Question 1

Which statement is most correct about the types of deposits a commercial bank can accept?

Accepted Answer

A) A commercial bank accepts checking,savings and time deposits. 
B) A commercial bank can only accept checking deposits from commercial enterprises. 
C) A commercial bank accepts savings and time deposits,but not checking deposits. 
D) A commercial bank does not accept deposits but sells shares. 
E) A commercial bank can accept loan deposits,reserve deposits,and checkable deposits. 
A) A commercial bank accepts checking,savings and time deposits. 
B) A commercial bank can only accept checking deposits from commercial enterprises. 
C) A commercial bank accepts savings and time deposits,but not checking deposits. 
D) A commercial bank does not accept deposits but sells shares. 
E) A commercial bank can accept loan deposits,reserve deposits,and checkable deposits.

Question 2

"Credit cards are considered money because they serve to purchase goods and services." Is the previous statement true or false?

Accepted Answer

The statement is false.Credit cards are

Question 3

What is barter? What is a double coincidence of wants? How does the existence of money affect barter?

Accepted Answer

Barter is the direct exchange of one goo

Question 4

If the currency drain ratio is 40 percent and the desired reserve ratio is 15 percent,what does the money multiplier equal?

Accepted Answer

The money multiplier is 2.55.T

Question 5

If the currency drain ratio increases,how can the Fed adjust the monetary base to offset the effect on the quantity of money?

Accepted Answer

If the currency drain ratio increases,th

Question 6

The discount rate is the

Accepted Answer

A) banks' real interest rate. 
B) interest rate at which the Fed will loan reserves to commercial banks. 
C) interest rate banks charge the Fed when the Fed borrows from the banks. 
D) name of the interest rate banks charge their most credit-worthy borrowers. 
E) interest rate paid on U.S.government securities. 
A) banks' real interest rate. 
B) interest rate at which the Fed will loan reserves to commercial banks. 
C) interest rate banks charge the Fed when the Fed borrows from the banks. 
D) name of the interest rate banks charge their most credit-worthy borrowers. 
E) interest rate paid on U.S.government securities.

Question 7

Because the Federal Reserve System is a central bank,it provides banking services to

Accepted Answer

A) businesses only. 
B) consumers and business. 
C) commercial banks. 
D) no one. 
E) the government only. 
A) businesses only. 
B) consumers and business. 
C) commercial banks. 
D) no one. 
E) the government only.

Question 8

If the desired reserve ratio increases,then

Accepted Answer

A) banks' desired reserves increase and their excess reserves decrease. 
B) bank customers become more willing to make deposits in banks. 
C) banks are able to make more loans. 
D) banks can buy more government securities. 
E) the Fed has supplied banks with more reserves. 
A) banks' desired reserves increase and their excess reserves decrease. 
B) bank customers become more willing to make deposits in banks. 
C) banks are able to make more loans. 
D) banks can buy more government securities. 
E) the Fed has supplied banks with more reserves.

Question 9

The Fed's policy tools include

Accepted Answer

A) required reserve ratios,the discount rate,open market operations,and extraordinary crisis measures. 
B) holding deposits for the U.S.government,reserve requirements,and the discount rate. 
C) setting regulations for lending standards and extraordinary crisis measures. 
D) supervision of the banking system and buying and selling commercial banks. 
E) required reserve ratios,income tax rates,and open market operations. 
A) required reserve ratios,the discount rate,open market operations,and extraordinary crisis measures. 
B) holding deposits for the U.S.government,reserve requirements,and the discount rate. 
C) setting regulations for lending standards and extraordinary crisis measures. 
D) supervision of the banking system and buying and selling commercial banks. 
E) required reserve ratios,income tax rates,and open market operations.

Question 10

When the Fed buys government securities,the immediate effect of the purchase is that banks'

Accepted Answer

A) reserves increase. 
B) deposits increase. 
C) assets increase. 
D) reserves decrease. 
E) loans decrease. 
A) reserves increase. 
B) deposits increase. 
C) assets increase. 
D) reserves decrease. 
E) loans decrease.

Question 11

A bank has deposits of $400,reserves of $50,and the desired reserve ratio is 7 percent.The bank's excess reserves are

Accepted Answer

A) $0. 
B) $22. 
C) $28. 
D) $3.50 
E) $50. 
A) $0. 
B) $22. 
C) $28. 
D) $3.50 
E) $50.

Question 12

The First National Bank of Townville has $125,000 in U.S.government securities,$200,000 in savings accounts,$300,000 in checking accounts,$50,000 in its reserve account at the Fed,$10,000 of currency in its vault,and loans of $250,000.What is the amount of its reserves?

Accepted Answer

Reserves include the bank's de

Question 13

If Joe withdraws a $100 bill from his checking account and Jack deposits another $100 bill in his savings account,by how will M1 and M2 change?

Accepted Answer

A) M1 will decrease,but M2 will remain the same. 
B) M1 will increase,and M2 will increase. 
C) M2 will decrease by $100. 
D) Both M1 and M2 will remain the same. 
E) M1 will remain the same,and M2 will increase. 
A) M1 will decrease,but M2 will remain the same. 
B) M1 will increase,and M2 will increase. 
C) M2 will decrease by $100. 
D) Both M1 and M2 will remain the same. 
E) M1 will remain the same,and M2 will increase.

Question 14

Suppose the Fed conducts an open market operation in which it buys government securities from a commercial bank.Why is there a multiplier effect on the quantity of money?

Accepted Answer

When the Fed buys government securities

Question 15

The medium of exchange is defined as

Accepted Answer

A) barter. 
B) the exchange of goods and services directly for goods and services. 
C) an object that is accepted in return for goods and services. 
D) credit cards. 
E) an item that can be stored and hold its value over time. 
A) barter. 
B) the exchange of goods and services directly for goods and services. 
C) an object that is accepted in return for goods and services. 
D) credit cards. 
E) an item that can be stored and hold its value over time.

Question 16

Banks create money by

Accepted Answer

A) printing dollar bills without limit. 
B) creating deposits without limit. 
C) printing money up to their required reserve limit. 
D) making loans and creating deposits,a process that is limited by the size of banks' excess reserves. 
E) buying U.S.government securities with cash. 
A) printing dollar bills without limit. 
B) creating deposits without limit. 
C) printing money up to their required reserve limit. 
D) making loans and creating deposits,a process that is limited by the size of banks' excess reserves. 
E) buying U.S.government securities with cash.

Question 17

Which of the following is an example of money?

Accepted Answer

A) currency in your wallet 
B) currency inside the banks 
C) checks written as payment for a good or service 
D) credit card used as a payment for a good or service 
E) a debit card 
A) currency in your wallet 
B) currency inside the banks 
C) checks written as payment for a good or service 
D) credit card used as a payment for a good or service 
E) a debit card

Question 18

The monetary base is the

Accepted Answer

A) minimum reserve banks must hold to cover any losses from unpaid loans. 
B) sum of coins,Federal Reserve notes,and banks' reserves at the Fed. 
C) sum of gold and foreign exchange held by the Fed. 
D) sum of government securities and loans to banks held by the Fed. 
E) sum of coins,required reserves,and banks' loans. 
A) minimum reserve banks must hold to cover any losses from unpaid loans. 
B) sum of coins,Federal Reserve notes,and banks' reserves at the Fed. 
C) sum of gold and foreign exchange held by the Fed. 
D) sum of government securities and loans to banks held by the Fed. 
E) sum of coins,required reserves,and banks' loans.

Question 19

Banks can make loans as long as they have

Accepted Answer

A) deposits. 
B) reserves. 
C) required reserves. 
D) excess reserves. 
E) excess government securities. 
A) deposits. 
B) reserves. 
C) required reserves. 
D) excess reserves. 
E) excess government securities.

Question 20

Which of the following describes the "invention" of banking?

Accepted Answer

A) The British Empire created a banking system to fund its exploration of the New World. 
B) Members of the New York Stock Exchange founded the Bank of America in the 1700s. 
C) Goldsmiths in the sixteenth century issued gold receipts which entitled its owners to reclaim their gold on demand. 
D) Clergy in the Renaissance created the banking system to help further the growth of the church. 
E) The United States government founded the Federal Reserve in 1913. 
A) The British Empire created a banking system to fund its exploration of the New World. 
B) Members of the New York Stock Exchange founded the Bank of America in the 1700s. 
C) Goldsmiths in the sixteenth century issued gold receipts which entitled its owners to reclaim their gold on demand. 
D) Clergy in the Renaissance created the banking system to help further the growth of the church. 
E) The United States government founded the Federal Reserve in 1913.

Which statement is most correct about the types of deposits a commercial bank can accept?

"Credit cards are considered money because they serve to purchase goods and services." Is the previous statement true or false?

What is barter? What is a double coincidence of wants? How does the existence of money affect barter?

If the currency drain ratio is 40 percent and the desired reserve ratio is 15 percent,what does the money multiplier equal?

If the currency drain ratio increases,how can the Fed adjust the monetary base to offset the effect on the quantity of money?

The discount rate is the

Because the Federal Reserve System is a central bank,it provides banking services to

If the desired reserve ratio increases,then

The Fed's policy tools include

When the Fed buys government securities,the immediate effect of the purchase is that banks'

A bank has deposits of $400,reserves of $50,and the desired reserve ratio is 7 percent.The bank's excess reserves are

The First National Bank of Townville has $125,000 in U.S.government securities,$200,000 in savings accounts,$300,000 in checking accounts,$50,000 in its reserve account at the Fed,$10,000 of currency in its vault,and loans of $250,000.What is the amount of its reserves?

If Joe withdraws a $100 bill from his checking account and Jack deposits another $100 bill in his savings account,by how will M1 and M2 change?

Suppose the Fed conducts an open market operation in which it buys government securities from a commercial bank.Why is there a multiplier effect on the quantity of money?

The medium of exchange is defined as

Banks create money by

Which of the following is an example of money?

The monetary base is the

Banks can make loans as long as they have

Which of the following describes the "invention" of banking?

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

Which statement is most correct about the types of deposits a commercial bank can accept?

"Credit cards are considered money because they serve to purchase goods and services." Is the previous statement true or false?

What is barter? What is a double coincidence of wants? How does the existence of money affect barter?

If the currency drain ratio is 40 percent and the desired reserve ratio is 15 percent,what does the money multiplier equal?

If the currency drain ratio increases,how can the Fed adjust the monetary base to offset the effect on the quantity of money?

The discount rate is the

Because the Federal Reserve System is a central bank,it provides banking services to

If the desired reserve ratio increases,then

The Fed's policy tools include

When the Fed buys government securities,the immediate effect of the purchase is that banks'

A bank has deposits of $400,reserves of $50,and the desired reserve ratio is 7 percent.The bank's excess reserves are

The First National Bank of Townville has $125,000 in U.S.government securities,$200,000 in savings accounts,$300,000 in checking accounts,$50,000 in its reserve account at the Fed,$10,000 of currency in its vault,and loans of $250,000.What is the amount of its reserves?

If Joe withdraws a $100 bill from his checking account and Jack deposits another $100 bill in his savings account,by how will M1 and M2 change?

Suppose the Fed conducts an open market operation in which it buys government securities from a commercial bank.Why is there a multiplier effect on the quantity of money?

The medium of exchange is defined as

Banks create money by

Which of the following is an example of money?

The monetary base is the

Banks can make loans as long as they have

Which of the following describes the "invention" of banking?

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