Question 1

The ease with which an asset can be

Accepted Answer

A)  traded for another asset determines whether or not that asset is a unit of account. 
B)  transported from one place to another determines whether or not that asset could serve as fiat money. 
C)  converted into a store of value determines the liquidity of that asset. 
D)  converted into the economy's medium of exchange determines the liquidity of that asset. 
A)  traded for another asset determines whether or not that asset is a unit of account. 
B)  transported from one place to another determines whether or not that asset could serve as fiat money. 
C)  converted into a store of value determines the liquidity of that asset. 
D)  converted into the economy's medium of exchange determines the liquidity of that asset.

Question 2

Consider the following traders who meet.   Which, if any, pairs of traders has a double coincidence of wants?

Accepted Answer

A)  Bill with Mike 
B)  Time with Amy 
C)  Bill with Mike, and Tim with Amy 
D)  Bill with Tim, and Mike with Amy 
A)  Bill with Mike 
B)  Time with Amy 
C)  Bill with Mike, and Tim with Amy 
D)  Bill with Tim, and Mike with Amy

Question 3

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 4

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 5

Mia puts money into a piggy bank so she can spend it later. What function of money does this illustrate?

Accepted Answer

A)  store of value 
B)  medium of exchange 
C)  unit of account 
D)  None of the above is correct. 
A)  store of value 
B)  medium of exchange 
C)  unit of account 
D)  None of the above is correct.

Question 6

The is the interest rate at which banks make overnight loans to other banks.

Accepted Answer

The answer of The is the interest rate at which...

Question 7

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 8

If the reserve requirement is 12 percent and banks desire to hold no excess reserves, when a bank receives a new deposit of $1,000,

Accepted Answer

A)  it must increase its required reserves by more than $150. 
B)  its total reserves initially increase by $120. 
C)  it will be able to make new loans up to a maximum of $880. 
D)  None of the above is correct. 
A)  it must increase its required reserves by more than $150. 
B)  its total reserves initially increase by $120. 
C)  it will be able to make new loans up to a maximum of $880. 
D)  None of the above is correct.

Question 9

First National Bank FNB) has a reserve ratio of 20 percent, a required reserve ratio of 10 percent, and deposits of $1,000. If FNB receives an additional deposit of $100,

Accepted Answer

A)  then it has required reserves of $210 and holds excess reserves of $10. 
B)  then it has required reserves of $10 and holds excess reserves of $20. 
C)  then it has required reserves of $110 and holds excess reserves of $190. 
D)  then it has required reserves of $110 and holds excess reserves of $0. 
A)  then it has required reserves of $210 and holds excess reserves of $10. 
B)  then it has required reserves of $10 and holds excess reserves of $20. 
C)  then it has required reserves of $110 and holds excess reserves of $190. 
D)  then it has required reserves of $110 and holds excess reserves of $0.

Question 10

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 11

When banks decide to increase their reserves, the money supply will holding all else constant).

Accepted Answer

The answer of When banks decide to increase their reserves,...

Question 12

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 13

Table 29-5.
  
-Refer to Table 29-5. If the bank faces a reserve requirement of 20 percent, then it

Accepted Answer

A)  has $10,000 of excess reserves. 
B)  needs $10,000 more reserves to meet its reserve requirements. 
C)  needs $20,000 more reserves to meet its reserve requirements. 
D)  just meets its reserve requirement. 
A)  has $10,000 of excess reserves. 
B)  needs $10,000 more reserves to meet its reserve requirements. 
C)  needs $20,000 more reserves to meet its reserve requirements. 
D)  just meets its reserve requirement.

Question 14

Explain why banks can influence the money supply if the required reserve ratio is less than 100 percent.

Accepted Answer

When the reserve requirement is less tha

Question 15

Bottles of very fine wine are less liquid than demand deposits.

Accepted Answer

A) True 
 B)False

Question 16

The Fed's primary tool to change the money supply is

Accepted Answer

A)  changing the interest rate on reserves. 
B)  changing the reserve requirement. 
C)  conducting open market operations. 
D)  redeeming Federal Reserve notes. 
A)  changing the interest rate on reserves. 
B)  changing the reserve requirement. 
C)  conducting open market operations. 
D)  redeeming Federal Reserve notes.

Question 17

When conducting an open-market purchase, 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 18

Which of the following is an asset of a bank and a liability for its customers?

Accepted Answer

A)  deposits of its customers and loans to its customers 
B)  deposits of its customers but not loans to its customers 
C)  loans to its customers but not the deposits of its customers 
D)  neither the deposits of its customers nor the loans to its customers 
A)  deposits of its customers and loans to its customers 
B)  deposits of its customers but not loans to its customers 
C)  loans to its customers but not the deposits of its customers 
D)  neither the deposits of its customers nor the loans to its customers

Question 19

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 20

One plausible explanation for the large amount of U.S. currency outstanding is that many dollars are held abroad.

Accepted Answer

A) True 
 B)False

Exam 21: The Monetary System

The ease with which an asset can be

Consider the following traders who meet. Which, if any, pairs of traders has a double coincidence of wants?

When the Fed makes open-market sales bank

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

Mia puts money into a piggy bank so she can spend it later. What function of money does this illustrate?

The is the interest rate at which banks make overnight loans to other banks.

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 requirement is 12 percent and banks desire to hold no excess reserves, when a bank receives a new deposit of $1,000,

First National Bank FNB) has a reserve ratio of 20 percent, a required reserve ratio of 10 percent, and deposits of $1,000. If FNB receives an additional deposit of $100,

Monetary policy affects employment

When banks decide to increase their reserves, the money supply will holding all else constant).

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?

Table 29-5. -Refer to Table 29-5. If the bank faces a reserve requirement of 20 percent, then it

Explain why banks can influence the money supply if the required reserve ratio is less than 100 percent.

Bottles of very fine wine are less liquid than demand deposits.

The Fed's primary tool to change the money supply is

When conducting an open-market purchase, the Fed

Which of the following is an asset of a bank and a liability for its customers?

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

One plausible explanation for the large amount of U.S. currency outstanding is that many dollars are held abroad.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Costs of Production

Firms in Competitive Markets

Monopoly

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

Money Growth and Inflation

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

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