Question 1

The Fed is a central bank and as such

Accepted Answer

A) does business only with the federal government. 
B) provides banking services to banks but not individuals. 
C) provides banking services to individuals and firms. 
D) does business with international organizations such as the United Nations. 
E) is where the Federal Government turns when it needs to borrow. 
A) does business only with the federal government. 
B) provides banking services to banks but not individuals. 
C) provides banking services to individuals and firms. 
D) does business with international organizations such as the United Nations. 
E) is where the Federal Government turns when it needs to borrow.

Question 2

Physical currency is ________ popular than e-cash,________.

Accepted Answer

A) less;and both are portable and recognizable 
B) more;and both are portable and recognizable 
C) more;but only physical currency is portable and recognizable 
D) more;and both are portable,untraceable and anonymous 
E) less;but both are portable,untraceable and anonymous 
A) less;and both are portable and recognizable 
B) more;and both are portable and recognizable 
C) more;but only physical currency is portable and recognizable 
D) more;and both are portable,untraceable and anonymous 
E) less;but both are portable,untraceable and anonymous

Question 3

The president of which Federal Reserve Bank is always a voting member of the FOMC? Why?

Accepted Answer

The president of the New York Federal Re

Question 4

If the desired reserve ratio decreases,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 are forced to buy fewer government securities. 
E) banks' desired reserves decrease and their excess reserves do not change. 
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 are forced to buy fewer government securities. 
E) banks' desired reserves decrease and their excess reserves do not change.

Question 5

For a commodity or token to be money it must

Accepted Answer

A) be accepted in exchange for all other goods and services. 
B) have a double coincidence of wants. 
C) be backed by government precious metals,like gold. 
D) be paper. 
E) be issued by the government or a government agency. 
A) be accepted in exchange for all other goods and services. 
B) have a double coincidence of wants. 
C) be backed by government precious metals,like gold. 
D) be paper. 
E) be issued by the government or a government agency.

Question 6

If the Fed makes an open market purchase of $1 million of government securities,the monetary base

Accepted Answer

A) is decreased by $1 million. 
B) is unchanged in size,though its composition changes. 
C) is increased by $1 million. 
D) will decrease by a multiple of $1 million over time. 
E) will increase by a multiple of $1 million over time. 
A) is decreased by $1 million. 
B) is unchanged in size,though its composition changes. 
C) is increased by $1 million. 
D) will decrease by a multiple of $1 million over time. 
E) will increase by a multiple of $1 million over time.

Question 7

Excess reserves are the

Accepted Answer

A) same as the required reserves. 
B) amount of reserves the Fed requires banks to hold. 
C) amount of reserves held over what is desired. 
D) amount of reserves a bank holds at the Fed. 
E) amount of reserves banks keep in their vaults. 
A) same as the required reserves. 
B) amount of reserves the Fed requires banks to hold. 
C) amount of reserves held over what is desired. 
D) amount of reserves a bank holds at the Fed. 
E) amount of reserves banks keep in their vaults.

Question 8

A bank has reserves of $50,deposits of $100,loans of $20,and government securities of $30.Assume the desired reserve ratio is 20 percent.
a.What are the bank's assets and what are its liabilities?
b.How much does the bank have in excess reserves?
c.What can the bank do with its excess reserves that will affect the quantity of money?

Accepted Answer

a.Assets are reserves,loans,and securiti

Question 9

M2 equals

Accepted Answer

A) M1 and is just another name for currency outside of banks. 
B) M1 plus savings deposits,small time deposits,and money market fund deposits. 
C) M1 minus traveler's checks because they are not really money. 
D) currency plus savings deposits,all time deposits,and money market funds and other deposits. 
E) M1 plus savings deposits and small time deposits minus money market fund deposits. 
A) M1 and is just another name for currency outside of banks. 
B) M1 plus savings deposits,small time deposits,and money market fund deposits. 
C) M1 minus traveler's checks because they are not really money. 
D) currency plus savings deposits,all time deposits,and money market funds and other deposits. 
E) M1 plus savings deposits and small time deposits minus money market fund deposits.

Question 10

An increase in the currency drain ratio

Accepted Answer

A) decreases the size of the money multiplier. 
B) increases the size of the money multiplier. 
C) increases the money supply. 
D) decreases the required reserve ratio. 
E) increases the desired reserve ratio. 
A) decreases the size of the money multiplier. 
B) increases the size of the money multiplier. 
C) increases the money supply. 
D) decreases the required reserve ratio. 
E) increases the desired reserve ratio.

Question 11

The minimum percent of deposits that banks must hold and cannot loan is determined by the

Accepted Answer

A) interest rate. 
B) discount rate. 
C) required reserve ratio. 
D) federal funds rate. 
E) ratio of M2 to M1. 
A) interest rate. 
B) discount rate. 
C) required reserve ratio. 
D) federal funds rate. 
E) ratio of M2 to M1.

Question 12

Riley deposits $4,000 cash in her checkable deposit at Fershur Bank.If the desired reserve ratio is 5 percent,Fershur Bank's

Accepted Answer

A) desired reserves increase by $4,000. 
B) assets and its liabilities change in opposite directions. 
C) desired reserves increase by $200 and its excess reserves increase by $3,800. 
D) excess reserves increase by $4,000. 
E) liabilities do not change but its assets increase. 
A) desired reserves increase by $4,000. 
B) assets and its liabilities change in opposite directions. 
C) desired reserves increase by $200 and its excess reserves increase by $3,800. 
D) excess reserves increase by $4,000. 
E) liabilities do not change but its assets increase.

Question 13

The Board of Governors of the Federal Reserve System has seven members appointed by the ________ that serve a term of ________ in order to ________.

Accepted Answer

A) U.S.congress;4 years;fulfill a mandate within the U.S.constitution 
B) U.S.senate;14 years;provide continuity in the governing of the U.S.economy 
C) U.S.president and confirmed by the U.S.senate;14 years;provide continuity in the governing of the U.S.economy 
D) U.S.president and confirmed by the U.S.congress;14 years;provide continuity in the governing of the U.S.economy 
E) U.S.president and confirmed by the U.S.senate;4 years;fulfill a mandate within the U.S.constitution 
A) U.S.congress;4 years;fulfill a mandate within the U.S.constitution 
B) U.S.senate;14 years;provide continuity in the governing of the U.S.economy 
C) U.S.president and confirmed by the U.S.senate;14 years;provide continuity in the governing of the U.S.economy 
D) U.S.president and confirmed by the U.S.congress;14 years;provide continuity in the governing of the U.S.economy 
E) U.S.president and confirmed by the U.S.senate;4 years;fulfill a mandate within the U.S.constitution

Question 14

The word "fiat" is

Accepted Answer

A) used to describe today's money because it is money set by law. 
B) used to describe money from when Kings ruled by decree or fiat. 
C) the term used to define the concept of barter. 
D) another word to mean the "double coincidence of wants." 
E) Latin for "backed by gold." 
A) used to describe today's money because it is money set by law. 
B) used to describe money from when Kings ruled by decree or fiat. 
C) the term used to define the concept of barter. 
D) another word to mean the "double coincidence of wants." 
E) Latin for "backed by gold."

Question 15

When the Fed purchases government securities ________ loans end up being made because ________.

Accepted Answer

A) more;excess reserves in the banking system increase 
B) more;excess reserves in the banking system decrease 
C) fewer;excess reserves in the banking system increase 
D) fewer;excess reserves in the banking system decrease 
E) fewer;required reserves in the banking system increase but desired reserves decrease 
A) more;excess reserves in the banking system increase 
B) more;excess reserves in the banking system decrease 
C) fewer;excess reserves in the banking system increase 
D) fewer;excess reserves in the banking system decrease 
E) fewer;required reserves in the banking system increase but desired reserves decrease

Question 16

The FUN Bank has no excess reserves when a new deposit of $20,000 is made.The desired reserve ratio is 5 percent.After the deposit,but before making any loans,how much does The FUN Bank have in excess reserves?

Accepted Answer

A) $1,000 
B) $20,000 
C) $9,000 
D) $19,000 
E) $21,000 
A) $1,000 
B) $20,000 
C) $9,000 
D) $19,000 
E) $21,000

Question 17

Which of the following lists includes only banks' assets?

Accepted Answer

A) liquid assets,loans,securities,and reserves 
B) reserves,savings deposits,securities,and loans 
C) reserves,securities,liquid assets,and savings deposits 
D) securities,reserves,checkable deposits,and liquid assets 
E) reserves,checkable deposits,securities,and loans 
A) liquid assets,loans,securities,and reserves 
B) reserves,savings deposits,securities,and loans 
C) reserves,securities,liquid assets,and savings deposits 
D) securities,reserves,checkable deposits,and liquid assets 
E) reserves,checkable deposits,securities,and loans

Question 18

For an asset to be a "means of payment," the asset

Accepted Answer

A) is valuable and backed by gold. 
B) is valuable and backed by the government. 
C) can be used to settle a debt. 
D) requires a double coincidence of wants. 
E) must be used when bartering. 
A) is valuable and backed by gold. 
B) is valuable and backed by the government. 
C) can be used to settle a debt. 
D) requires a double coincidence of wants. 
E) must be used when bartering.

Question 19

Bank One has reserves of $100,000,government securities of $200,000,loans of $700,000,and checkable deposits of $800,000.If the desired reserve ratio is 10 percent,Bank One can make additional loans totaling

Accepted Answer

A) $0.00. 
B) $10,000. 
C) $20,000. 
D) $80,000. 
E) $100,000. 
A) $0.00. 
B) $10,000. 
C) $20,000. 
D) $80,000. 
E) $100,000.

Question 20

Suppose the desired reserve ratio is 10 percent and there is no currency drain.Then a $200 increase in the monetary base results in the banking system increasing the quantity of money by

Accepted Answer

A) $200. 
B) $2,000. 
C) $20. 
D) $10. 
E) $2,190. 
A) $200. 
B) $2,000. 
C) $20. 
D) $10. 
E) $2,190.

The Fed is a central bank and as such

Physical currency is popular than e-cash,.

The president of which Federal Reserve Bank is always a voting member of the FOMC? Why?

If the desired reserve ratio decreases,then

For a commodity or token to be money it must

If the Fed makes an open market purchase of $1 million of government securities,the monetary base

Excess reserves are the

M2 equals

An increase in the currency drain ratio

The minimum percent of deposits that banks must hold and cannot loan is determined by the

Riley deposits $4,000 cash in her checkable deposit at Fershur Bank.If the desired reserve ratio is 5 percent,Fershur Bank's

The Board of Governors of the Federal Reserve System has seven members appointed by the that serve a term of in order to .

The word "fiat" is

When the Fed purchases government securities loans end up being made because .

The FUN Bank has no excess reserves when a new deposit of $20,000 is made.The desired reserve ratio is 5 percent.After the deposit,but before making any loans,how much does The FUN Bank have in excess reserves?

Which of the following lists includes only banks' assets?

For an asset to be a "means of payment," the asset

Bank One has reserves of $100,000,government securities of $200,000,loans of $700,000,and checkable deposits of $800,000.If the desired reserve ratio is 10 percent,Bank One can make additional loans totaling

Suppose the desired reserve ratio is 10 percent and there is no currency drain.Then a $200 increase in the monetary base results in the banking system increasing the quantity of 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

The Fed is a central bank and as such

Physical currency is ________ popular than e-cash,________.

The president of which Federal Reserve Bank is always a voting member of the FOMC? Why?

If the desired reserve ratio decreases,then

For a commodity or token to be money it must

If the Fed makes an open market purchase of $1 million of government securities,the monetary base

Excess reserves are the

M2 equals

An increase in the currency drain ratio

The minimum percent of deposits that banks must hold and cannot loan is determined by the

Riley deposits $4,000 cash in her checkable deposit at Fershur Bank.If the desired reserve ratio is 5 percent,Fershur Bank's

The Board of Governors of the Federal Reserve System has seven members appointed by the ________ that serve a term of ________ in order to ________.

The word "fiat" is

When the Fed purchases government securities ________ loans end up being made because ________.

The FUN Bank has no excess reserves when a new deposit of $20,000 is made.The desired reserve ratio is 5 percent.After the deposit,but before making any loans,how much does The FUN Bank have in excess reserves?

Which of the following lists includes only banks' assets?

For an asset to be a "means of payment," the asset

Bank One has reserves of $100,000,government securities of $200,000,loans of $700,000,and checkable deposits of $800,000.If the desired reserve ratio is 10 percent,Bank One can make additional loans totaling

Suppose the desired reserve ratio is 10 percent and there is no currency drain.Then a $200 increase in the monetary base results in the banking system increasing the quantity of 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

Physical currency is popular than e-cash,.

The Board of Governors of the Federal Reserve System has seven members appointed by the that serve a term of in order to .

When the Fed purchases government securities loans end up being made because .