Question 1

Small time deposits are included in

Accepted Answer

A)   M1 but not M2.
B)   M2 but not M1.
C)   M1 and M2.
D)   neither M1 nor M2.E) B) and C)
F) A) and C)

Question 2

The Federal Reserve

Accepted Answer

A)   was created in 1836.
B)   serves as a lender of last resort.
C)   was created to facilitate the federal government's collection of taxes as well as its expenditures.
D)   All of the above are correct.E) None of the above
F) B) and D)

Question 3

Many societies used gold as money, because

Accepted Answer

A)   it is relatively rare.
B)   it is durable.
C)   it has a relatively low melting point.
D)   All of the above are correct.E) None of the above
F) B) and D)

Question 4

Reserves are

Accepted Answer

A)   the central bank of the U.S.
B)   deposits that banks hold in excess of the required amount.
C)   the purchase of bonds by the Federal Open Market Committee.
D)   deposits that banks have received but have not yet loaned out.E) A) and B)
F) A) and C)

Question 5

The most common method employed by the Fed to increase the money supply is the

Accepted Answer

A)   sale of U.S. government bonds.
B)   purchase of U.S. government bonds.
C)   sale of gold.
D)   increase of the federal debt ceiling.E) A) and B)
F) A) and C)

Question 6

The Fed increases reserves if it conducts open market

Accepted Answer

A)   purchases or auctions term credit.
B)   purchases but not if it auctions term credit
C)   sales or auctions term credit
D)   sales but not if it auctions term creditE) A) and D)
F) A) and C)

Question 7

In 1991, the Federal Reserve lowered the reserve requirement from 12 percent to 10 percent. Other things the same this should have

Accepted Answer

A)   increased both the money multiplier and the money supply.
B)   decreased both the money multiplier and the money supply.
C)   increased the money multiplier and decreased the money supply.
D)   decreased the money multiplier and increased the money supply.E) All of the above
F) None of the above

Question 8

Commodity money cannot be used as a unit of account.

Accepted Answer

A) True 
 B)False

Question 9

If the federal funds rate were above the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by

Accepted Answer

A)   buying bonds. This buying would increase the money supply.
B)   buying bonds. This buying would reduce the money supply.
C)   selling bonds. This selling would increase the money supply.
D)   selling bonds. This selling would reduce the money supply.E) B) and C)
F) A) and D)

Question 10

Just after the terrorist attack on September 11, 2001, the Fed stood ready to lend financial institutions funds. When the Fed did this, it was acting in its role of lender of last resort.

Accepted Answer

A) True 
 B)False

Question 11

Table 29-7.
 
-Refer to Table 29-7. Assuming the Bank of Springfield and all other banks have the same reserve ratio, then what is the value of the money multiplier?

Accepted Answer

A)   1.1
B)   12.3
C)   8.1
D)   9.1E) A) and B)
F) A) and D)

Question 12

The Fed purchases $200 worth of government bonds from the public. The reserve requirement is 12.5 percent, people hold no currency, and the banking system keeps no excess reserves. The U.S. money supply eventually increases by

Accepted Answer

A)   $25.
B)   between $200 and $300.
C)   $1,600.
D)   $2,500.E) A) and B)
F) C) and D)

Question 13

The ease with which an asset can be converted into the economy's medium of exchange is known as__________________.

Accepted Answer

The answer of The ease with which an asset can...

Question 14

Consider five high school students working on homework in study hall.

Which of the following pairs of students has a double coincidence of wants?

Accepted Answer

A)   Rosie and Piper
B)   Piper and Molly
C)   Dewey and Molly
D)   Bob and DeweyE) B) and C)
F) A) and D)

Question 15

The is the interest rate at which banks make overnight loans to other banks.

Accepted Answer

The answer of The is the interest rate at which...

Question 16

If traveler's checks were $1000 higher and saving deposits were $500 higher, M1 would be

Accepted Answer

A)   $500 higher and M2 would be $1,500 higher.
B)   $1,000 higher and M2 would be $1,500 higher.
C)   M2 and M1 would be $1,500 higher.
D)   $1,000 high and M2 would be $500 higher..E) A) and C)
F) A) and B)

Question 17

Monetary policy has an important influence on and in the short run.

Accepted Answer

inflation,...

Question 18

Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the

Accepted Answer

A)   money supply to fall. To reduce the impact of this the Fed could sell Treasury bonds.
B)   money supply to fall. To reduce the impact of this the Fed could buy Treasury bonds.
C)   money supply to rise. To reduce the impact of this the Fed could sell Treasury bonds.
D)   money supply to rise. To reduce the impact of this the Fed could buy Treasury bonds.E) None of the above
F) A) and C)

Question 19

Table 29-2.
The information in the table pertains to an imaginary economy.
 
-Refer to Table 29-2. What is the M2 money supply?

Accepted Answer

A)   $1,300 billion
B)   $580 billion
C)   $880 billion
D)   $1,000 billionE) A) and B)
F) B) and D)

Question 20

Which of the following defer payments?

Accepted Answer

A)   credit cards and debit cards
B)   neither credit cards nor debit cards
C)   credit cards but not debit cards
D)   debit cards but not credit cardsE) All of the above
F) A) and C)

Exam 11: The Monetary System

Many societies used gold as money, because

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If traveler's checks were $1000 higher and saving deposits were $500 higher, M1 would be

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Just after the terrorist attack on September 11, 2001, the Fed stood ready to lend financial institutions funds. When the Fed did this, it was acting in its role of lender of last resort.

Correct AnswerverifiedShow Answer

The most common method employed by the Fed to increase the money supply is the

Correct AnswerverifiedShow Answer

Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the

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Consider five high school students working on homework in study hall. Which of the following pairs of students has a double coincidence of wants?

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Which of the following defer payments?

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The ease with which an asset can be converted into the economy's medium of exchange is known as__________________.

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Monetary policy has an important influence on and in the short run.

Correct Answerverifiedinflation,...View AnswerShow Answer

The Fed increases reserves if it conducts open market

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The is the interest rate at which banks make overnight loans to other banks.

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The Federal Reserve

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The Fed purchases $200 worth of government bonds from the public. The reserve requirement is 12.5 percent, people hold no currency, and the banking system keeps no excess reserves. The U.S. money supply eventually increases by

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In 1991, the Federal Reserve lowered the reserve requirement from 12 percent to 10 percent. Other things the same this should have

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Commodity money cannot be used as a unit of account.

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Table 29-2. The information in the table pertains to an imaginary economy. -Refer to Table 29-2. What is the M2 money supply?

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If the federal funds rate were above the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by

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Table 29-7. -Refer to Table 29-7. Assuming the Bank of Springfield and all other banks have the same reserve ratio, then what is the value of the money multiplier?

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Small time deposits are included in

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Reserves are

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inflation,...
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