Question 1

What is the interaction between the Federal Reserve districts and the Board of Governors of the Federal Reserve System?

Accepted Answer

The Federal Reserve System divides the n

Question 2

Which of the following is NOT a function of money?
I.unit of account
Ii.store of value
Iii.unit of debt

Accepted Answer

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

Question 3

Commercial bank reserves are typically less than 1 percent of total assets,however in 2013 bank reserves ________ because of ________.

Accepted Answer

A) rose to around 88 percent;the financial crisis of 2008-2009 
B) dropped drastically to near zero;the financial crisis of 2008-2009 
C) rose to around 18 percent;the financial crisis of 2008-2009 
D) dropped drastically to near zero;the wave of natural disasters experienced in the nation and around the world 
E) rose drastically to around 18 percent;the wave of natural disasters experienced in the nation and around the world 
A) rose to around 88 percent;the financial crisis of 2008-2009 
B) dropped drastically to near zero;the financial crisis of 2008-2009 
C) rose to around 18 percent;the financial crisis of 2008-2009 
D) dropped drastically to near zero;the wave of natural disasters experienced in the nation and around the world 
E) rose drastically to around 18 percent;the wave of natural disasters experienced in the nation and around the world

Question 4

The Fed buys $50,000 of government securities.The desired reserve ratio is 10 percent and the currency drain ratio is zero.What will be the change in the quantity of money?

Accepted Answer

A) $5,000 
B) $50,000 
C) $500,000 
D) $5,000,000 
E) $0 
A) $5,000 
B) $50,000 
C) $500,000 
D) $5,000,000 
E) $0

Question 5

In order for any given commodity to be considered money,it has to

Accepted Answer

A) have some intrinsic value. 
B) be generally acceptable as a means of payment. 
C) be issued and controlled by some governmental institution. 
D) be convertible into gold or silver. 
E) be used in barter transactions. 
A) have some intrinsic value. 
B) be generally acceptable as a means of payment. 
C) be issued and controlled by some governmental institution. 
D) be convertible into gold or silver. 
E) be used in barter transactions.

Question 6

A-1 bank initially has no excess reserves.If the desired reserve ratio is 10 percent and a new deposit of $10,000 is made in A-1,then A-1

Accepted Answer

A) is required to hold the deposit in its reserves. 
B) can immediately loan a multiple of the $10,000. 
C) can immediately loan $9,000. 
D) can immediately loan $100,000. 
E) can immediately loan $10,000. 
A) is required to hold the deposit in its reserves. 
B) can immediately loan a multiple of the $10,000. 
C) can immediately loan $9,000. 
D) can immediately loan $100,000. 
E) can immediately loan $10,000.

Question 7

If the Fed buys government securities,then

Accepted Answer

A) the quantity of money is not changed,just its composition. 
B) new bank reserves are created. 
C) the quantity of money decreases. 
D) bank reserves are destroyed. 
E) banks' excess reserves decrease. 
A) the quantity of money is not changed,just its composition. 
B) new bank reserves are created. 
C) the quantity of money decreases. 
D) bank reserves are destroyed. 
E) banks' excess reserves decrease.

Question 8

Banks earn a profit by

Accepted Answer

A) keeping as many reserves on hand as possible. 
B) making loans at a lower interest rate than the rate that they offer on their deposits. 
C) charging an interest rate on their depositors' accounts. 
D) making loans at a higher interest rate than the rates that they offer on their deposits. 
E) not paying interest on their reserves. 
A) keeping as many reserves on hand as possible. 
B) making loans at a lower interest rate than the rate that they offer on their deposits. 
C) charging an interest rate on their depositors' accounts. 
D) making loans at a higher interest rate than the rates that they offer on their deposits. 
E) not paying interest on their reserves.

Question 9

List the Fed's main policy tools and briefly explain each one.

Accepted Answer

The Fed's main policy tools are: require

Question 10

An increase in the currency drain ratio

Accepted Answer

A) decreases the quantity of money. 
B) decreases the monetary base. 
C) increases banks' reserves. 
D) increases banks' deposits. 
E) has no effect on the amount of the monetary base or the quantity of money. 
A) decreases the quantity of money. 
B) decreases the monetary base. 
C) increases banks' reserves. 
D) increases banks' deposits. 
E) has no effect on the amount of the monetary base or the quantity of money.

Question 11

If we look at the components of M2,we find that

Accepted Answer

A) money market funds are the largest component. 
B) savings deposits are the largest component. 
C) currency is the largest component. 
D) banks' reserves are the largest component. 
E) loans are the largest component. 
A) money market funds are the largest component. 
B) savings deposits are the largest component. 
C) currency is the largest component. 
D) banks' reserves are the largest component. 
E) loans are the largest component.

Question 12

An increase in the currency drain ratio

Accepted Answer

A) increases the size of the money multiplier. 
B) decreases the size of the money multiplier. 
C) increases the deposits in all banks. 
D) decreases the size of the monetary base. 
E) increases the size of the monetary base. 
A) increases the size of the money multiplier. 
B) decreases the size of the money multiplier. 
C) increases the deposits in all banks. 
D) decreases the size of the monetary base. 
E) increases the size of the monetary base.

Question 13

The U.S.dollar is called

Accepted Answer

A) fiat money because the law decrees it is money. 
B) faith money. 
C) commodity money,because it is convertible into gold. 
D) frail money because wear and tear ruins paper bills. 
E) convertible money because the government stands ready to convert it into gold or silver. 
A) fiat money because the law decrees it is money. 
B) faith money. 
C) commodity money,because it is convertible into gold. 
D) frail money because wear and tear ruins paper bills. 
E) convertible money because the government stands ready to convert it into gold or silver.

Question 14

Checks are not money because they

Accepted Answer

A) are just instruments to transfer money between banks. 
B) are not guaranteed by banks. 
C) can bounce when there are not enough funds to cash them. 
D) are not issued by the government. 
E) are not always accepted when trying to purchase goods or services. 
A) are just instruments to transfer money between banks. 
B) are not guaranteed by banks. 
C) can bounce when there are not enough funds to cash them. 
D) are not issued by the government. 
E) are not always accepted when trying to purchase goods or services.

Question 15

Suppose the Fed buys $1 million of government securities from Bank One,a large commercial bank.Bank One's reserves ________ and its deposits ________.

Accepted Answer

A) increase by $1 million;do not change 
B) increase by $1 million;increase by $1 million 
C) do not change;increase by $1 million 
D) do not change;do not change 
E) decrease by $1 million;do not change 
A) increase by $1 million;do not change 
B) increase by $1 million;increase by $1 million 
C) do not change;increase by $1 million 
D) do not change;do not change 
E) decrease by $1 million;do not change

Question 16

The goal of a commercial bank is to

Accepted Answer

A) establish good regulations for commercial activities. 
B) make only safe,no-risk loans. 
C) maximize its stockholders' wealth. 
D) minimize its taxes paid to state governments. 
E) accept only deposits made in money. 
A) establish good regulations for commercial activities. 
B) make only safe,no-risk loans. 
C) maximize its stockholders' wealth. 
D) minimize its taxes paid to state governments. 
E) accept only deposits made in money.

Question 17

When part of a bank loan does not return to the banking system but rather remains outside the banking system as currency,then the money multiplier ________ in size and the amount of money created by an open market operation ________.

Accepted Answer

A) increases;decreases 
B) does not change;increases 
C) decreases;decreases 
D) increases;increases 
E) decreases;does not change 
A) increases;decreases 
B) does not change;increases 
C) decreases;decreases 
D) increases;increases 
E) decreases;does not change

Question 18

The desired reserve ratio is 3 percent.Robert deposits $3,000 in Bank America.Bank America keeps its minimum desired reserves and lends the excess to Fredrica.How much does Bank America lend to Fredrica?

Accepted Answer

A) $3,000 
B) $2,910 
C) $300 
D) $2,700 
E) $900 
A) $3,000 
B) $2,910 
C) $300 
D) $2,700 
E) $900

Question 19

Decisions of ________ determine the magnitude of the monetary multiplier.

Accepted Answer

A) only the Fed 
B) only the public 
C) both the Fed and the public 
D) neither the Fed nor the public 
E) the Fed and the U.S.Congress 
A) only the Fed 
B) only the public 
C) both the Fed and the public 
D) neither the Fed nor the public 
E) the Fed and the U.S.Congress

Question 20

In performing which of its primary functions does money solve the problem of the double coincidence of wants?

Accepted Answer

A) medium of exchange 
B) unit of account 
C) store of value 
D) barter system 
E) money supply 
A) medium of exchange 
B) unit of account 
C) store of value 
D) barter system 
E) money supply

What is the interaction between the Federal Reserve districts and the Board of Governors of the Federal Reserve System?

Which of the following is NOT a function of money? I.unit of account Ii.store of value Iii.unit of debt

Commercial bank reserves are typically less than 1 percent of total assets,however in 2013 bank reserves because of .

The Fed buys $50,000 of government securities.The desired reserve ratio is 10 percent and the currency drain ratio is zero.What will be the change in the quantity of money?

In order for any given commodity to be considered money,it has to

A-1 bank initially has no excess reserves.If the desired reserve ratio is 10 percent and a new deposit of $10,000 is made in A-1,then A-1

If the Fed buys government securities,then

Banks earn a profit by

List the Fed's main policy tools and briefly explain each one.

An increase in the currency drain ratio

If we look at the components of M2,we find that

An increase in the currency drain ratio

The U.S.dollar is called

Checks are not money because they

Suppose the Fed buys $1 million of government securities from Bank One,a large commercial bank.Bank One's reserves and its deposits .

The goal of a commercial bank is to

When part of a bank loan does not return to the banking system but rather remains outside the banking system as currency,then the money multiplier in size and the amount of money created by an open market operation .

The desired reserve ratio is 3 percent.Robert deposits $3,000 in Bank America.Bank America keeps its minimum desired reserves and lends the excess to Fredrica.How much does Bank America lend to Fredrica?

Decisions of ________ determine the magnitude of the monetary multiplier.

In performing which of its primary functions does money solve the problem of the double coincidence of wants?

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

What is the interaction between the Federal Reserve districts and the Board of Governors of the Federal Reserve System?

Which of the following is NOT a function of money? I.unit of account Ii.store of value Iii.unit of debt

Commercial bank reserves are typically less than 1 percent of total assets,however in 2013 bank reserves ________ because of ________.

The Fed buys $50,000 of government securities.The desired reserve ratio is 10 percent and the currency drain ratio is zero.What will be the change in the quantity of money?

In order for any given commodity to be considered money,it has to

A-1 bank initially has no excess reserves.If the desired reserve ratio is 10 percent and a new deposit of $10,000 is made in A-1,then A-1

If the Fed buys government securities,then

Banks earn a profit by

List the Fed's main policy tools and briefly explain each one.

An increase in the currency drain ratio

If we look at the components of M2,we find that

An increase in the currency drain ratio

The U.S.dollar is called

Checks are not money because they

Suppose the Fed buys $1 million of government securities from Bank One,a large commercial bank.Bank One's reserves ________ and its deposits ________.

The goal of a commercial bank is to

When part of a bank loan does not return to the banking system but rather remains outside the banking system as currency,then the money multiplier ________ in size and the amount of money created by an open market operation ________.

The desired reserve ratio is 3 percent.Robert deposits $3,000 in Bank America.Bank America keeps its minimum desired reserves and lends the excess to Fredrica.How much does Bank America lend to Fredrica?

Decisions of ________ determine the magnitude of the monetary multiplier.

In performing which of its primary functions does money solve the problem of the double coincidence of wants?

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

Commercial bank reserves are typically less than 1 percent of total assets,however in 2013 bank reserves because of .

Suppose the Fed buys $1 million of government securities from Bank One,a large commercial bank.Bank One's reserves and its deposits .

When part of a bank loan does not return to the banking system but rather remains outside the banking system as currency,then the money multiplier in size and the amount of money created by an open market operation .