Question 1

When the Fed makes open-market sales bank

Accepted Answer

A)  withdrawals and lending increase. 
B)  withdrawals increase and lending decreases. 
C)  deposits and lending increase. 
D)  deposits increase and lending decreases. 
A)  withdrawals and lending increase. 
B)  withdrawals increase and lending decreases. 
C)  deposits and lending increase. 
D)  deposits increase and lending decreases.

Question 2

At one time, people in a certain country had no access to banks; they relied exclusively on currency. Then, a fractional-reserve banking system was created. As a result, the money supply

Accepted Answer

A)  increased. The central bank could have reduced the size of this increase by buying bonds. 
B)  increased. The central bank could have reduced the size of this increase by selling bonds. 
C)  decreased. The central bank could have reduced the size of this decrease by buying bonds. 
D)  decreased. The central bank could have reduced the size of this decrease by selling bonds. 
A)  increased. The central bank could have reduced the size of this increase by buying bonds. 
B)  increased. The central bank could have reduced the size of this increase by selling bonds. 
C)  decreased. The central bank could have reduced the size of this decrease by buying bonds. 
D)  decreased. The central bank could have reduced the size of this decrease by selling bonds.

Question 3

The primary tool used by the Federal Reserve to change the money supply is .

Accepted Answer

open-marke

Question 4

Suppose a bank has $3,000 in reserves, $25,000 of deposits, and a 10 percent reserve requirement. What is the amount of excess reserves?

Accepted Answer

The answer of Suppose a bank has $3,000 in reserves,...

Question 5

When conducting an open-market sale, the Fed

Accepted Answer

A)  buys government bonds, and in so doing increases the money supply. 
B)  buys government bonds, and in so doing decreases the money supply. 
C)  sells government bonds, and in so doing increases the money supply. 
D)  sells government bonds, and in so doing decreases the money supply. 
A)  buys government bonds, and in so doing increases the money supply. 
B)  buys government bonds, and in so doing decreases the money supply. 
C)  sells government bonds, and in so doing increases the money supply. 
D)  sells government bonds, and in so doing decreases the money supply.

Question 6

A bank's reserve ratio is 10 percent and the bank has $5,000 in deposits. Its reserves amount to

Accepted Answer

A)  $50. 
B)  $500. 
C)  $4,500. 
D)  $4,950. 
A)  $50. 
B)  $500. 
C)  $4,500. 
D)  $4,950.

Question 7

All Fed purchases and sales of

Accepted Answer

A)  corporate stocks and bonds are conducted at the New York Fed's trading desk. 
B)  government bonds are conducted at the New York Fed's trading desk. 
C)  real estate and other real assets are conducted by the Federal Open Market Committee. 
D)  All of the above are correct. 
A)  corporate stocks and bonds are conducted at the New York Fed's trading desk. 
B)  government bonds are conducted at the New York Fed's trading desk. 
C)  real estate and other real assets are conducted by the Federal Open Market Committee. 
D)  All of the above are correct.

Question 8

As banks create money, they create wealth.

Accepted Answer

A) True 
 B)False

Question 9

A bank has $1000 in deposits and maintains a 12 percent reserve ratio. Its reserves are $ .

Accepted Answer

The answer of A bank has $1000 in deposits and...

Question 10

The "yardstick" people use to post prices and record debts is called

Accepted Answer

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

Question 11

Paper dollars

Accepted Answer

A)  are commodity money and gold coins are fiat money. 
B)  are fiat money and gold coins are commodity money. 
C)  and gold coins are both commodity monies. 
D)  and gold coins are both fiat monies. 
A)  are commodity money and gold coins are fiat money. 
B)  are fiat money and gold coins are commodity money. 
C)  and gold coins are both commodity monies. 
D)  and gold coins are both fiat monies.

Question 12

One surprising thing about the U.S. money stock is that

Accepted Answer

A)  banks hold so much currency relative to the public. 
B)  the public holds so much currency relative to banks. 
C)  there is so little currency per person. 
D)  there is so much currency per person. 
A)  banks hold so much currency relative to the public. 
B)  the public holds so much currency relative to banks. 
C)  there is so little currency per person. 
D)  there is so much currency per person.

Question 13

Which of the following does the Federal Reserve not do?

Accepted Answer

A)  conduct monetary policy 
B)  act as a lender of last resort 
C)  convert Federal Reserve Notes into gold 
D)  serve as a bank regulator 
A)  conduct monetary policy 
B)  act as a lender of last resort 
C)  convert Federal Reserve Notes into gold 
D)  serve as a bank regulator

Question 14

Which of the following is not correct?

Accepted Answer

A)  The president of the New York Federal Reserve bank is the only Federal Reserve Regional Bank President who gets to vote at every meeting of the Federal Open Market Committee. 
B)  The Fed's policy decisions influence the economy's rate of inflation in the short run and the economy's employment and production in the long run. 
C)  The Fed's primary monetary policy tool is open­market operations. 
D)  All of the above are correct. 
A)  The president of the New York Federal Reserve bank is the only Federal Reserve Regional Bank President who gets to vote at every meeting of the Federal Open Market Committee. 
B)  The Fed's policy decisions influence the economy's rate of inflation in the short run and the economy's employment and production in the long run. 
C)  The Fed's primary monetary policy tool is open­market operations. 
D)  All of the above are correct.

Question 15

Which of the following both increase the money supply?

Accepted Answer

A)  an increase in the discount rate and an increase in the interest rate on reserves 
B)  an increase in the discount rate and a decrease in the interest rate on reserves 
C)  a decrease in the discount rate and an increase in the interest rate on reserves 
D)  a decrease in the discount rate and a decrease in the interest rate on reserves 
A)  an increase in the discount rate and an increase in the interest rate on reserves 
B)  an increase in the discount rate and a decrease in the interest rate on reserves 
C)  a decrease in the discount rate and an increase in the interest rate on reserves 
D)  a decrease in the discount rate and a decrease in the interest rate on reserves

Question 16

During wars the public tends to hold relatively more currency and relatively fewer deposits. This decision makes reserves

Accepted Answer

A)  and the money supply increase. 
B)  and the money supply decrease. 
C)  increase, but leaves the money supply unchanged. 
D)  decrease, but leaves the money supply unchanged. 
A)  and the money supply increase. 
B)  and the money supply decrease. 
C)  increase, but leaves the money supply unchanged. 
D)  decrease, but leaves the money supply unchanged.

Question 17

There is a

Accepted Answer

A)  short-run tradeoff between inflation and unemployment. 
B)  short-run tradeoff between an increase in the money supply and inflation. 
C)  long-run tradeoff between inflation and unemployment. 
D)  long-run tradeoff between an increase in the money supply and inflation. 
A)  short-run tradeoff between inflation and unemployment. 
B)  short-run tradeoff between an increase in the money supply and inflation. 
C)  long-run tradeoff between inflation and unemployment. 
D)  long-run tradeoff between an increase in the money supply and inflation.

Question 18

If the reserve ratio is 8 percent, then a decrease in reserves of $6,000 can cause the money supply to fall by as much as

Accepted Answer

A)  $48,000. 
B)  $75,000. 
C)  $55,200. 
D)  $10,800. 
A)  $48,000. 
B)  $75,000. 
C)  $55,200. 
D)  $10,800.

Question 19

In the United States, currency holdings per person average about

Accepted Answer

A)  $110; one explanation for this relatively small average is that many people use credit and debit cards to make transactions. 
B)  $110; one explanation for this relatively small average is that U.S. citizens hold a lot of foreign currency. 
C)  $4,490; one explanation for this relatively large amount is that criminals probably prefer currency as a medium of exchange. 
D)  $4,490; one explanation for this relatively large average is that U.S. citizens hold a lot of foreign currency. 
A)  $110; one explanation for this relatively small average is that many people use credit and debit cards to make transactions. 
B)  $110; one explanation for this relatively small average is that U.S. citizens hold a lot of foreign currency. 
C)  $4,490; one explanation for this relatively large amount is that criminals probably prefer currency as a medium of exchange. 
D)  $4,490; one explanation for this relatively large average is that U.S. citizens hold a lot of foreign currency.

Question 20

Other things the same, if reserve requirements are increased, the reserve ratio

Accepted Answer

A)  increases, the money multiplier increases, and the money supply increases. 
B)  increases, the money multiplier decreases, and the money supply decreases. 
C)  decreases, the money multiplier increases, and the money supply increases. 
D)  decreases, the money multiplier decreases, and the money supply increases. 
A)  increases, the money multiplier increases, and the money supply increases. 
B)  increases, the money multiplier decreases, and the money supply decreases. 
C)  decreases, the money multiplier increases, and the money supply increases. 
D)  decreases, the money multiplier decreases, and the money supply increases.

When the Fed makes open-market sales bank

At one time, people in a certain country had no access to banks; they relied exclusively on currency. Then, a fractional-reserve banking system was created. As a result, the money supply

The primary tool used by the Federal Reserve to change the money supply is .

Suppose a bank has $3,000 in reserves, $25,000 of deposits, and a 10 percent reserve requirement. What is the amount of excess reserves?

When conducting an open-market sale, the Fed

A bank's reserve ratio is 10 percent and the bank has $5,000 in deposits. Its reserves amount to

All Fed purchases and sales of

As banks create money, they create wealth.

A bank has $1000 in deposits and maintains a 12 percent reserve ratio. Its reserves are $ .

The "yardstick" people use to post prices and record debts is called

Paper dollars

One surprising thing about the U.S. money stock is that

Which of the following does the Federal Reserve not do?

Which of the following is not correct?

Which of the following both increase the money supply?

During wars the public tends to hold relatively more currency and relatively fewer deposits. This decision makes reserves

There is a

If the reserve ratio is 8 percent, then a decrease in reserves of $6,000 can cause the money supply to fall by as much as

In the United States, currency holdings per person average about

Other things the same, if reserve requirements are increased, the reserve ratio

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

Exam 11: The Monetary System

When the Fed makes open-market sales bank

At one time, people in a certain country had no access to banks; they relied exclusively on currency. Then, a fractional-reserve banking system was created. As a result, the money supply

The primary tool used by the Federal Reserve to change the money supply is .

Suppose a bank has $3,000 in reserves, $25,000 of deposits, and a 10 percent reserve requirement. What is the amount of excess reserves?

When conducting an open-market sale, the Fed

A bank's reserve ratio is 10 percent and the bank has $5,000 in deposits. Its reserves amount to

All Fed purchases and sales of

As banks create money, they create wealth.

A bank has $1000 in deposits and maintains a 12 percent reserve ratio. Its reserves are $ .

The "yardstick" people use to post prices and record debts is called

Paper dollars

One surprising thing about the U.S. money stock is that

Which of the following does the Federal Reserve not do?

Which of the following is not correct?

Which of the following both increase the money supply?

During wars the public tends to hold relatively more currency and relatively fewer deposits. This decision makes reserves

There is a

If the reserve ratio is 8 percent, then a decrease in reserves of $6,000 can cause the money supply to fall by as much as

In the United States, currency holdings per person average about

Other things the same, if reserve requirements are increased, the reserve ratio

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