so the reserve ratio will fall. 
B)  fewer reserves, so the reserve ratio will rise. 
C)  more reserves, so the reserve ratio will fall. 
D)  more reserves, so the reserve ratio will rise. 
A)  fewer reserves, so the reserve ratio will fall. 
B)  fewer reserves, so the reserve ratio will rise. 
C)  more reserves, so the reserve ratio will fall. 
D)  more reserves, so the reserve ratio will rise.

Question 20

In recent years the Federal Open Market Committee has focused on a target for

Accepted Answer

A)  M1 growth. 
B)  the federal funds rate. 
C)  the number of Treasury Securities issued by the federal government. 
D)  total reserves of banks. 
A)  M1 growth. 
B)  the federal funds rate. 
C)  the number of Treasury Securities issued by the federal government. 
D)  total reserves of banks.

Table 29-1. The information in the table pertains to an imaginary economy. -Refer to Table 29-1. What is the value of M2 in billions of dollars?

Which of the following increases when the Fed makes open-market sales?

Table 29-4. -Refer to Table 29-4. The reserve ratio for this bank is

The Federal Reserve primarily uses open-market operations to change the money supply.

The reserve requirement is 4 percent, banks hold no excess reserves and people hold no currency. If the Fed sells $10,000 worth of bonds, what happens to the money supply?

A bank has a 20 percent reserve requirement, $8,000 in loans, and has loaned out all it can given the reserve requirement.

The regional Federal Reserve Banks

Treasury Bonds are

All U.S. paper dollars read "This note is legal tender for all debts, public and private." This statement represents which characteristic of US currency?

In a 100-percent-reserve banking system, if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits, then

The money multiplier is when the reserve ratio is 12.5 percent.

Table 29-1. The information in the table pertains to an imaginary economy. -Refer to Table 29-1. What is the value of M1 in billions of dollars?

You pay for cheese and bread from the deli with currency. Which function of money does this best illustrate?

Which of the following is not correct?

Which of the following can banks use to borrow from the Federal Reserve?

How does the Fed Open Market Committee increase the money supply?

To increase the money supply, the Fed could

If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold

In recent years the Federal Open Market Committee has focused on a target for

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

Table 29-1. The information in the table pertains to an imaginary economy. -Refer to Table 29-1. What is the value of M2 in billions of dollars?

Which of the following increases when the Fed makes open-market sales?

Table 29-4. -Refer to Table 29-4. The reserve ratio for this bank is

The Federal Reserve primarily uses open-market operations to change the money supply.

The reserve requirement is 4 percent, banks hold no excess reserves and people hold no currency. If the Fed sells $10,000 worth of bonds, what happens to the money supply?

A bank has a 20 percent reserve requirement, $8,000 in loans, and has loaned out all it can given the reserve requirement.

The regional Federal Reserve Banks

Treasury Bonds are

All U.S. paper dollars read "This note is legal tender for all debts, public and private." This statement represents which characteristic of US currency?

In a 100-percent-reserve banking system, if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits, then

The money multiplier is when the reserve ratio is 12.5 percent.

Table 29-1. The information in the table pertains to an imaginary economy. -Refer to Table 29-1. What is the value of M1 in billions of dollars?

You pay for cheese and bread from the deli with currency. Which function of money does this best illustrate?

Which of the following is not correct?

Which of the following can banks use to borrow from the Federal Reserve?

How does the Fed Open Market Committee increase the money supply?

To increase the money supply, the Fed could

If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold

In recent years the Federal Open Market Committee has focused on a target for

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