Question 1

Explain which of the following count as money.
a.a check in Ann's checkbook
b.currency in Ann's bank
c.currency in Ann's purse
d.Ann's checking deposit

Accepted Answer

Only parts (c),currency in Ann's purse,a

Question 2

If the Fed buys a $100,000 government security from a bank when the desired reserve ratio is 20 percent and the currency drain ratio is 5 percent,the bank can loan a maximum of

Accepted Answer

A) $75,000. 
B) $80,000. 
C) $100,000. 
D) $95,000. 
E) $85,000. 
A) $75,000. 
B) $80,000. 
C) $100,000. 
D) $95,000. 
E) $85,000.

Question 3

If a bank receives an additional deposit of $50,000 and the desired reserve ratio is 20 percent,what is the amount of new loans the bank can make?

Accepted Answer

The bank can make loans equal to its exc

Question 4

If the currency drain ratio is 0.2 and the desired reserve ratio is 0.03,the money multiplier is

Accepted Answer

A) 0.76. 
B) 6.67. 
C) 3.23. 
D) 4.46. 
E) 5.22. 
A) 0.76. 
B) 6.67. 
C) 3.23. 
D) 4.46. 
E) 5.22.

Question 5

Which of the following counts as part of M1?

Accepted Answer

A) $5,000 worth of gold 
B) $5,000 worth of government bonds 
C) $5,000 in a checking account 
D) $5,000 credit line on a credit card 
E) $5,000 of real estate 
A) $5,000 worth of gold 
B) $5,000 worth of government bonds 
C) $5,000 in a checking account 
D) $5,000 credit line on a credit card 
E) $5,000 of real estate

Question 6

What makes up M1? Is M1 larger or smaller than real GDP?

Accepted Answer

M1 is the sum of currency held by indivi

Question 7

If the Fed engages in quantitative easing,it has likely

Accepted Answer

A) decreased the federal funds rate to almost zero by buying large sums of securities. 
B) increased the discount rate to prevent inflation. 
C) decreased the discount rate by selling its own securities. 
D) increased the federal funds rate by selling private securities. 
E) started paying interest on required reserves. 
A) decreased the federal funds rate to almost zero by buying large sums of securities. 
B) increased the discount rate to prevent inflation. 
C) decreased the discount rate by selling its own securities. 
D) increased the federal funds rate by selling private securities. 
E) started paying interest on required reserves.

Question 8

When the Fed sells government securities to banks,the sale

Accepted Answer

A) increases banks' reserves. 
B) increases the quantity of money. 
C) creates more excess reserves. 
D) decreases banks' reserves. 
E) increases the monetary base. 
A) increases banks' reserves. 
B) increases the quantity of money. 
C) creates more excess reserves. 
D) decreases banks' reserves. 
E) increases the monetary base.

Question 9

Which of the following is a tool the Fed uses to adjust the quantity of money?
I.The Fed can change the interest rate banks charge for loans to their prime customers.
Ii.The Fed can change the discount rate on loans to banks.
Iii.The Fed can buy or sell government securities.

Accepted Answer

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

Question 10

Which of the following is money?

Accepted Answer

A) credit card 
B) debit card 
C) e-checks 
D) checkable deposit 
E) checks 
A) credit card 
B) debit card 
C) e-checks 
D) checkable deposit 
E) checks

Question 11

A bank has checkable deposits of $1,000,000,loans of $600,000,and government securities of $400,000.If the required reserve ratio is 5 percent,the amount of required reserves is

Accepted Answer

A) $100,000. 
B) $30,000. 
C) $50,000. 
D) $80,000. 
E) $20,000. 
A) $100,000. 
B) $30,000. 
C) $50,000. 
D) $80,000. 
E) $20,000.

Question 12

"Banks hold about 50 percent of their assets as reserves." Is the previous statement correct or not?

Accepted Answer

The statement is inc

Question 13

A commercial bank's main goal is to

Accepted Answer

A) provide loans to its customers. 
B) maximize the wealth of its stockholders. 
C) help the government when it needs money. 
D) lend money to the Federal Reserve Banks. 
E) open checking accounts. 
A) provide loans to its customers. 
B) maximize the wealth of its stockholders. 
C) help the government when it needs money. 
D) lend money to the Federal Reserve Banks. 
E) open checking accounts.

Question 14

When we use money to purchase goods and services,we are using money as a

Accepted Answer

A) unit of account. 
B) reserve of wealth. 
C) medium of exchange. 
D) store of value. 
E) bartering tool. 
A) unit of account. 
B) reserve of wealth. 
C) medium of exchange. 
D) store of value. 
E) bartering tool.

Question 15

Suppose the Fed sells $100 of government securities.If the desired reserve ratio is 20 percent and there is no currency drain,then the quantity of money

Accepted Answer

A) decreases by $100. 
B) decreases by $500. 
C) decreases by $400. 
D) increases by $100. 
E) decreases by $80. 
A) decreases by $100. 
B) decreases by $500. 
C) decreases by $400. 
D) increases by $100. 
E) decreases by $80.

Question 16

If the required reserve ratio is 15 percent,there is no currency drain,and banks loan all of their excess reserves,an increase in the monetary base of $20,000 leads to a total increase in the quantity of money of

Accepted Answer

A) $3,000. 
B) $20,000. 
C) $133,333. 
D) $200,000. 
E) $300,000. 
A) $3,000. 
B) $20,000. 
C) $133,333. 
D) $200,000. 
E) $300,000.

Question 17

A currency drain ________ the amount of bank reserves available to banks to make loans because ________.

Accepted Answer

A) reduces;people are holding more money outside of the banks 
B) increases;people are holding less money outside of the banks 
C) reduces;people are holding less money outside of the banks 
D) reduces the monetary base;people are holding more money outside of the banks 
E) reduces;people are holding onto the money the banks could have borrowed from the Fed 
A) reduces;people are holding more money outside of the banks 
B) increases;people are holding less money outside of the banks 
C) reduces;people are holding less money outside of the banks 
D) reduces the monetary base;people are holding more money outside of the banks 
E) reduces;people are holding onto the money the banks could have borrowed from the Fed

Question 18

The Federal Reserve reports that it has coins valued at $10 billion,bank reserves at the Fed of $15 billion,gold valued at $10 billion,Federal Reserve notes of $400 billion,and U.S.government securities of $300 billion.What is the size of the monetary base?

Accepted Answer

The monetary base is the sum o

Question 19

Are the members of the Board of Governors of the Federal Reserve System elected officials?

Accepted Answer

No,the members are not elected

Question 20

"By definition,all parts of M2 are money." Is the previous statement correct or not? Explain your answer.

Accepted Answer

The statement is incorrect.Many of the a

Explain which of the following count as money. a.a check in Ann's checkbook b.currency in Ann's bank c.currency in Ann's purse d.Ann's checking deposit

If the Fed buys a $100,000 government security from a bank when the desired reserve ratio is 20 percent and the currency drain ratio is 5 percent,the bank can loan a maximum of

If a bank receives an additional deposit of $50,000 and the desired reserve ratio is 20 percent,what is the amount of new loans the bank can make?

If the currency drain ratio is 0.2 and the desired reserve ratio is 0.03,the money multiplier is

Which of the following counts as part of M1?

What makes up M1? Is M1 larger or smaller than real GDP?

If the Fed engages in quantitative easing,it has likely

When the Fed sells government securities to banks,the sale

Which of the following is a tool the Fed uses to adjust the quantity of money? I.The Fed can change the interest rate banks charge for loans to their prime customers. Ii.The Fed can change the discount rate on loans to banks. Iii.The Fed can buy or sell government securities.

Which of the following is money?

A bank has checkable deposits of $1,000,000,loans of $600,000,and government securities of $400,000.If the required reserve ratio is 5 percent,the amount of required reserves is

"Banks hold about 50 percent of their assets as reserves." Is the previous statement correct or not?

A commercial bank's main goal is to

When we use money to purchase goods and services,we are using money as a

Suppose the Fed sells $100 of government securities.If the desired reserve ratio is 20 percent and there is no currency drain,then the quantity of money

If the required reserve ratio is 15 percent,there is no currency drain,and banks loan all of their excess reserves,an increase in the monetary base of $20,000 leads to a total increase in the quantity of money of

A currency drain the amount of bank reserves available to banks to make loans because .

The Federal Reserve reports that it has coins valued at $10 billion,bank reserves at the Fed of $15 billion,gold valued at $10 billion,Federal Reserve notes of $400 billion,and U.S.government securities of $300 billion.What is the size of the monetary base?

Are the members of the Board of Governors of the Federal Reserve System elected officials?

"By definition,all parts of M2 are money." Is the previous statement correct or not? Explain your answer.

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

Explain which of the following count as money. a.a check in Ann's checkbook b.currency in Ann's bank c.currency in Ann's purse d.Ann's checking deposit

If the Fed buys a $100,000 government security from a bank when the desired reserve ratio is 20 percent and the currency drain ratio is 5 percent,the bank can loan a maximum of

If a bank receives an additional deposit of $50,000 and the desired reserve ratio is 20 percent,what is the amount of new loans the bank can make?

If the currency drain ratio is 0.2 and the desired reserve ratio is 0.03,the money multiplier is

Which of the following counts as part of M1?

What makes up M1? Is M1 larger or smaller than real GDP?

If the Fed engages in quantitative easing,it has likely

When the Fed sells government securities to banks,the sale

Which of the following is a tool the Fed uses to adjust the quantity of money? I.The Fed can change the interest rate banks charge for loans to their prime customers. Ii.The Fed can change the discount rate on loans to banks. Iii.The Fed can buy or sell government securities.

Which of the following is money?

A bank has checkable deposits of $1,000,000,loans of $600,000,and government securities of $400,000.If the required reserve ratio is 5 percent,the amount of required reserves is

"Banks hold about 50 percent of their assets as reserves." Is the previous statement correct or not?

A commercial bank's main goal is to

When we use money to purchase goods and services,we are using money as a

Suppose the Fed sells $100 of government securities.If the desired reserve ratio is 20 percent and there is no currency drain,then the quantity of money

If the required reserve ratio is 15 percent,there is no currency drain,and banks loan all of their excess reserves,an increase in the monetary base of $20,000 leads to a total increase in the quantity of money of

A currency drain ________ the amount of bank reserves available to banks to make loans because ________.

The Federal Reserve reports that it has coins valued at $10 billion,bank reserves at the Fed of $15 billion,gold valued at $10 billion,Federal Reserve notes of $400 billion,and U.S.government securities of $300 billion.What is the size of the monetary base?

Are the members of the Board of Governors of the Federal Reserve System elected officials?

"By definition,all parts of M2 are money." Is the previous statement correct or not? Explain your answer.

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 the amount of bank reserves available to banks to make loans because .