Question 1

"If the currency drain ratio increases,the monetary base decreases." Explain whether the previous statement is correct or incorrect.

Accepted Answer

The statement is false.If the

Question 2

The desired reserve ratio is 10 percent and banks have no excess reserves.Juliet deposits $300 in her bank.What is the maximum that Juliet's bank can now loan?

Accepted Answer

A) $3,000 
B) $270 
C) $30 
D) $330 
E) $300 
A) $3,000 
B) $270 
C) $30 
D) $330 
E) $300

Question 3

The discount rate is the interest rate that

Accepted Answer

A) commercial banks charge their customers. 
B) commercial banks charge each other for the loan of reserves. 
C) the Fed charges the government for loans. 
D) the Fed charges commercial banks when it loans reserves to the banks. 
E) the Fed pays commercial banks on their reserves held at the Fed. 
A) commercial banks charge their customers. 
B) commercial banks charge each other for the loan of reserves. 
C) the Fed charges the government for loans. 
D) the Fed charges commercial banks when it loans reserves to the banks. 
E) the Fed pays commercial banks on their reserves held at the Fed.

Question 4

All of the following are elements in the structure of the Fed EXCEPT the

Accepted Answer

A) Federal Open Market Committee. 
B) Executive Council to the Governor. 
C) 12 Federal Reserve Banks. 
D) Board of Governors. 
E) presidents of the 12 Federal Reserve Banks. 
A) Federal Open Market Committee. 
B) Executive Council to the Governor. 
C) 12 Federal Reserve Banks. 
D) Board of Governors. 
E) presidents of the 12 Federal Reserve Banks.

Question 5

What is the structure of the Federal Reserve Bank System?

Accepted Answer

The key elements in the structure of the

Question 6

Which of the following accept deposits from or sell shares to the general public?
I.money market funds
Ii.thrift institutions
Iii.commercial banks

Accepted Answer

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

Question 7

The Fed buys $20,000 of government securities.The desired reserve ratio is 5 percent and the currency drain ratio is zero.What will be the change in the quantity of money?

Accepted Answer

A) $20,000 
B) $400,000 
C) $399,980 
D) $19,000 
E) $5,000 
A) $20,000 
B) $400,000 
C) $399,980 
D) $19,000 
E) $5,000

Question 8

When money is used to compare the relative price of a burrito and a taco,money is being used as a

Accepted Answer

A) medium of exchange. 
B) store of value. 
C) measurement of inflation. 
D) unit of account. 
E) token of bartering. 
A) medium of exchange. 
B) store of value. 
C) measurement of inflation. 
D) unit of account. 
E) token of bartering.

Question 9

Suppose a bank has $1,000 in deposits and $100 in reserves.If the desired reserve ratio is 5 percent,how much can this bank increase its loans?

Accepted Answer

A) $0 
B) $400 
C) $80 
D) $50 
E) $100 
A) $0 
B) $400 
C) $80 
D) $50 
E) $100

Question 10

A credit card is

Accepted Answer

A) money. 
B) barter money. 
C) not money. 
D) fiat money. 
E) not money,but the card's credit line is money. 
A) money. 
B) barter money. 
C) not money. 
D) fiat money. 
E) not money,but the card's credit line is money.

Question 11

A bank reports reserves of $100,000,government securities of $250,000,loans of $750,000,checkable deposits of $900,000,and owners' equity of $200,000.The desired reserve ratio is 10 percent and the bank wants to hold as reserves only the amount it is required to hold.What is the amount of excess reserves for this bank? Show your work.

Accepted Answer

Excess reserves equal the actual reserve

Question 12

The Fed conducts an open market operation and increases a bank's excess reserves by $2,000.Explain the first five rounds of the money creation process if the desired reserve ratio is 25 percent and if people keep no currency outside of the banking system.

Accepted Answer

In round one,the bank gains $2,000 of re

Question 13

If the reserve requirement is 20 percent and the Fed buys $10,000 worth of Treasury bonds,what is the change in the banks' total reserves?

Accepted Answer

A) $2,000 
B) $10,000 
C) $20,000 
D) $8,000 
E) $100,000 
A) $2,000 
B) $10,000 
C) $20,000 
D) $8,000 
E) $100,000

Question 14

If a single bank has $25,000 in excess reserves and the desired reserve ratio is 20 percent,what is the maximum this bank can loan?

Accepted Answer

A) $5,000 
B) $20,000 
C) $25,000 
D) $125,000 
E) $30,000 
A) $5,000 
B) $20,000 
C) $25,000 
D) $125,000 
E) $30,000

Question 15

When the Fed buys securities from the public,banks' reserves ________ and the quantity of money ________.

Accepted Answer

A) increase;increases 
B) increase;decreases 
C) decrease;increases 
D) decrease;decreases 
E) do not change;increases 
A) increase;increases 
B) increase;decreases 
C) decrease;increases 
D) decrease;decreases 
E) do not change;increases

Question 16

The Fed's policy is determined by the

Accepted Answer

A) Federal Open Market Committee. 
B) Executive Council to the Governor. 
C) Regional Federal Reserve Banks. 
D) Board of Governors. 
E) Federal Monetary Policy Committee. 
A) Federal Open Market Committee. 
B) Executive Council to the Governor. 
C) Regional Federal Reserve Banks. 
D) Board of Governors. 
E) Federal Monetary Policy Committee.

Question 17

Money is any commodity or token that

Accepted Answer

A) is generally accepted as a means of payment. 
B) is backed up and controlled by the government. 
C) is naturally accepted by households to accumulate wealth. 
D) does not change in value over time. 
E) is backed by gold. 
A) is generally accepted as a means of payment. 
B) is backed up and controlled by the government. 
C) is naturally accepted by households to accumulate wealth. 
D) does not change in value over time. 
E) is backed by gold.

Question 18

The monetary base is equal to

Accepted Answer

A) banks' assets plus liabilities. 
B) Federal Reserve notes plus coins plus banks' reserves at the Fed. 
C) checkable deposits plus coins plus traveler's checks. 
D) checkable deposits plus coins plus banks' assets. 
E) M2 minus M1. 
A) banks' assets plus liabilities. 
B) Federal Reserve notes plus coins plus banks' reserves at the Fed. 
C) checkable deposits plus coins plus traveler's checks. 
D) checkable deposits plus coins plus banks' assets. 
E) M2 minus M1.

Question 19

The currency drain reduces the amount of

Accepted Answer

A) reserves available to banks to make loans. 
B) currency the Fed has outstanding in the economy. 
C) currency available for banks to borrow from the Fed. 
D) the monetary base. 
E) open market operations the Fed can make. 
A) reserves available to banks to make loans. 
B) currency the Fed has outstanding in the economy. 
C) currency available for banks to borrow from the Fed. 
D) the monetary base. 
E) open market operations the Fed can make.

Question 20

Credit cards are
I.a generally accepted form of payment and therefore part of M1.
Ii.included in M1 because you write a check to pay your monthly bill.
Iii.a means of borrowing money.

Accepted Answer

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

"If the currency drain ratio increases,the monetary base decreases." Explain whether the previous statement is correct or incorrect.

The desired reserve ratio is 10 percent and banks have no excess reserves.Juliet deposits $300 in her bank.What is the maximum that Juliet's bank can now loan?

The discount rate is the interest rate that

All of the following are elements in the structure of the Fed EXCEPT the

What is the structure of the Federal Reserve Bank System?

Which of the following accept deposits from or sell shares to the general public? I.money market funds Ii.thrift institutions Iii.commercial banks

The Fed buys $20,000 of government securities.The desired reserve ratio is 5 percent and the currency drain ratio is zero.What will be the change in the quantity of money?

When money is used to compare the relative price of a burrito and a taco,money is being used as a

Suppose a bank has $1,000 in deposits and $100 in reserves.If the desired reserve ratio is 5 percent,how much can this bank increase its loans?

A credit card is

The Fed conducts an open market operation and increases a bank's excess reserves by $2,000.Explain the first five rounds of the money creation process if the desired reserve ratio is 25 percent and if people keep no currency outside of the banking system.

If the reserve requirement is 20 percent and the Fed buys $10,000 worth of Treasury bonds,what is the change in the banks' total reserves?

If a single bank has $25,000 in excess reserves and the desired reserve ratio is 20 percent,what is the maximum this bank can loan?

When the Fed buys securities from the public,banks' reserves and the quantity of money .

The Fed's policy is determined by the

Money is any commodity or token that

The monetary base is equal to

The currency drain reduces the amount of

Credit cards are I.a generally accepted form of payment and therefore part of M1. Ii.included in M1 because you write a check to pay your monthly bill. Iii.a means of borrowing money.

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

"If the currency drain ratio increases,the monetary base decreases." Explain whether the previous statement is correct or incorrect.

The desired reserve ratio is 10 percent and banks have no excess reserves.Juliet deposits $300 in her bank.What is the maximum that Juliet's bank can now loan?

The discount rate is the interest rate that

All of the following are elements in the structure of the Fed EXCEPT the

What is the structure of the Federal Reserve Bank System?

Which of the following accept deposits from or sell shares to the general public? I.money market funds Ii.thrift institutions Iii.commercial banks

The Fed buys $20,000 of government securities.The desired reserve ratio is 5 percent and the currency drain ratio is zero.What will be the change in the quantity of money?

When money is used to compare the relative price of a burrito and a taco,money is being used as a

Suppose a bank has $1,000 in deposits and $100 in reserves.If the desired reserve ratio is 5 percent,how much can this bank increase its loans?

A credit card is

The Fed conducts an open market operation and increases a bank's excess reserves by $2,000.Explain the first five rounds of the money creation process if the desired reserve ratio is 25 percent and if people keep no currency outside of the banking system.

If the reserve requirement is 20 percent and the Fed buys $10,000 worth of Treasury bonds,what is the change in the banks' total reserves?

If a single bank has $25,000 in excess reserves and the desired reserve ratio is 20 percent,what is the maximum this bank can loan?

When the Fed buys securities from the public,banks' reserves ________ and the quantity of money ________.

The Fed's policy is determined by the

Money is any commodity or token that

The monetary base is equal to

The currency drain reduces the amount of

Credit cards are I.a generally accepted form of payment and therefore part of M1. Ii.included in M1 because you write a check to pay your monthly bill. Iii.a means of borrowing money.

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

When the Fed buys securities from the public,banks' reserves and the quantity of money .