Question 1

Which list ranks assets from most to least liquid?

Accepted Answer

A)  money, bonds, cars, houses 
B)  money, cars, houses, bonds 
C)  bonds, money, cars, houses 
D)  bonds, cars, money, houses 
A)  money, bonds, cars, houses 
B)  money, cars, houses, bonds 
C)  bonds, money, cars, houses 
D)  bonds, cars, money, houses

Question 2

Designers of the Federal Reserve System were concerned that the Fed might form policy favorable to one part of the country or to a particular party. What are some ways that the organization of the Fed reflects such concerns?

Accepted Answer

1. The president appoints the Board of G

Question 3

If the reserve ratio is 5 percent, then $500 of additional reserves can create up to

Accepted Answer

A)  $10,500 of new money. 
B)  $10,000 of new money. 
C)  $9,500 of new money. 
D)  $2,500 of new money. 
A)  $10,500 of new money. 
B)  $10,000 of new money. 
C)  $9,500 of new money. 
D)  $2,500 of new money.

Question 4

Which of the following might explain why the United States has so much currency per person?

Accepted Answer

A)  U.S. citizens are holding a lot of foreign currency. 
B)  Currency may be a preferable store of wealth for criminals. 
C)  People use credit and debit cards more frequently. 
D)  All of the above help explain the abundance of currency. 
A)  U.S. citizens are holding a lot of foreign currency. 
B)  Currency may be a preferable store of wealth for criminals. 
C)  People use credit and debit cards more frequently. 
D)  All of the above help explain the abundance of currency.

Question 5

All of the presidents of the regional Federal Reserve banks

Accepted Answer

A)  attend each FOMC meeting. 
B)  have voting rights at each FOMC meeting. 
C)  are appointed by the president of the U.S. and confirmed by the U.S. Senate. 
D)  All of the above are correct. 
A)  attend each FOMC meeting. 
B)  have voting rights at each FOMC meeting. 
C)  are appointed by the president of the U.S. and confirmed by the U.S. Senate. 
D)  All of the above are correct.

Question 6

The Board of Governors

Accepted Answer

A)  is chaired by the U.S. Secretary of the Treasury. 
B)  members are elected by the U.S. public. 
C)  has 7 members. 
D)  All of the above are correct. 
A)  is chaired by the U.S. Secretary of the Treasury. 
B)  members are elected by the U.S. public. 
C)  has 7 members. 
D)  All of the above are correct.

Question 7

Discuss why the Fed rarely changes the reserve requirements.

Accepted Answer

There are two main reasons the Fed does

Question 8

If the Fed buys bonds in the open market, the money supply decreases.

Accepted Answer

A) True 
 B)False

Question 9

Money is the most liquid asset available because

Accepted Answer

A)  it is a store of value. 
B)  it is a medium of exchange. 
C)  it is a unit of account. 
D)  it has intrinsic value. 
A)  it is a store of value. 
B)  it is a medium of exchange. 
C)  it is a unit of account. 
D)  it has intrinsic value.

Question 10

Banks cannot influence the money supply if they are required to hold all deposits in reserve.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following items is not included in the most narrow definition of money, M1?

Accepted Answer

A)  currency 
B)  savings deposits 
C)  traveler's checks 
D)  demand deposits 
A)  currency 
B)  savings deposits 
C)  traveler's checks 
D)  demand deposits

Question 12

Trace the effects on the money supply when the Fed decreases the discount rate.

Accepted Answer

The discount rate represents the cost of

Question 13

What does the Fed auction at the Term-Auction Facility?

Accepted Answer

A)  government bonds of a quantity it sets 
B)  government bonds with the quantity determined at the auction 
C)  loans of a quantity it sets 
D)  loans with the quantity determined at the auction 
A)  government bonds of a quantity it sets 
B)  government bonds with the quantity determined at the auction 
C)  loans of a quantity it sets 
D)  loans with the quantity determined at the auction

Question 14

To decrease the money supply, the Fed can

Accepted Answer

A)  buy government bonds or increase the discount rate. 
B)  buy government bonds or decrease the discount rate. 
C)  sell government bonds or increase the discount rate. 
D)  sell government bonds or decrease the discount rate. 
A)  buy government bonds or increase the discount rate. 
B)  buy government bonds or decrease the discount rate. 
C)  sell government bonds or increase the discount rate. 
D)  sell government bonds or decrease the discount rate.

Question 15

When the Fed purchases $1000 worth of government bonds from the public, the U.S. money supply eventually increases by

Accepted Answer

A)  more than $1000. 
B)  exactly $1000. 
C)  less than $1000. 
D)  None of the above are correct. 
A)  more than $1000. 
B)  exactly $1000. 
C)  less than $1000. 
D)  None of the above are correct.

Question 16

The Federal Reserve

Accepted Answer

A)  was created in 1913. 
B)  is the U.S.'s central bank. 
C)  has other duties in addition to controlling the money supply. 
D)  All of the above are correct. 
A)  was created in 1913. 
B)  is the U.S.'s central bank. 
C)  has other duties in addition to controlling the money supply. 
D)  All of the above are correct.

Question 17

Reserves decrease if the Federal Reserve

Accepted Answer

A)  raises the discount rate or auctions more credit. 
B)  raises the discount rate but not if it auctions more credit. 
C)  lowers the discount rate or auctions more credit. 
D)  lowers the discount rate but not if it auctions more credit. 
A)  raises the discount rate or auctions more credit. 
B)  raises the discount rate but not if it auctions more credit. 
C)  lowers the discount rate or auctions more credit. 
D)  lowers the discount rate but not if it auctions more credit.

Question 18

Monetary policy affects employment

Accepted Answer

A)  only in the long run. 
B)  only in the short run. 
C)  in both the long run and the short run. 
D)  in neither the long run nor the short run. 
A)  only in the long run. 
B)  only in the short run. 
C)  in both the long run and the short run. 
D)  in neither the long run nor the short run.

Question 19

The tool most often used by the Fed to control the money supply is

Accepted Answer

A)  changing reserve requirements. 
B)  open market operations. 
C)  buying and selling of equities. 
D)  altering the discount rate. 
A)  changing reserve requirements. 
B)  open market operations. 
C)  buying and selling of equities. 
D)  altering the discount rate.

Question 20

Table 29-2.
The information in the table pertains to an imaginary economy.
  
-Refer to Table 29-2. What is the M1 money supply?

Accepted Answer

A)  $705 billion 
B)  $570 billion 
C)  $505 billion 
D)  $585 billion 
A)  $705 billion 
B)  $570 billion 
C)  $505 billion 
D)  $585 billion

Which list ranks assets from most to least liquid?

Designers of the Federal Reserve System were concerned that the Fed might form policy favorable to one part of the country or to a particular party. What are some ways that the organization of the Fed reflects such concerns?

If the reserve ratio is 5 percent, then $500 of additional reserves can create up to

Which of the following might explain why the United States has so much currency per person?

All of the presidents of the regional Federal Reserve banks

The Board of Governors

Discuss why the Fed rarely changes the reserve requirements.

If the Fed buys bonds in the open market, the money supply decreases.

Money is the most liquid asset available because

Banks cannot influence the money supply if they are required to hold all deposits in reserve.

Which of the following items is not included in the most narrow definition of money, M1?

Trace the effects on the money supply when the Fed decreases the discount rate.

What does the Fed auction at the Term-Auction Facility?

To decrease the money supply, the Fed can

When the Fed purchases $1000 worth of government bonds from the public, the U.S. money supply eventually increases by

The Federal Reserve

Reserves decrease if the Federal Reserve

Monetary policy affects employment

The tool most often used by the Fed to control the money supply is

Table 29-2. The information in the table pertains to an imaginary economy. -Refer to Table 29-2. What is the M1 money supply?

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

Which list ranks assets from most to least liquid?

Designers of the Federal Reserve System were concerned that the Fed might form policy favorable to one part of the country or to a particular party. What are some ways that the organization of the Fed reflects such concerns?

If the reserve ratio is 5 percent, then $500 of additional reserves can create up to

Which of the following might explain why the United States has so much currency per person?

All of the presidents of the regional Federal Reserve banks

The Board of Governors

Discuss why the Fed rarely changes the reserve requirements.

If the Fed buys bonds in the open market, the money supply decreases.

Money is the most liquid asset available because

Banks cannot influence the money supply if they are required to hold all deposits in reserve.

Which of the following items is not included in the most narrow definition of money, M1?

Trace the effects on the money supply when the Fed decreases the discount rate.

What does the Fed auction at the Term-Auction Facility?

To decrease the money supply, the Fed can

When the Fed purchases $1000 worth of government bonds from the public, the U.S. money supply eventually increases by

The Federal Reserve

Reserves decrease if the Federal Reserve

Monetary policy affects employment

The tool most often used by the Fed to control the money supply is

Table 29-2. The information in the table pertains to an imaginary economy. -Refer to Table 29-2. What is the M1 money supply?

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