Question 1

Which type of money has intrinsic value?

Accepted Answer

A)  commodity money 
B)  fiat money 
C)  both commodity money and fiat money 
D)  neither commodity money nor fiat money 
A)  commodity money 
B)  fiat money 
C)  both commodity money and fiat money 
D)  neither commodity money nor fiat money

Question 2

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 3

Suppose banks decide to hold fewer excess reserves relative to deposits. Other things the same, this action will cause the

Accepted Answer

A)  money supply to fall. To reduce the impact of this the Fed could sell Treasury bonds. 
B)  money supply to fall. To reduce the impact of this the Fed could buy Treasury bonds. 
C)  money supply to rise. To reduce the impact of this the Fed could sell Treasury bonds. 
D)  money supply to rise. To reduce the impact of this the Fed could buy Treasury bonds. 
A)  money supply to fall. To reduce the impact of this the Fed could sell Treasury bonds. 
B)  money supply to fall. To reduce the impact of this the Fed could buy Treasury bonds. 
C)  money supply to rise. To reduce the impact of this the Fed could sell Treasury bonds. 
D)  money supply to rise. To reduce the impact of this the Fed could buy Treasury bonds.

Question 4

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 5

When the Fed conducts open-market purchases,

Accepted Answer

A)  it buys Treasury securities, which increases the money supply. 
B)  it buys Treasury securities, which decreases the money supply. 
C)  it borrows money from member banks, which increases the money supply. 
D)  it lends money to member banks, which decreases the money supply. 
A)  it buys Treasury securities, which increases the money supply. 
B)  it buys Treasury securities, which decreases the money supply. 
C)  it borrows money from member banks, which increases the money supply. 
D)  it lends money to member banks, which decreases the money supply.

Question 6

Gary's wealth is $1 million. Economists would say that Gary has $1 million worth of money.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is included in both M1 and M2?

Accepted Answer

A)  currency 
B)  demand deposits 
C)  other checkable deposits 
D)  All of the above are correct. 
A)  currency 
B)  demand deposits 
C)  other checkable deposits 
D)  All of the above are correct.

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

If $300 of new reserves generates $800 of new money in the economy, then the reserve ratio is

Accepted Answer

A)  2.7 percent. 
B)  12.5 percent. 
C)  37.5 percent. 
D)  40 percent. 
A)  2.7 percent. 
B)  12.5 percent. 
C)  37.5 percent. 
D)  40 percent.

Question 10

Which of the three functions of money are commonly met by each of the following assets in the U.S. economy?
a. paper dollar
b. precious metals
c. collectibles such as baseball cards, stamps, and antiques

Accepted Answer

a. medium of exchang

Question 11

Table 29-6.
  
-Refer to Table 29-6. If the Fed's reserve requirement is 5 percent, then what quantity of excess reserves does the Bank of Pleasantville now hold?

Accepted Answer

A)  $500 
B)  $250 
C)  $2,000 
D)  $3,600 
A)  $500 
B)  $250 
C)  $2,000 
D)  $3,600

Question 12

If the money multiplier is 3 and the Fed wants to increase the money supply by $900,000, it could

Accepted Answer

A)  buy $300,000 worth of bonds. 
B)  buy $225,000 worth of bonds. 
C)  sell $300,000 worth of bonds. 
D)  sell $225,000 worth of bonds. 
A)  buy $300,000 worth of bonds. 
B)  buy $225,000 worth of bonds. 
C)  sell $300,000 worth of bonds. 
D)  sell $225,000 worth of bonds.

Question 13

Credit card limits are included in

Accepted Answer

A)  M1 but not M2. 
B)  M2 but not M1. 
C)  M1 and M2. 
D)  neither M1 nor M2. 
A)  M1 but not M2. 
B)  M2 but not M1. 
C)  M1 and M2. 
D)  neither M1 nor M2.

Question 14

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.

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

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 17

If a bank that desires to hold no excess reserves and has just enough reserves to meet the required reserve ratio of 15 percent receives a deposit of $600, it has a

Accepted Answer

A)  $600 increase in excess reserves and no increase in required reserves. 
B)  $600 increase in required reserves and no increase in excess reserves. 
C)  $510 increase in excess reserves and a $90 increase in required reserves. 
D)  $90 increase in excess reserves and a $510 increase in required reserves. 
A)  $600 increase in excess reserves and no increase in required reserves. 
B)  $600 increase in required reserves and no increase in excess reserves. 
C)  $510 increase in excess reserves and a $90 increase in required reserves. 
D)  $90 increase in excess reserves and a $510 increase in required reserves.

Which type of money has intrinsic value?

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?

Suppose banks decide to hold fewer excess reserves relative to deposits. Other things the same, this action will cause the

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

When the Fed conducts open-market purchases,

Gary's wealth is $1 million. Economists would say that Gary has $1 million worth of money.

Which of the following is included in both M1 and M2?

Treasury Bonds are

If $300 of new reserves generates $800 of new money in the economy, then the reserve ratio is

Which of the three functions of money are commonly met by each of the following assets in the U.S. economy? a. paper dollar b. precious metals c. collectibles such as baseball cards, stamps, and antiques

Table 29-6. -Refer to Table 29-6. If the Fed's reserve requirement is 5 percent, then what quantity of excess reserves does the Bank of Pleasantville now hold?

If the money multiplier is 3 and the Fed wants to increase the money supply by $900,000, it could

Credit card limits are included in

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

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

To decrease the money supply, the Fed can

If a bank that desires to hold no excess reserves and has just enough reserves to meet the required reserve ratio of 15 percent receives a deposit of $600, it has a

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

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

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 Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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Exam 16: The Monetary System

Which type of money has intrinsic value?

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?

Suppose banks decide to hold fewer excess reserves relative to deposits. Other things the same, this action will cause the

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

When the Fed conducts open-market purchases,

Gary's wealth is $1 million. Economists would say that Gary has $1 million worth of money.

Which of the following is included in both M1 and M2?

Treasury Bonds are

If $300 of new reserves generates $800 of new money in the economy, then the reserve ratio is

Which of the three functions of money are commonly met by each of the following assets in the U.S. economy? a. paper dollar b. precious metals c. collectibles such as baseball cards, stamps, and antiques

Table 29-6. -Refer to Table 29-6. If the Fed's reserve requirement is 5 percent, then what quantity of excess reserves does the Bank of Pleasantville now hold?

If the money multiplier is 3 and the Fed wants to increase the money supply by $900,000, it could

Credit card limits are included in

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

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

To decrease the money supply, the Fed can

If a bank that desires to hold no excess reserves and has just enough reserves to meet the required reserve ratio of 15 percent receives a deposit of $600, it has a

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

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

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 Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters