Question 1

Open-market operations are:

Accepted Answer

A)  sales or purchases of government securities,by the Fed to or from banks on the open market.
B)  regulations that sets the minimum fraction of deposits banks must hold in reserve.
C)  allows any bank to borrow reserves from the Fed at a special interest rate,called the discount rate.
D)  None of these is true.E) None of the above
F) A) and B)

Question 2

The one central bank president that always has a seat on the Federal Open Market Committee is located in:

Accepted Answer

A)  New York City.
B)  Chicago.
C)  Boston.
D)  San Francisco.E) B) and D)
F) C) and D)

Question 3

In order to change the money supply,the Fed might use which of the following tools?

Accepted Answer

A)  Dual mandate
B)  Reserve requirement
C)  Fiscal policy
D)  The Fed could use all of theseE) A) and C)
F) B) and D)

Question 4

The liquidity preference model was first introduced:

Accepted Answer

A)  in 2008 by Ben Bernanke.
B)  in 1936 by John Maynard Keynes.
C)  in 1776 by Adam Smith.
D)  in 1970 by John Kenneth Galbraith.E) None of the above
F) All of the above

Question 5

The money supply is:

Accepted Answer

A)  the amount of money available in the economy.
B)  the amount of money that banks keep on hand.
C)  the amount of money that banks keep on hand beyond the reserve requirement.
D)  None of these is true.E) C) and D)
F) B) and C)

Question 6

Which measure of money would we most likely use if we were interested in looking at saving in the economy?

Accepted Answer

A)  Hard money
B)  M1
C)  M2
D)  We would not use any of theseE) A) and D)
F) B) and C)

Question 7

If money has intrinsic value,it has:

Accepted Answer

A)  value unrelated to its use as money.
B)  value only as its use as money.
C)  value that sets its value as money.
D)  None of these is true.E) B) and D)
F) C) and D)

Question 8

The Federal Reserve:

Accepted Answer

A)  is fairly independent of the rest of government.
B)  works closely with the Treasury department.
C)  is easily swayed by political pressure.
D)  has become an ineffective policy-making body in the last decade.E) A) and B)
F) A) and C)

Question 9

We say that money is a store of value because it represents:

Accepted Answer

A)  a certain amount of purchasing power held over time.
B)  something you can use to purchase goods and services.
C)  something you can directly offer,like any good or service,in exchange for some good or service you want.
D)  a standard unit of comparison.E) All of the above
F) None of the above

Question 10

The goal of contractionary monetary policy is to:

Accepted Answer

A)  reduce interest rates to stimulate the economy.
B)  increase interest rates to stimulate the economy.
C)  reduce interest rates to slow down the economy.
D)  increase interest rates to slow down the economy.E) A) and D)
F) All of the above

Question 11

If the reserve ratio was 100 percent,then:

Accepted Answer

A)  no lending would occur using deposits.
B)  maximum lending would occur.
C)  banks would create money in the economy.
D)  None of these is true.E) None of the above
F) B) and C)

Question 12

The lending facility that allows any bank to borrow reserves from the Fed is called:

Accepted Answer

A)  the discount window.
B)  the reserve window.
C)  the reserve rate.
D)  the borrower of last resort.E) C) and D)
F) B) and C)

Question 13

When deciding what to use as money,one characteristic to look for is:

Accepted Answer

A)  its convenience.
B)  its exchange value.
C)  its intrinsic value.
D)  All of these are important characteristics.E) B) and C)
F) A) and D)

Question 14

If we wanted to consider all the money that had been "multiplied" in the economy,we would think about:

Accepted Answer

A)  hard money.
B)  M1.
C)  M2.
D)  None of these.E) A) and C)
F) B) and C)

Question 15

Any amount that a bank chooses to keep on hand beyond what it is required to is called:

Accepted Answer

A)  excess reserves.
B)  excess deposits.
C)  federal funds.
D)  extra holdings.E) B) and C)
F) None of the above

Question 16

The chairman of the Federal Reserve:

Accepted Answer

A)  is one of the most important economic positions in the United States,if not the world.
B)  has significant direct control over the conduct of monetary policy by the central bank.
C)  is appointed by the President and confirmed by Senate for a four-year term.
D)  All of these are true.E) B) and D)
F) None of the above

Question 17

The definition of M1 includes:

Accepted Answer

A)  cash and checking account balances.
B)  hard money and savings account balances.
C)  cash and savings account balances.
D)  cash,checking accounts,savings accounts,and other financial instruments where money is locked away for a specified period of time.E) A) and B)
F) A) and C)

Question 18

The chairman of the Federal Reserve is considered one of the most important economic positions in the world because this person has significant direct control over the:

Accepted Answer

A)  conduct of fiscal policy in the United States.
B)  conduct of monetary policy in the United States.
C)  conduct of international trade policy in the United States.
D)  The chairman has control over all of these things.E) A) and B)
F) A) and C)

Question 19

If the Fed wishes to increase the money supply,it could:

Accepted Answer

A)  buy a bond.
B)  increase the reserve requirement.
C)  increase the discount rate.
D)  All of these would increase the money supply.E) B) and C)
F) C) and D)

Question 20

The discount rate is typically:

Accepted Answer

A)  higher than other interest rates.
B)  lower than other interest rates.
C)  about the same as other interest rates.
D)  determined by the government,and does not correlate with other interest rates.E) A) and B)
F) All of the above

Exam 31: Money and the Monetary System

If the reserve ratio was 100 percent,then:

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The lending facility that allows any bank to borrow reserves from the Fed is called:

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The chairman of the Federal Reserve:

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The discount rate is typically:

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The liquidity preference model was first introduced:

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The definition of M1 includes:

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The one central bank president that always has a seat on the Federal Open Market Committee is located in:

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In order to change the money supply,the Fed might use which of the following tools?

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Which measure of money would we most likely use if we were interested in looking at saving in the economy?

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If we wanted to consider all the money that had been "multiplied" in the economy,we would think about:

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Any amount that a bank chooses to keep on hand beyond what it is required to is called:

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The goal of contractionary monetary policy is to:

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The chairman of the Federal Reserve is considered one of the most important economic positions in the world because this person has significant direct control over the:

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Open-market operations are:

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If money has intrinsic value,it has:

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The money supply is:

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If the Fed wishes to increase the money supply,it could:

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We say that money is a store of value because it represents:

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The Federal Reserve:

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When deciding what to use as money,one characteristic to look for is:

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