Question 1

When you use a credit card to pay your tuition,

Accepted Answer

A) you've used the credit card as money because it is a means of payment. 
B) the credit card is not money but is an ID card for an instant loan. 
C) the credit card is not money because it involves an electronic transaction. 
D) the credit card is not money because it is not officially issued by the government. 
E) you've used the credit card as money because you received something in return. 
A) you've used the credit card as money because it is a means of payment. 
B) the credit card is not money but is an ID card for an instant loan. 
C) the credit card is not money because it involves an electronic transaction. 
D) the credit card is not money because it is not officially issued by the government. 
E) you've used the credit card as money because you received something in return.

Question 2

When the Fed buys $100 million of securities from a commercial bank,the

Accepted Answer

A) monetary base increases. 
B) money supply decreases. 
C) bank's reserves decrease. 
D) required reserve ratio decreases. 
E) bank is risking its depositors' money. 
A) monetary base increases. 
B) money supply decreases. 
C) bank's reserves decrease. 
D) required reserve ratio decreases. 
E) bank is risking its depositors' money.

Question 3

The Commerce Bank of Beverly Hills has total deposits of $1,000,000 and total reserves of $220,000.The desired reserve ratio is 10 percent.The bank's excess reserves are

Accepted Answer

A) $22,000. 
B) $120,000. 
C) $100,000. 
D) $80,000. 
E) $1,000,000. 
A) $22,000. 
B) $120,000. 
C) $100,000. 
D) $80,000. 
E) $1,000,000.

Question 4

A bank has checking deposits of $400,saving deposits of $900,time deposits of $900,loans of $950,government securities of $900,outstanding credit card balances of $400,currency in its vault of $40,and deposits in its reserve account at the Fed of $40.
a.What is the amount of this bank's deposits that are in M1?
b.What is the amount of this bank's deposits that are in M2?
c.What is the amount of this bank's reserves?

Accepted Answer

a.The only deposit that is in M1 is the

Question 5

What is fiat money?

Accepted Answer

Fiat money is objects that are money bec

Question 6

The Fed purchases $1 million of U.S.government securities from First Bank.The desired reserve ratio is 10 percent,the currency drain ratio is zero,and banks loan all excess reserves.The Fed's purchase increases First Bank's excess reserves by how much?

Accepted Answer

A) $900,000 
B) $1,000,000 
C) $1,100,000 
D) $10,000,000 
E) $100,000 
A) $900,000 
B) $1,000,000 
C) $1,100,000 
D) $10,000,000 
E) $100,000

Question 7

When we keep part of our wealth in a bank checking account,we are using money as a ________ because ________.

Accepted Answer

A) store of value;we are holding the money to exchange for goods at a later time 
B) medium of exchange;we are holding the money to gain interest earned 
C) barter token;we are holding the money to exchange for goods at a later time 
D) unit of account;we are holding the money to exchange for goods at a later time 
E) unit of currency;we have agreed upon the value of the money with bank 
A) store of value;we are holding the money to exchange for goods at a later time 
B) medium of exchange;we are holding the money to gain interest earned 
C) barter token;we are holding the money to exchange for goods at a later time 
D) unit of account;we are holding the money to exchange for goods at a later time 
E) unit of currency;we have agreed upon the value of the money with bank

Question 8

What are the three types of financial institutions that accept deposits that are part of the U.S.money supply? Briefly describe each of the three types of financial institutions.

Accepted Answer

The three institutions are commercial ba

Question 9

M1 is composed of

Accepted Answer

A) currency held by individuals and businesses,traveler's checks,and checkable deposits owned by individuals and businesses. 
B) checkable deposits owned by individuals and businesses,saving deposits,and certificates of deposit. 
C) currency inside of banks,traveler's checks,and government-issued checks. 
D) traveler's checks,credit cards,and e-cash. 
E) currency held by individuals and businesses,traveler's checks,and the credit line on credit cards. 
A) currency held by individuals and businesses,traveler's checks,and checkable deposits owned by individuals and businesses. 
B) checkable deposits owned by individuals and businesses,saving deposits,and certificates of deposit. 
C) currency inside of banks,traveler's checks,and government-issued checks. 
D) traveler's checks,credit cards,and e-cash. 
E) currency held by individuals and businesses,traveler's checks,and the credit line on credit cards.

Question 10

If the Federal Reserve ________ the required reserve ratio,the interest rate ________.

Accepted Answer

A) lowers;rises 
B) lowers;falls 
C) raises;does not change 
D) raises;falls 
E) Not enough information is given because the effect depends also on the size of the monetary base. 
A) lowers;rises 
B) lowers;falls 
C) raises;does not change 
D) raises;falls 
E) Not enough information is given because the effect depends also on the size of the monetary base.

Question 11

Quantitative easing by the Fed refers to

Accepted Answer

A) the creation of bank reserves by engaging in large-scale open market operation at very low interest rates. 
B) selling private securities issued by the Fed. 
C) decreasing the money supply during a recession to prevent inflation. 
D) lowering the federal funds rate while increasing the discount rate. 
E) lowering the required reserve ratio to zero percent. 
A) the creation of bank reserves by engaging in large-scale open market operation at very low interest rates. 
B) selling private securities issued by the Fed. 
C) decreasing the money supply during a recession to prevent inflation. 
D) lowering the federal funds rate while increasing the discount rate. 
E) lowering the required reserve ratio to zero percent.

Question 12

Which of the following is money?

Accepted Answer

A) a credit card with no credit left 
B) the check you write to pay tuition 
C) a credit card that still has credit available on it 
D) a checkable deposit in your bank 
E) the current credit available on a credit card 
A) a credit card with no credit left 
B) the check you write to pay tuition 
C) a credit card that still has credit available on it 
D) a checkable deposit in your bank 
E) the current credit available on a credit card

Question 13

Which of the following is NOT a component of M1?

Accepted Answer

A) demand deposits 
B) traveler's checks 
C) savings deposits 
D) currency 
E) Both answers C and D are correct. 
A) demand deposits 
B) traveler's checks 
C) savings deposits 
D) currency 
E) Both answers C and D are correct.

Question 14

A commercial bank's reserves are equal to the amount of

Accepted Answer

A) the bank's deposits. 
B) the bank's government securities. 
C) the bank's loans. 
D) currency in the bank's vault plus the balance on its reserve account at a Federal Reserve Bank. 
E) only the currency in its vault. 
A) the bank's deposits. 
B) the bank's government securities. 
C) the bank's loans. 
D) currency in the bank's vault plus the balance on its reserve account at a Federal Reserve Bank. 
E) only the currency in its vault.

Question 15

Which of the following is a thrift institution?

Accepted Answer

A) a savings and loan association 
B) a money market fund 
C) a commercial bank 
D) a loan institution 
E) the Federal Reserve 
A) a savings and loan association 
B) a money market fund 
C) a commercial bank 
D) a loan institution 
E) the Federal Reserve

Question 16

Whenever somebody deposits a check from bank A into a checkable deposit at bank B,bank A's reserves ________ and bank B's reserves ________.

Accepted Answer

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

Question 17

Which of the following is NOT one of the Fed's monetary policy tools?

Accepted Answer

A) changing the discount rate 
B) conducting open market purchases of government securities 
C) changing the coupon rate 
D) changing the required reserve ratio 
E) conducting open market sales of government securities 
A) changing the discount rate 
B) conducting open market purchases of government securities 
C) changing the coupon rate 
D) changing the required reserve ratio 
E) conducting open market sales of government securities

Question 18

The Fed purchases $1 million of U.S.government securities from First Bank.The desired reserve ratio is 10 percent,the currency drain ratio is zero,and banks loan all excess reserves.The money multiplier is equal to

Accepted Answer

A) 0.10. 
B) 1.0. 
C) 10.0. 
D) 100.0. 
E) $1 million. 
A) 0.10. 
B) 1.0. 
C) 10.0. 
D) 100.0. 
E) $1 million.

Question 19

To increase the quantity of money in the economy,the Federal Reserve can

Accepted Answer

A) print more money and give it to the banks. 
B) increase the required reserve ratio. 
C) buy government bonds in an open market operation. 
D) sell government bonds in an open market operation. 
E) cut taxes. 
A) print more money and give it to the banks. 
B) increase the required reserve ratio. 
C) buy government bonds in an open market operation. 
D) sell government bonds in an open market operation. 
E) cut taxes.

Question 20

Banks create money by

Accepted Answer

A) printing paper money. 
B) minting coins. 
C) making loans. 
D) buying government securities. 
E) None of the above because banks cannot create money;only the Federal Reserve can create money. 
A) printing paper money. 
B) minting coins. 
C) making loans. 
D) buying government securities. 
E) None of the above because banks cannot create money;only the Federal Reserve can create money.

When you use a credit card to pay your tuition,

When the Fed buys $100 million of securities from a commercial bank,the

The Commerce Bank of Beverly Hills has total deposits of $1,000,000 and total reserves of $220,000.The desired reserve ratio is 10 percent.The bank's excess reserves are

What is fiat money?

The Fed purchases $1 million of U.S.government securities from First Bank.The desired reserve ratio is 10 percent,the currency drain ratio is zero,and banks loan all excess reserves.The Fed's purchase increases First Bank's excess reserves by how much?

When we keep part of our wealth in a bank checking account,we are using money as a because .

What are the three types of financial institutions that accept deposits that are part of the U.S.money supply? Briefly describe each of the three types of financial institutions.

M1 is composed of

If the Federal Reserve the required reserve ratio,the interest rate .

Quantitative easing by the Fed refers to

Which of the following is money?

Which of the following is NOT a component of M1?

A commercial bank's reserves are equal to the amount of

Which of the following is a thrift institution?

Whenever somebody deposits a check from bank A into a checkable deposit at bank B,bank A's reserves and bank B's reserves .

Which of the following is NOT one of the Fed's monetary policy tools?

The Fed purchases $1 million of U.S.government securities from First Bank.The desired reserve ratio is 10 percent,the currency drain ratio is zero,and banks loan all excess reserves.The money multiplier is equal to

To increase the quantity of money in the economy,the Federal Reserve can

Banks create money by

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 you use a credit card to pay your tuition,

When the Fed buys $100 million of securities from a commercial bank,the

The Commerce Bank of Beverly Hills has total deposits of $1,000,000 and total reserves of $220,000.The desired reserve ratio is 10 percent.The bank's excess reserves are

What is fiat money?

The Fed purchases $1 million of U.S.government securities from First Bank.The desired reserve ratio is 10 percent,the currency drain ratio is zero,and banks loan all excess reserves.The Fed's purchase increases First Bank's excess reserves by how much?

When we keep part of our wealth in a bank checking account,we are using money as a ________ because ________.

What are the three types of financial institutions that accept deposits that are part of the U.S.money supply? Briefly describe each of the three types of financial institutions.

M1 is composed of

If the Federal Reserve ________ the required reserve ratio,the interest rate ________.

Quantitative easing by the Fed refers to

Which of the following is money?

Which of the following is NOT a component of M1?

A commercial bank's reserves are equal to the amount of

Which of the following is a thrift institution?

Whenever somebody deposits a check from bank A into a checkable deposit at bank B,bank A's reserves ________ and bank B's reserves ________.

Which of the following is NOT one of the Fed's monetary policy tools?

The Fed purchases $1 million of U.S.government securities from First Bank.The desired reserve ratio is 10 percent,the currency drain ratio is zero,and banks loan all excess reserves.The money multiplier is equal to

To increase the quantity of money in the economy,the Federal Reserve can

Banks create money by

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 we keep part of our wealth in a bank checking account,we are using money as a because .

If the Federal Reserve the required reserve ratio,the interest rate .

Whenever somebody deposits a check from bank A into a checkable deposit at bank B,bank A's reserves and bank B's reserves .