Question 1

What is larger: M1 or M2? Why?

Accepted Answer

M2 is larger than M1.M2 includes M1 plus

Question 2

The Federal Reserve System provides banking services to ________ because ________.

Accepted Answer

A) consumers and businesses;it is a central bank with responsibilities to the entire U.S.population 
B) banks and businesses;it is a central bank with the primary purpose of regulating financial institutions and markets 
C) commercial banks;it is a central bank with the primary purpose of regulating financial institutions and markets 
D) no one;it is a central bank with the primary purpose of regulating financial markets 
E) FDIC insured banks;they are the ones that have paid their membership fees and the only ones the U.S.central bank guarantees 
A) consumers and businesses;it is a central bank with responsibilities to the entire U.S.population 
B) banks and businesses;it is a central bank with the primary purpose of regulating financial institutions and markets 
C) commercial banks;it is a central bank with the primary purpose of regulating financial institutions and markets 
D) no one;it is a central bank with the primary purpose of regulating financial markets 
E) FDIC insured banks;they are the ones that have paid their membership fees and the only ones the U.S.central bank guarantees

Question 3

Fiat money means

Accepted Answer

A) Italian currency. 
B) money's value does not change. 
C) the government has decreed that something is money. 
D) the money can be converted into gold. 
E) only currency counts as money. 
A) Italian currency. 
B) money's value does not change. 
C) the government has decreed that something is money. 
D) the money can be converted into gold. 
E) only currency counts as money.

Question 4

In response to the financial crisis in 2008,the Fed created which of the following policy tools?

Accepted Answer

A) quantitative easing 
B) the required reserve ratio 
C) the discount rate 
D) the federal funds rate 
E) open market operations 
A) quantitative easing 
B) the required reserve ratio 
C) the discount rate 
D) the federal funds rate 
E) open market operations

Question 5

The function of money that helps assess the opportunity cost of an activity is money's use as a

Accepted Answer

A) medium of exchange. 
B) store of value. 
C) unit of account. 
D) store of debt. 
E) barter tool. 
A) medium of exchange. 
B) store of value. 
C) unit of account. 
D) store of debt. 
E) barter tool.

Question 6

Money serves as a

Accepted Answer

A) means of payment,legal obligation,and public tax. 
B) medium of exchange,unit of account,and store of value. 
C) means of settling debts,transaction lubricant,and private commodity. 
D) means of worker exploitation and capitalist enrichment. 
E) means to conduct barter transactions. 
A) means of payment,legal obligation,and public tax. 
B) medium of exchange,unit of account,and store of value. 
C) means of settling debts,transaction lubricant,and private commodity. 
D) means of worker exploitation and capitalist enrichment. 
E) means to conduct barter transactions.

Question 7

The required reserve ratio is 10 percent and Charlie deposits $3,000 in her checking account.The bank must

Accepted Answer

A) increase reserves by $3,000. 
B) increase reserves by $300. 
C) decrease reserves by $3,000. 
D) decrease reserves by $300. 
E) not change its reserves until Charlie decides to withdraw her funds. 
A) increase reserves by $3,000. 
B) increase reserves by $300. 
C) decrease reserves by $3,000. 
D) decrease reserves by $300. 
E) not change its reserves until Charlie decides to withdraw her funds.

Question 8

The monetary base is the sum of

Accepted Answer

A) Federal Reserve notes and banks' reserves at the Fed. 
B) coins,Federal Reserve notes,and individuals' deposits at the Fed. 
C) Federal Reserve notes,Treasury deposits at the Fed,banks' reserves at the Fed,and coins. 
D) coins,Federal Reserve notes,and banks' reserves at the Fed. 
E) coins,Federal Reserve notes,and gold at the Fed. 
A) Federal Reserve notes and banks' reserves at the Fed. 
B) coins,Federal Reserve notes,and individuals' deposits at the Fed. 
C) Federal Reserve notes,Treasury deposits at the Fed,banks' reserves at the Fed,and coins. 
D) coins,Federal Reserve notes,and banks' reserves at the Fed. 
E) coins,Federal Reserve notes,and gold at the Fed.

Question 9

Money must be ________ which includes the fact that is should ________.

Accepted Answer

A) in physical form;not be transferable using electronic means 
B) accepted as a means of payment across countries' borders;not be fiat money 
C) generally accepted as a means of payment;be recognizable and divisible into small parts 
D) whatever is used in a barter system;transferable across countries' borders 
E) backed by gold;not decrease in value over time 
A) in physical form;not be transferable using electronic means 
B) accepted as a means of payment across countries' borders;not be fiat money 
C) generally accepted as a means of payment;be recognizable and divisible into small parts 
D) whatever is used in a barter system;transferable across countries' borders 
E) backed by gold;not decrease in value over time

Question 10

The interest rate the Federal Reserve charges a bank when it borrows reserves from the Fed is called the

Accepted Answer

A) market interest rate. 
B) federal funds rate. 
C) discount rate. 
D) prime rate. 
E) borrowing rate. 
A) market interest rate. 
B) federal funds rate. 
C) discount rate. 
D) prime rate. 
E) borrowing rate.

Question 11

The "double coincidence of wants" is

Accepted Answer

A) what is needed to use money. 
B) eliminated with the use of money. 
C) eliminated when we barter instead of using money. 
D) how value is stored when we transact with money. 
E) money's role as a unit of account. 
A) what is needed to use money. 
B) eliminated with the use of money. 
C) eliminated when we barter instead of using money. 
D) how value is stored when we transact with money. 
E) money's role as a unit of account.

Question 12

Which of the following financial institutions does NOT have to meet minimum reserve ratios?
I.the Fed
Ii.commercial banks
Iii.credit unions

Accepted Answer

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

Question 13

When the Fed sells $100 million of securities to a commercial bank,the

Accepted Answer

A) monetary base increases. 
B) money supply increases. 
C) bank's reserves decrease. 
D) required reserve ratio decreases. 
E) bank's reserves do not change. 
A) monetary base increases. 
B) money supply increases. 
C) bank's reserves decrease. 
D) required reserve ratio decreases. 
E) bank's reserves do not change.

Question 14

The required reserve ratio is the minimum percentage of ________ that banks are required to hold by regulation.

Accepted Answer

A) reserves as total assets 
B) deposits as total assets 
C) reserves as deposits 
D) deposits as reserves 
E) reserves as total liabilities 
A) reserves as total assets 
B) deposits as total assets 
C) reserves as deposits 
D) deposits as reserves 
E) reserves as total liabilities

Question 15

Suppose you use your debit card to buy soda from a soda machine.Which of the following is true regarding the transaction?

Accepted Answer

A) The debit card is not money;it's only an instruction to make a loan. 
B) The debit card is money;your use reflects the exchange of a good. 
C) The debit card is not money;its use is only a tool to cause money to move from your account. 
D) Your use makes the debit card money,as funds are transferred between your account and the machine owner. 
E) Using the debit card is like using a check and is,therefore,money. 
A) The debit card is not money;it's only an instruction to make a loan. 
B) The debit card is money;your use reflects the exchange of a good. 
C) The debit card is not money;its use is only a tool to cause money to move from your account. 
D) Your use makes the debit card money,as funds are transferred between your account and the machine owner. 
E) Using the debit card is like using a check and is,therefore,money.

Question 16

"To count as required reserves,the reserves must be on deposit at the bank's district Federal Reserve Bank." Is the previous statement correct or incorrect?

Accepted Answer

The statement is inc

Question 17

Describe how actual reserves are calculated.Explain the difference between required reserves and excess reserves.How do reserves affect the amount of loans a bank can make?

Accepted Answer

Actual reserves are equal to the bank's

Question 18

A bank has deposits of $100,000,reserves of $20,000,and loans of $80,000.If the desired reserve ratio is 10 percent,then its excess reserves are

Accepted Answer

A) 0. 
B) $8,000. 
C) $10,000. 
D) $2,000. 
E) $12,000. 
A) 0. 
B) $8,000. 
C) $10,000. 
D) $2,000. 
E) $12,000.

Question 19

Which of the following items is included in the M1 money supply?

Accepted Answer

A) $10 bills in the Bank of America 
B) a $5,000 student loan granted to a U.S.citizen 
C) coins in a Pepsi vending machine,waiting to be used as change 
D) a $5,000 line of credit on a newly graduated student's credit card 
E) $1,500 in a student's saving account 
A) $10 bills in the Bank of America 
B) a $5,000 student loan granted to a U.S.citizen 
C) coins in a Pepsi vending machine,waiting to be used as change 
D) a $5,000 line of credit on a newly graduated student's credit card 
E) $1,500 in a student's saving account

Question 20

When Dale buys a new computer for $1,000 using a credit card,

Accepted Answer

A) he is taking out a loan for $1,000. 
B) his bank account decreases by $1,000. 
C) the credit card is acting as money. 
D) the money supply decreases by $1,000. 
E) the credit card is performing the function of an unit of account. 
A) he is taking out a loan for $1,000. 
B) his bank account decreases by $1,000. 
C) the credit card is acting as money. 
D) the money supply decreases by $1,000. 
E) the credit card is performing the function of an unit of account.

What is larger: M1 or M2? Why?

The Federal Reserve System provides banking services to because .

Fiat money means

In response to the financial crisis in 2008,the Fed created which of the following policy tools?

The function of money that helps assess the opportunity cost of an activity is money's use as a

Money serves as a

The required reserve ratio is 10 percent and Charlie deposits $3,000 in her checking account.The bank must

The monetary base is the sum of

Money must be which includes the fact that is should .

The interest rate the Federal Reserve charges a bank when it borrows reserves from the Fed is called the

The "double coincidence of wants" is

Which of the following financial institutions does NOT have to meet minimum reserve ratios? I.the Fed Ii.commercial banks Iii.credit unions

When the Fed sells $100 million of securities to a commercial bank,the

The required reserve ratio is the minimum percentage of ________ that banks are required to hold by regulation.

Suppose you use your debit card to buy soda from a soda machine.Which of the following is true regarding the transaction?

"To count as required reserves,the reserves must be on deposit at the bank's district Federal Reserve Bank." Is the previous statement correct or incorrect?

Describe how actual reserves are calculated.Explain the difference between required reserves and excess reserves.How do reserves affect the amount of loans a bank can make?

A bank has deposits of $100,000,reserves of $20,000,and loans of $80,000.If the desired reserve ratio is 10 percent,then its excess reserves are

Which of the following items is included in the M1 money supply?

When Dale buys a new computer for $1,000 using a credit card,

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 larger: M1 or M2? Why?

The Federal Reserve System provides banking services to ________ because ________.

Fiat money means

In response to the financial crisis in 2008,the Fed created which of the following policy tools?

The function of money that helps assess the opportunity cost of an activity is money's use as a

Money serves as a

The required reserve ratio is 10 percent and Charlie deposits $3,000 in her checking account.The bank must

The monetary base is the sum of

Money must be ________ which includes the fact that is should ________.

The interest rate the Federal Reserve charges a bank when it borrows reserves from the Fed is called the

The "double coincidence of wants" is

Which of the following financial institutions does NOT have to meet minimum reserve ratios? I.the Fed Ii.commercial banks Iii.credit unions

When the Fed sells $100 million of securities to a commercial bank,the

The required reserve ratio is the minimum percentage of ________ that banks are required to hold by regulation.

Suppose you use your debit card to buy soda from a soda machine.Which of the following is true regarding the transaction?

"To count as required reserves,the reserves must be on deposit at the bank's district Federal Reserve Bank." Is the previous statement correct or incorrect?

Describe how actual reserves are calculated.Explain the difference between required reserves and excess reserves.How do reserves affect the amount of loans a bank can make?

A bank has deposits of $100,000,reserves of $20,000,and loans of $80,000.If the desired reserve ratio is 10 percent,then its excess reserves are

Which of the following items is included in the M1 money supply?

When Dale buys a new computer for $1,000 using a credit card,

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

The Federal Reserve System provides banking services to because .

Money must be which includes the fact that is should .