Question 1

Explain why banks can influence the money supply if the required reserve ratio is less than 100 percent.

Accepted Answer

When the reserve requirement is less tha...

Question 2

In Hugoland,the money supply is $8 million and reserves are $1 million.Assuming that people hold only deposits and no currency,and that banks hold no excess reserves,then the reserve requirement is

Accepted Answer

A)   14 percent.
B)   12.5 percent.
C)   8 percent.
D)   None of the above is correct.E) B) and C)
F) A) and B)

Question 3

The existence of money leads to

Accepted Answer

A)   greater specialization in production,but not to a higher standard of living.
B)   a higher standard of living,but not to greater specialization.
C)   greater specialization and to a higher standard of living.
D)   neither greater specialization nor to a higher standard of living.E) A) and B)
F) A) and D)

Question 4

Bottles of very fine wine are less liquid than demand deposits.

Accepted Answer

A) True 
 B)False

Question 5

The set of items that serve as media of exchange clearly includes

Accepted Answer

A)   balances that lie behind debit cards.
B)   demand deposits.
C)   deposits other than demand deposits,such as NOW accounts,on which checks can be written.
D)   All of the above are correct.E) C) and D)
F) B) and D)

Question 6

Over one time horizon or another,Fed policy decisions influence

Accepted Answer

A)   inflation and employment.
B)   inflation but not employment.
C)   employment but not inflation.
D)   neither inflation nor employment.E) A) and C)
F) B) and D)

Question 7

Which of the following is not included in either M1 or M2?

Accepted Answer

A)   U.S.Treasury bills
B)   small time deposits
C)   demand deposits
D)   money market mutual fundsE) C) and D)
F) A) and B)

Question 8

When the Fed conducts open-market sales,

Accepted Answer

A)   it sells Treasury securities,which increases the money supply.
B)   it sells Treasury securities,which decreases the money supply.
C)   it borrows from member banks,which increases the money supply.
D)   it lends money to member banks,which decreases the money supply.E) A) and B)
F) A) and C)

Question 9

When money functions as a unit of account,then it cannot be commodity money.

Accepted Answer

A) True 
 B)False

Question 10

Which type of money has intrinsic value?

Accepted Answer

A)   commodity money
B)   fiat money
C)   both commodity money and fiat money
D)   neither commodity money nor fiat moneyE) A) and D)
F) B) and C)

Question 11

If banks hold any amount of their deposits in reserve,then they do not have the ability to influence the money supply.

Accepted Answer

A) True 
 B)False

Question 12

Table 29-4.
The First Bank of Wahooton
 
-Refer to Table 29-4.If the First Bank of Wahooton is holding $4,000 in excess reserves,then the reserve requirement with which it must comply is

Accepted Answer

A)   4 percent.
B)   6 percent.
C)   12 percent.
D)   14 percent.E) All of the above
F) A) and C)

Question 13

The discount rate is the interest rate that

Accepted Answer

A)   banks charge one another for loans.
B)   banks charge the Fed for loans.
C)   the Fed charges banks for loans.
D)   the Fed charges Congress for loans.E) C) and D)
F) A) and D)

Question 14

When we want to measure and record economic value,we use money as the

Accepted Answer

A)   liquid asset.
B)   medium of exchange.
C)   unit of account.
D)   store of value.E) B) and C)
F) None of the above

Question 15

When the Federal Reserve conducts open-market operations to increase the money supply,it

Accepted Answer

A)   redeems Federal Reserve notes.
B)   buys government bonds from the public.
C)   raises the discount rate.
D)   decreases its lending to member banks.E) A) and B)
F) C) and D)

Question 16

Money

Accepted Answer

A)   is more efficient than barter.
B)   makes trades easier.
C)   allows greater specialization.
D)   All of the above are correct.E) B) and D)
F) A) and B)

Question 17

The "yardstick" people use to post prices and record debts is called

Accepted Answer

A)   a medium of exchange.
B)   a unit of account.
C)   a store of value.
D)   liquidity.E) None of the above
F) A) and D)

Question 18

Members of the Board of Governors are appointed by the president of the U.S.and confirmed by the U.S.Senate.

Accepted Answer

A) True 
 B)False

Question 19

Savings 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) A) and B)
F) B) and C)

Question 20

Which of the following is a store of value?

Accepted Answer

A)   currency
B)   U.S.government bonds
C)   fine art
D)   All of the above are correct.E) B) and C)
F) A) and D)

Exam 29: The Monetary System

When the Fed conducts open-market sales,

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Money

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In Hugoland,the money supply is $8 million and reserves are $1 million.Assuming that people hold only deposits and no currency,and that banks hold no excess reserves,then the reserve requirement is

Correct AnswerverifiedShow Answer

Bottles of very fine wine are less liquid than demand deposits.

Correct AnswerverifiedShow Answer

Savings deposits are included in

Correct AnswerverifiedShow Answer

If banks hold any amount of their deposits in reserve,then they do not have the ability to influence the money supply.

Correct AnswerverifiedShow Answer

Table 29-4. The First Bank of Wahooton -Refer to Table 29-4.If the First Bank of Wahooton is holding $4,000 in excess reserves,then the reserve requirement with which it must comply is

Correct AnswerverifiedShow Answer

The existence of money leads to

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The set of items that serve as media of exchange clearly includes

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Explain why banks can influence the money supply if the required reserve ratio is less than 100 percent.

Correct AnswerverifiedWhen the reserve requirement is less tha...View AnswerShow Answer

The "yardstick" people use to post prices and record debts is called

Correct AnswerverifiedShow Answer

Members of the Board of Governors are appointed by the president of the U.S.and confirmed by the U.S.Senate.

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When money functions as a unit of account,then it cannot be commodity money.

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The discount rate is the interest rate that

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When the Federal Reserve conducts open-market operations to increase the money supply,it

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Which of the following is a store of value?

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Which type of money has intrinsic value?

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Which of the following is not included in either M1 or M2?

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When we want to measure and record economic value,we use money as the

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Over one time horizon or another,Fed policy decisions influence

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When the reserve requirement is less tha...
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