Question 1

Jim transfers money from his money market account to his savings account. This action

Accepted Answer

A)  reduced M1 and increases M2. 
B)  increases M1 and reduces M2. 
C)  has no effect on M1 or M2. 
D)  increases M1 and M2. 
A)  reduced M1 and increases M2. 
B)  increases M1 and reduces M2. 
C)  has no effect on M1 or M2. 
D)  increases M1 and M2.

Question 2

Which of the following is not included in either M1 or M2?

Accepted Answer

A)  U.S. Treasury bills 
B)  small time deposits 
C)  demand deposits 
D)  money market mutual funds 
A)  U.S. Treasury bills 
B)  small time deposits 
C)  demand deposits 
D)  money market mutual funds

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 the Fed decreases the discount rate, banks will

Accepted Answer

A)  borrow more from the Fed and lend more to the public. The money supply increases. 
B)  borrow more from the Fed and lend less to the public. The money supply decreases. 
C)  borrow less from the Fed and lend more to the public. The money supply increases. 
D)  borrow less from the Fed and lend less to the public. The money supply decreases. 
A)  borrow more from the Fed and lend more to the public. The money supply increases. 
B)  borrow more from the Fed and lend less to the public. The money supply decreases. 
C)  borrow less from the Fed and lend more to the public. The money supply increases. 
D)  borrow less from the Fed and lend less to the public. The money supply decreases.

Question 5

In a fractional-reserve banking system, an increase in reserve requirements

Accepted Answer

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

Question 6

As opposed to a payments system based on barter, a payments system based on money

Accepted Answer

A)  requires a double coincidence of wants. 
B)  leads to less specialization. 
C)  makes trades less costly. 
D)  None of the above is correct. 
A)  requires a double coincidence of wants. 
B)  leads to less specialization. 
C)  makes trades less costly. 
D)  None of the above is correct.

Question 7

Compare the Board of Governors and the Federal Open Market Committee.

Accepted Answer

The Board of Governors runs the Federal

Question 8

On a bank's T-account, which are part of the banks liabilities?

Accepted Answer

A)  both deposits made by its customers and reserves 
B)  deposits made by its customers but not reserves 
C)  reserves but not deposits made by its customers 
D)  neither deposits made by its customers nor reserves 
A)  both deposits made by its customers and reserves 
B)  deposits made by its customers but not reserves 
C)  reserves but not deposits made by its customers 
D)  neither deposits made by its customers nor reserves

Question 9

The agency responsible for regulating the U.S. monetary system is the

Accepted Answer

A)  U.S. Treasury 
B)  Federal Reserve 
C)  Department of Justice 
D)  Federal Trade Commission 
A)  U.S. Treasury 
B)  Federal Reserve 
C)  Department of Justice 
D)  Federal Trade Commission

Question 10

Table 29-5.
  
-Refer to Table 29-5. If the bank is holding $4,000 in excess reserves, then the reserve requirement with which it must comply is

Accepted Answer

A)  17 percent. 
B)  12 percent. 
C)  13 percent. 
D)  14 percent. 
A)  17 percent. 
B)  12 percent. 
C)  13 percent. 
D)  14 percent.

Question 11

Why is the president of the New York Fed always a voting member of the FOMC?

Accepted Answer

New York is the financial capitol of the

Question 12

The Fed bonds when it conducts an open-market purchase. This action the money supply.

Accepted Answer

The answer of The Fed bonds when it conducts an...

Question 13

Name three actions the Fed can take to increase the money supply.

Accepted Answer

Open-market purchases buy gove

Question 14

In a system of 100-percent-reserve banking,

Accepted Answer

A)  banks do not accept deposits. 
B)  banks do not influence the supply of money. 
C)  loans are the only asset item for banks. 
D)  All of the above are correct. 
A)  banks do not accept deposits. 
B)  banks do not influence the supply of money. 
C)  loans are the only asset item for banks. 
D)  All of the above are correct.

Question 15

During the early 1930s there were a number of bank failures in the United States. What did this do to the money supply? The New York Federal Reserve Bank advocated open market purchases. Would these purchases have reversed the change in the money supply and helped banks? Explain.

Accepted Answer

Bank failures cause people to lose confi

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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 18

The existence of money makes trade easier. How is it that money can also increase the standard of living?

Accepted Answer

The existence of money means the economy

Question 19

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 20

When the Fed buys government bonds,

Accepted Answer

A)  the money supply increases and the federal funds rate increases. 
B)  the money supply increases and the federal funds rate decreases. 
C)  the money supply decreases and the federal funds rate increases. 
D)  the money supply decreases and the federal funds rate decreases. 
A)  the money supply increases and the federal funds rate increases. 
B)  the money supply increases and the federal funds rate decreases. 
C)  the money supply decreases and the federal funds rate increases. 
D)  the money supply decreases and the federal funds rate decreases.

Exam 16: The Monetary System

Jim transfers money from his money market account to his savings account. This action

Which of the following is not included in either M1 or M2?

When the Fed makes open-market sales bank

When the Fed decreases the discount rate, banks will

In a fractional-reserve banking system, an increase in reserve requirements

As opposed to a payments system based on barter, a payments system based on money

Compare the Board of Governors and the Federal Open Market Committee.

On a bank's T-account, which are part of the banks liabilities?

The agency responsible for regulating the U.S. monetary system is the

Table 29-5. -Refer to Table 29-5. If the bank is holding $4,000 in excess reserves, then the reserve requirement with which it must comply is

Why is the president of the New York Fed always a voting member of the FOMC?

The Fed bonds when it conducts an open-market purchase. This action the money supply.

Name three actions the Fed can take to increase the money supply.

In a system of 100-percent-reserve banking,

During the early 1930s there were a number of bank failures in the United States. What did this do to the money supply? The New York Federal Reserve Bank advocated open market purchases. Would these purchases have reversed the change in the money supply and helped banks? Explain.

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

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

The existence of money makes trade easier. How is it that money can also increase the standard of living?

The Federal Reserve

When the Fed buys government bonds,

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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