Question 1

When Grayce deposits $4,000 cash in her checkable deposit at the Beach Bank and the Beach Bank's excess reserves increase by $3,600,the desired reserve ratio is

Accepted Answer

A) 5 percent. 
B) 10 percent. 
C) 15 percent. 
D) 90 percent. 
E) $400. 
A) 5 percent. 
B) 10 percent. 
C) 15 percent. 
D) 90 percent. 
E) $400.

Question 2

The amount of loans that a bank can create is limited by

Accepted Answer

A) a law enacted by Congress. 
B) the bank's excess reserves. 
C) a directive from the Federal Reserve System,which takes into account the bank's financial stability. 
D) the real interest rate. 
E) the bank's government securities. 
A) a law enacted by Congress. 
B) the bank's excess reserves. 
C) a directive from the Federal Reserve System,which takes into account the bank's financial stability. 
D) the real interest rate. 
E) the bank's government securities.

Question 3

Money today

Accepted Answer

A) is the demand for loanable funds. 
B) is the supply of loanable funds. 
C) is only currency inside banks. 
D) is fiat money. 
E) in the United States,is only dollar bills and coins. 
A) is the demand for loanable funds. 
B) is the supply of loanable funds. 
C) is only currency inside banks. 
D) is fiat money. 
E) in the United States,is only dollar bills and coins.

Question 4

When the desired reserve ratio is 10 percent,suppose the Fed buys $1,000,000 of government securities from banks.As a result,the banks' excess reserves

Accepted Answer

A) increase by $900,000. 
B) increase by $1,000,000. 
C) increase by $10,000. 
D) decrease by $10,000. 
E) decrease by $1,000,000. 
A) increase by $900,000. 
B) increase by $1,000,000. 
C) increase by $10,000. 
D) decrease by $10,000. 
E) decrease by $1,000,000.

Question 5

The main policy-making body of the Federal Reserve System is the

Accepted Answer

A) Board of Governors of the Federal Reserve System. 
B) Board of Presidents of the Federal Reserve Banks. 
C) Federal Open Market Committee. 
D) Board of Advisors. 
E) Federal Monetary Conditions Board. 
A) Board of Governors of the Federal Reserve System. 
B) Board of Presidents of the Federal Reserve Banks. 
C) Federal Open Market Committee. 
D) Board of Advisors. 
E) Federal Monetary Conditions Board.

Question 6

An increase in the currency drain ratio

Accepted Answer

A) decreases the monetary base. 
B) increases the quantity of money. 
C) increases bank reserves. 
D) does not change the amount of the monetary base. 
E) does not change the quantity of money. 
A) decreases the monetary base. 
B) increases the quantity of money. 
C) increases bank reserves. 
D) does not change the amount of the monetary base. 
E) does not change the quantity of money.

Question 7

Explain the process by which the banking system creates money.

Accepted Answer

When a bank gains excess reserves,it use

Question 8

"Banks make a profit by paying depositors a high rate to attract funds and making loans at a low rate to encourage borrowing." Is the previous statement correct or not?

Accepted Answer

The statement is incorrect.Ban

Question 9

If there is an increase in the amount of currency held outside banks,then the

Accepted Answer

A) monetary base will decrease. 
B) quantity of money will increase. 
C) quantity of money and the monetary base will decrease. 
D) quantity of money will decrease. 
E) quantity of money will not change. 
A) monetary base will decrease. 
B) quantity of money will increase. 
C) quantity of money and the monetary base will decrease. 
D) quantity of money will decrease. 
E) quantity of money will not change.

Question 10

Which of the following is money?

Accepted Answer

A) debit cards 
B) e-checks 
C) credit cards 
D) checkable deposits 
E) checks 
A) debit cards 
B) e-checks 
C) credit cards 
D) checkable deposits 
E) checks

Question 11

How can a new deposit of $10,000 at one bank create other new deposits at other banks? Suppose the desired reserve ratio is 10 percent and people keep no currency outside of the banks.What will be the new amount of deposits in the second and third rounds?

Accepted Answer

When the bank receives a new deposit of

Question 12

Which of the following statements is correct?

Accepted Answer

A) required reserves = (total deposits)× (excess reserve ratio) 
B) required reserves = (total reserves)× (excess reserve ratio) 
C) required reserves = (total deposits)× (required reserve ratio) 
D) required reserves = (total deposits)÷ (required reserve ratio) 
E) required reserves = (total deposits)× (required reserve ratio)- excess reserves 
A) required reserves = (total deposits)× (excess reserve ratio) 
B) required reserves = (total reserves)× (excess reserve ratio) 
C) required reserves = (total deposits)× (required reserve ratio) 
D) required reserves = (total deposits)÷ (required reserve ratio) 
E) required reserves = (total deposits)× (required reserve ratio)- excess reserves

Question 13

What is the central bank of the United States?

Accepted Answer

A) There is no central bank in the United States. 
B) The Department of Treasury 
C) The Federal Reserve System 
D) Each state has its own central bank,which,when all taken together,constitute the central bank of the United States. 
E) The U.S.Mint 
A) There is no central bank in the United States. 
B) The Department of Treasury 
C) The Federal Reserve System 
D) Each state has its own central bank,which,when all taken together,constitute the central bank of the United States. 
E) The U.S.Mint

Question 14

A bank has $200 of reserves and $4,000 of deposits.It is just meeting its desired reserves and has no excess reserves.Thus the desired reserve ratio is

Accepted Answer

A) 10 percent. 
B) 20 percent. 
C) 25 percent. 
D) 5 percent. 
E) $200. 
A) 10 percent. 
B) 20 percent. 
C) 25 percent. 
D) 5 percent. 
E) $200.

Question 15

A currency drain is cash ________ and has ________ effect on the money multiplier.

Accepted Answer

A) draining into the banks;no 
B) draining into the banks;an 
C) held outside the banks;an 
D) held at the Fed;an 
E) held as reserves;no 
A) draining into the banks;no 
B) draining into the banks;an 
C) held outside the banks;an 
D) held at the Fed;an 
E) held as reserves;no

Question 16

Money is any commodity or token that is

Accepted Answer

A) backed by gold. 
B) generally accepted as a means of measurement. 
C) generally accepted as a means of payment. 
D) issued by the government. 
E) a store of value. 
A) backed by gold. 
B) generally accepted as a means of measurement. 
C) generally accepted as a means of payment. 
D) issued by the government. 
E) a store of value.

Question 17

Which of the following is a tool the Federal Reserve System can use to regulate the quantity of money?
I.changing the discount rate
Ii.conducting open market operations
Iii.changing the required reserve ratio

Accepted Answer

A) i only 
B) ii only 
C) ii and iii 
D) i and ii 
E) i,ii,and iii 
A) i only 
B) ii only 
C) ii and iii 
D) i and ii 
E) i,ii,and iii

Question 18

Susan just sold her text books for $200 cash and deposited the cash she received in her checking account.This transaction has

Accepted Answer

A) increased the quantity of M1. 
B) decreased the quantity of M1. 
C) increased the quantity of M2. 
D) decreased the quantity of M2. 
E) not changed either M1 or M2. 
A) increased the quantity of M1. 
B) decreased the quantity of M1. 
C) increased the quantity of M2. 
D) decreased the quantity of M2. 
E) not changed either M1 or M2.

Question 19

New money is created in the U.S.economy by

Accepted Answer

A) increased federal government expenditures. 
B) banks that create checkable deposits. 
C) the U.S.Treasury. 
D) U.S.Department of Mint. 
E) the U.S.Congress. 
A) increased federal government expenditures. 
B) banks that create checkable deposits. 
C) the U.S.Treasury. 
D) U.S.Department of Mint. 
E) the U.S.Congress.

Question 20

Briefly describe the Federal Reserve System,how it is governed,and its roles in the economy.

Accepted Answer

The Federal Reserve,or Fed,is the U.S.ce

When Grayce deposits $4,000 cash in her checkable deposit at the Beach Bank and the Beach Bank's excess reserves increase by $3,600,the desired reserve ratio is

The amount of loans that a bank can create is limited by

Money today

When the desired reserve ratio is 10 percent,suppose the Fed buys $1,000,000 of government securities from banks.As a result,the banks' excess reserves

The main policy-making body of the Federal Reserve System is the

An increase in the currency drain ratio

Explain the process by which the banking system creates money.

"Banks make a profit by paying depositors a high rate to attract funds and making loans at a low rate to encourage borrowing." Is the previous statement correct or not?

If there is an increase in the amount of currency held outside banks,then the

Which of the following is money?

How can a new deposit of $10,000 at one bank create other new deposits at other banks? Suppose the desired reserve ratio is 10 percent and people keep no currency outside of the banks.What will be the new amount of deposits in the second and third rounds?

Which of the following statements is correct?

What is the central bank of the United States?

A bank has $200 of reserves and $4,000 of deposits.It is just meeting its desired reserves and has no excess reserves.Thus the desired reserve ratio is

A currency drain is cash and has effect on the money multiplier.

Money is any commodity or token that is

Which of the following is a tool the Federal Reserve System can use to regulate the quantity of money? I.changing the discount rate Ii.conducting open market operations Iii.changing the required reserve ratio

Susan just sold her text books for $200 cash and deposited the cash she received in her checking account.This transaction has

New money is created in the U.S.economy by

Briefly describe the Federal Reserve System,how it is governed,and its roles in the economy.

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 18: Money and the Monetary System

When Grayce deposits $4,000 cash in her checkable deposit at the Beach Bank and the Beach Bank's excess reserves increase by $3,600,the desired reserve ratio is

The amount of loans that a bank can create is limited by

Money today

When the desired reserve ratio is 10 percent,suppose the Fed buys $1,000,000 of government securities from banks.As a result,the banks' excess reserves

The main policy-making body of the Federal Reserve System is the

An increase in the currency drain ratio

Explain the process by which the banking system creates money.

"Banks make a profit by paying depositors a high rate to attract funds and making loans at a low rate to encourage borrowing." Is the previous statement correct or not?

If there is an increase in the amount of currency held outside banks,then the

Which of the following is money?

How can a new deposit of $10,000 at one bank create other new deposits at other banks? Suppose the desired reserve ratio is 10 percent and people keep no currency outside of the banks.What will be the new amount of deposits in the second and third rounds?

Which of the following statements is correct?

What is the central bank of the United States?

A bank has $200 of reserves and $4,000 of deposits.It is just meeting its desired reserves and has no excess reserves.Thus the desired reserve ratio is

A currency drain is cash ________ and has ________ effect on the money multiplier.

Money is any commodity or token that is

Which of the following is a tool the Federal Reserve System can use to regulate the quantity of money? I.changing the discount rate Ii.conducting open market operations Iii.changing the required reserve ratio

Susan just sold her text books for $200 cash and deposited the cash she received in her checking account.This transaction has

New money is created in the U.S.economy by

Briefly describe the Federal Reserve System,how it is governed,and its roles in the economy.

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

A currency drain is cash and has effect on the money multiplier.