Question 1

If the discount rate is lowered, banks borrow

Accepted Answer

A)  less from the Fed so reserves increase. 
B)  less from the Fed so reserves decrease. 
C)  more from the Fed so reserves increase. 
D)  more from the Fed so reserves decrease. 
A)  less from the Fed so reserves increase. 
B)  less from the Fed so reserves decrease. 
C)  more from the Fed so reserves increase. 
D)  more from the Fed so reserves decrease.

Question 2

Which of the following lists is included in what economists call "money"?

Accepted Answer

A)  cash 
B)  cash and stocks and bonds 
C)  cash and stocks and bonds and real estate 
D)  cash and stocks and bonds and real estate and all other assets 
A)  cash 
B)  cash and stocks and bonds 
C)  cash and stocks and bonds and real estate 
D)  cash and stocks and bonds and real estate and all other assets

Question 3

Table 29-5.
  
-Refer to Table 29-5. If the bank faces a reserve requirement of 6 percent, then the bank

Accepted Answer

A)  is in a position to make a new loan of $12,000. 
B)  is in a position to make a new loan of $18,000. 
C)  has excess reserves of $12,000. 
D)  None of the above is correct. 
A)  is in a position to make a new loan of $12,000. 
B)  is in a position to make a new loan of $18,000. 
C)  has excess reserves of $12,000. 
D)  None of the above is correct.

Question 4

The federal funds rate is the interest rate

Accepted Answer

A)  the Federal Reserve charges for loans it makes to the federal government. 
B)  the Federal Reserve charges banks for short-term loans. 
C)  banks charge each other for short-term loans of reserves. 
D)  on newly issued one-year Treasury bonds. 
A)  the Federal Reserve charges for loans it makes to the federal government. 
B)  the Federal Reserve charges banks for short-term loans. 
C)  banks charge each other for short-term loans of reserves. 
D)  on newly issued one-year Treasury bonds.

Question 5

If the public decides to hold more currency and fewer deposits in banks, bank reserves

Accepted Answer

A)  decrease and the money supply eventually decreases. 
B)  decrease but the money supply does not change. 
C)  increase and the money supply eventually increases. 
D)  increase but the money supply does not change. 
A)  decrease and the money supply eventually decreases. 
B)  decrease but the money supply does not change. 
C)  increase and the money supply eventually increases. 
D)  increase but the money supply does not change.

Question 6

If the federal funds rate were below the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by

Accepted Answer

A)  buying bonds. This buying would reduce reserves. 
B)  buying bonds. This buying would increase reserves. 
C)  selling bonds. This selling would reduce reserves. 
D)  selling bonds. This selling would increase reserves. 
A)  buying bonds. This buying would reduce reserves. 
B)  buying bonds. This buying would increase reserves. 
C)  selling bonds. This selling would reduce reserves. 
D)  selling bonds. This selling would increase reserves.

Question 7

The legal tender requirement means that

Accepted Answer

A)  people are more likely to accept the dollar as a medium of exchange. 
B)  the government must hold enough gold to redeem all currency. 
C)  people may not make trades with anything else. 
D)  All of the above are correct. 
A)  people are more likely to accept the dollar as a medium of exchange. 
B)  the government must hold enough gold to redeem all currency. 
C)  people may not make trades with anything else. 
D)  All of the above are correct.

Question 8

If you deposit $100 of currency into a demand deposit at a bank, this action by itself

Accepted Answer

A)  does not change the money supply. 
B)  increases the money supply. 
C)  decreases the money supply. 
D)  has an indeterminate effect on the money supply. 
A)  does not change the money supply. 
B)  increases the money supply. 
C)  decreases the money supply. 
D)  has an indeterminate effect on the money supply.

Question 9

Fractional reserve banking is a system where banks must hold an amount of cash based on a percentage of its loans.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is correct? In the special case of the 100-percent reserve banking the money multiplier is

Accepted Answer

A)  0 and banks create money. 
B)  0 and banks do not create money. 
C)  1 and banks create money 
D)  1 and banks do not create money. 
A)  0 and banks create money. 
B)  0 and banks do not create money. 
C)  1 and banks create money 
D)  1 and banks do not create money.

Question 11

What does it mean for the Fed to be the "lender of last resort?"

Accepted Answer

When banks cannot borrow in the market p

Question 12

Currency includes

Accepted Answer

A)  paper bills and coins. 
B)  demand deposits. 
C)  credit cards. 
D)  Both a) and b) are correct. 
A)  paper bills and coins. 
B)  demand deposits. 
C)  credit cards. 
D)  Both a) and b) are correct.

Question 13

U.S. dollars are an example of commodity money and hides used to make trades are an example of fiat money.

Accepted Answer

A) True 
 B)False

Question 14

A bank has $500,000 in deposits and $475,000 in loans. It has loaned out all it can. It has a reserve ratio of

Accepted Answer

A)  2.5 percent. 
B)  5 percent. 
C)  9.5 percent. 
D)  25 percent. 
A)  2.5 percent. 
B)  5 percent. 
C)  9.5 percent. 
D)  25 percent.

Question 15

What is meant by the term "lender of last resort?" In what circumstances might the Fed be a lender of last resort?

Accepted Answer

A "lender of last resort" is a lender to

Question 16

When we say that trade is roundabout we mean that

Accepted Answer

A)  people sometimes trade goods for goods. 
B)  trades require a double coincidence of wants. 
C)  currency is accepted primarily to make further trades. 
D)  people must spend time searching for the products they wish to purchase. 
A)  people sometimes trade goods for goods. 
B)  trades require a double coincidence of wants. 
C)  currency is accepted primarily to make further trades. 
D)  people must spend time searching for the products they wish to purchase.

Question 17

If the federal funds rate were above the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by

Accepted Answer

A)  buying bonds. This buying would reduce reserves. 
B)  buying bonds. This buying would increase reserves. 
C)  selling bonds. This selling would reduce reserves. 
D)  selling bonds. This selling would increase reserves. 
A)  buying bonds. This buying would reduce reserves. 
B)  buying bonds. This buying would increase reserves. 
C)  selling bonds. This selling would reduce reserves. 
D)  selling bonds. This selling would increase reserves.

Question 18

The Fed can decrease the money supply by conducting open-market

Accepted Answer

A)  sales or by raising the discount rate. 
B)  sales or by lowering the discount rate. 
C)  purchases or by raising the discount rate. 
D)  purchases or by lowering the discount rate. 
A)  sales or by raising the discount rate. 
B)  sales or by lowering the discount rate. 
C)  purchases or by raising the discount rate. 
D)  purchases or by lowering the discount rate.

Question 19

What is the Term Auction Facility?

Accepted Answer

The Term Auction Facility is the market

Question 20

Bank runs and the accompanying increase in the money multiplier caused the U.S. money supply to rise by 28 percent from 1929 to 1933.

Accepted Answer

A) True 
 B)False

If the discount rate is lowered, banks borrow

Which of the following lists is included in what economists call "money"?

Table 29-5. -Refer to Table 29-5. If the bank faces a reserve requirement of 6 percent, then the bank

The federal funds rate is the interest rate

If the public decides to hold more currency and fewer deposits in banks, bank reserves

If the federal funds rate were below the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by

The legal tender requirement means that

If you deposit $100 of currency into a demand deposit at a bank, this action by itself

Fractional reserve banking is a system where banks must hold an amount of cash based on a percentage of its loans.

Which of the following statements is correct? In the special case of the 100-percent reserve banking the money multiplier is

What does it mean for the Fed to be the "lender of last resort?"

Currency includes

U.S. dollars are an example of commodity money and hides used to make trades are an example of fiat money.

A bank has $500,000 in deposits and $475,000 in loans. It has loaned out all it can. It has a reserve ratio of

What is meant by the term "lender of last resort?" In what circumstances might the Fed be a lender of last resort?

When we say that trade is roundabout we mean that

If the federal funds rate were above the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by

The Fed can decrease the money supply by conducting open-market

What is the Term Auction Facility?

Bank runs and the accompanying increase in the money multiplier caused the U.S. money supply to rise by 28 percent from 1929 to 1933.

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

If the discount rate is lowered, banks borrow

Which of the following lists is included in what economists call "money"?

Table 29-5. -Refer to Table 29-5. If the bank faces a reserve requirement of 6 percent, then the bank

The federal funds rate is the interest rate

If the public decides to hold more currency and fewer deposits in banks, bank reserves

If the federal funds rate were below the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by

The legal tender requirement means that

If you deposit $100 of currency into a demand deposit at a bank, this action by itself

Fractional reserve banking is a system where banks must hold an amount of cash based on a percentage of its loans.

Which of the following statements is correct? In the special case of the 100-percent reserve banking the money multiplier is

What does it mean for the Fed to be the "lender of last resort?"

Currency includes

U.S. dollars are an example of commodity money and hides used to make trades are an example of fiat money.

A bank has $500,000 in deposits and $475,000 in loans. It has loaned out all it can. It has a reserve ratio of

What is meant by the term "lender of last resort?" In what circumstances might the Fed be a lender of last resort?

When we say that trade is roundabout we mean that

If the federal funds rate were above the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by

The Fed can decrease the money supply by conducting open-market

What is the Term Auction Facility?

Bank runs and the accompanying increase in the money multiplier caused the U.S. money supply to rise by 28 percent from 1929 to 1933.

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