Question 1

People tend to hold more money as

Accepted Answer

A)  the average price level falls.
B)  the interest rate rises.
C)  credit availability falls.
D)  incomes fall.E) B) and D)
F) A) and B)

Question 2

A debit card

Accepted Answer

A)  is considered part of M1.
B)  is just like credit card in that you pay for it with a check at a later time.
C)  purchase takes money out of your checking account.
D)  is considered part of M2.
E)  None of the choices are true of debit cards.F) D) and E)
G) C) and E)

Question 3

The biggest deterrent to bank panics in the United States is ________.

Accepted Answer

Deposit in...

Question 4

It is costly to hold money because

Accepted Answer

A)  deflation may reduce its purchasing power.
B)  in doing so one sacrifices interest income.
C)  bond prices are highly variable.
D)  the velocity of money may decline.E) B) and C)
F) A) and C)

Question 5

The first bankers were

Accepted Answer

A)  goldsmiths.
B)  printers.
C)  storekeepers.
D)  innkeepers.
E)  blacksmiths.F) B) and C)
G) None of the above

Question 6

If a goldsmith had 200 gold coins in his safe,and there were 400 gold coins and 400 goldsmith's receipts circulating, (a)how much is his reserve ratio; (b)how much is the money supply?

Accepted Answer

The answer of If a goldsmith had 200 gold coins...

Question 7

Higher interest rates ____ the ____ cost of holding currency and therefore reduce the quantity of currency demanded.

Accepted Answer

A)  decrease;opportunity
B)  increase;transaction
C)  decrease;transaction
D)  increase;opportunityE) A) and D)
F) All of the above

Question 8

Statement I: The savings and loan debacle has cost the U.S.taxpayers hundreds of billions of dollars.
Statement II: One of the main causes of the savings and loan debacle was federal deregulation of that industry.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.E) A) and C)
F) C) and D)

Question 9

The major consideration of whether something can serve as money is that it must be

Accepted Answer

A)  redeemable in precious metals such as gold or silver.
B)  printed by each nation's government or banking authority.
C)  freely available to all who want it.
D)  exchangeable for other types of money.
E)  acceptable as a means of payment.F) A) and E)
G) D) and E)

Question 10

Even though credit cards are used by many people in making purchases,they are not included in the M1.A major reason is that

Accepted Answer

A)  credit cards are a way of going into debt,whereas the components of M1 represent assets.
B)  credit cards had not yet been invented when money was defined.
C)  some credit cards are issued by stores (such as Sears) ,whereas all money is issued by banks.
D)  credit cards are much less liquid than M1.
E)  credit cards don't affect consumer expenditures,whereas M1 does.F) None of the above
G) A) and E)

Question 11

M1 = 1,000
Small denomination time deposits = 1,500
Savings deposit = 1,800
Money market mutual funds = 300
Large denomination time deposits = 800
-How much is M2?

Accepted Answer

M2 = 1,000...

Question 12

The goldsmith's ability to create money was based on the fact that

Accepted Answer

A)  withdrawals of gold tended to exceed deposits of gold in any given time period.
B)  consumers and merchants preferred to use gold for transactions,rather than paper money.
C)  the goldsmith was required to keep 100 percent gold reserves.
D)  paper money was rarely redeemed for golD.E) A) and B)
F) A) and C)

Question 13

Which one of the following is not part of our money supply?

Accepted Answer

A)  Dollar bills
B)  Demand deposits
C)  Travelers checks
D)  GoldE) None of the above
F) A) and B)

Question 14

The largest element of the currency component of M1 is

Accepted Answer

A)  coins.
B)  United States Notes.
C)  silver certificates.
D)  Federal Reserve Notes.E) A) and B)
F) A) and C)

Question 15

Citizens in the U.S.are not concerned with the financial well being of their bank due to which of the following?

Accepted Answer

A)  The stability of the economy
B)  The FDIC
C)  Government regulation of the banking sector
D)  The improvement in the reputation of bankersE) A) and D)
F) B) and C)

Question 16

Interstate banking

Accepted Answer

A)  used to be legal but is now illegal.
B)  used to be illegal but is now legal.
C)  is illegal today and has always been illegal.
D)  has always been legal.E) B) and C)
F) None of the above

Question 17

Statement I: The dividing line between small denomination CDs and large denomination CDs is $10,000.
Statement II: Our money supply grows from 4 to 6 percent two out of three years.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.E) All of the above
F) A) and D)

Question 18

Statement I: Whether you pay with currency,with a credit card,or with a check,all of these methods are a form of money.
Statement II: Negotiated Orders of Withdrawal (NOW) accounts are checkable deposits.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.E) A) and D)
F) B) and C)

Question 19

If you are really poor,often your only credit option may be _______________.

Accepted Answer

The answer of If you are really poor,often your only...

Question 20

Which statement is true?

Accepted Answer

A)  The largest six American banks are among the top 10 banks in the world.
B)  Bank of America is the largest American bank.
C)  There are no American banks among the largest 10 banks in the world.
D)  Two of the largest 10 banks in the world are Japanese.E) All of the above
F) A) and B)

Exam 13: Money and Banking

A debit card

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Statement I: The savings and loan debacle has cost the U.S.taxpayers hundreds of billions of dollars. Statement II: One of the main causes of the savings and loan debacle was federal deregulation of that industry.

Correct AnswerverifiedShow Answer

Even though credit cards are used by many people in making purchases,they are not included in the M1.A major reason is that

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Statement I: The dividing line between small denomination CDs and large denomination CDs is $10,000. Statement II: Our money supply grows from 4 to 6 percent two out of three years.

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If you are really poor,often your only credit option may be _______________.

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The major consideration of whether something can serve as money is that it must be

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The biggest deterrent to bank panics in the United States is ________.

Correct AnswerverifiedDeposit in...View AnswerShow Answer

People tend to hold more money as

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Citizens in the U.S.are not concerned with the financial well being of their bank due to which of the following?

Correct AnswerverifiedShow Answer

If a goldsmith had 200 gold coins in his safe,and there were 400 gold coins and 400 goldsmith's receipts circulating, (a)how much is his reserve ratio; (b)how much is the money supply?

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Statement I: Whether you pay with currency,with a credit card,or with a check,all of these methods are a form of money. Statement II: Negotiated Orders of Withdrawal (NOW) accounts are checkable deposits.

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Interstate banking

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Which one of the following is not part of our money supply?

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It is costly to hold money because

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Which statement is true?

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The goldsmith's ability to create money was based on the fact that

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The first bankers were

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M1 = 1,000 Small denomination time deposits = 1,500 Savings deposit = 1,800 Money market mutual funds = 300 Large denomination time deposits = 800 -How much is M2?

Correct AnswerverifiedM2 = 1,000...View AnswerShow Answer

The largest element of the currency component of M1 is

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Higher interest rates ____ the ____ cost of holding currency and therefore reduce the quantity of currency demanded.

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Deposit in...
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M2 = 1,000...
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Higher interest rates the cost of holding currency and therefore reduce the quantity of currency demanded.

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