Question 1

In a fractional-reserve banking system,an increase in reserve requirements

Accepted Answer

A)   increases both the money multiplier and the money supply.
B)   decreases both the money multiplier and the money supply.
C)   increases the money multiplier,but decreases the money supply.
D)   decreases the money multiplier,but increases the money supply.E) B) and C)
F) A) and C)

Question 2

The Fed purchases $200 worth of government bonds from the public.The reserve requirement is 8 percent,people hold no currency,and the banking system keeps no excess reserves.The U.S.money supply eventually increases by

Accepted Answer

A)   $16.
B)   $200.
C)   $1,600.
D)   $2,500.E) A) and C)
F) All of the above

Question 3

In the months of November and December,people in the United States hold a larger part of their money in the form of currency because they intend to shop and travel for the holidays.As a result,other things the same,the money supply increases.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following can banks use to borrow from the Federal Reserve?

Accepted Answer

A)   the discount window or the term auction facility
B)   the discount window but not the term auction facility
C)   the term auction facility but not the discount window
D)   Banks can not borrow from the Federal Reserve,only the government can.E) All of the above
F) A) and C)

Question 5

When there is a reserve requirement,banks

Accepted Answer

A)   must hold exactly the required quantity of reserves.
B)   may hold more than,but not less than,the required quantity of reserves.
C)   may hold less than,but not more than,the required quantity of reserves.
D)   must seek the Fed's permission whenever they wish to expand or contract their loans to customers.E) A) and B)
F) None of the above

Question 6

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) None of the above
F) C) and D)

Question 7

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)   other checkable depositis.
D)   All of the above are correct.E) A) and B)
F) C) and D)

Question 8

Which of the following is an example of barter?

Accepted Answer

A)   A parent gives a teenager a $10 bill in exchange for her babysitting services.
B)   A homeowner gives an exterminator a check for $50 in exchange for extermination services.
C)   A barber gives a plumber a haircut in exchange for the plumber fixing the barber's leaky faucet.
D)   All of the above are examples of barter.E) B) and C)
F) All of the above

Question 9

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) None of the above
F) All of the above

Question 10

Today,bank runs are

Accepted Answer

A)   uncommon because of the high reserve requirement.
B)   uncommon because of FDIC deposit insurance.
C)   common because of the low reserve requirement.
D)   common because the FDIC is nearly bankrupt.E) B) and C)
F) B) and D)

Question 11

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) A) and B)
F) A) and D)

Question 12

An open-market purchase

Accepted Answer

A)   increases the number of dollars and the number of bonds in the hands of the public.
B)   increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public.
C)   decreases the number of dollars and the number of bonds in the hands of the public.
D)   decreases the number of dollars in the hands of the public and increases the number of bonds in the hands of the public.E) B) and C)
F) C) and D)

Question 13

Economists use the word "money" to refer to

Accepted Answer

A)   income generated by the production of goods and services.
B)   those assets regularly used to buy goods and services.
C)   fianncial assets such as stocks and bonds.
D)   any type of wealth.E) A) and B)
F) A) and D)

Question 14

The Soviet government in the 1980's never abandoned the ruble as the official currency.However,the people of Moscow preferred to accept

Accepted Answer

A)   cigarettes in exchange for goods and services,because they were convinced that cigarettes were going to soon become hard to come by.
B)   American dollars in exchange for goods and services,because rubles were extremely hard to come by.
C)   goods such as cigarettes or American dollars in exchange for goods and services,reminding us of the fact that government decree by itself is not sufficient for the success of a commodity money.
D)   All of the above are correct.E) None of the above
F) All of the above

Question 15

A problem that the Fed faces when it attempts to control the money supply is that

Accepted Answer

A)   since the U.S.has a fractional-reserve banking system,the amount of money in the economy depends in part on the behavior of depositors and bankers.
B)   the Fed has to get the approval of the U.S.Treasury Department whenever it uses any of its monetary policy tools.
C)   while the Fed has the ability to change the money supply by a large amount,it does not have the ability to change it by a small amount.
D)   federal legislation in the 1950s stripped the Fed of its power to act as a lender of last resort to banks.E) None of the above
F) C) and D)

Question 16

Assume that when $100 of new reserves enter the banking system,the money supply ultimately increases by $625.Assume also that no banks hold excess reserves and that the entire money supply consists of bank deposits.If,at a point in time,reserves for all banks amount to $500,then at that same point in time,loans for all banks amount to $2,625.

Accepted Answer

A) True 
 B)False

Question 17

The agency responsible for regulating the U.S.monetary system is the

Accepted Answer

A)   U.S.Treasury
B)   Federal Reserve
C)   Department of Justice
D)   Federal Trade CommissionE) A) and C)
F) A) and B)

Question 18

List two reasons why the Fed can not control the exact amount of money supply.

Accepted Answer

1)The Fed can not control how much money...

Question 19

Demand 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) All of the above
F) C) and D)

Question 20

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 B)
F) A) and C)

Exam 29: The Monetary System

In the months of November and December,people in the United States hold a larger part of their money in the form of currency because they intend to shop and travel for the holidays.As a result,other things the same,the money supply increases.

Correct Answer
verified

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

Correct Answer
verified

Money

Correct Answer
verified

Today,bank runs are

Correct Answer
verified

The Soviet government in the 1980's never abandoned the ruble as the official currency.However,the people of Moscow preferred to accept

Correct Answer
verified

The Fed increases reserves if it conducts open market

Correct Answer
verified

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

Correct Answer
verified

List two reasons why the Fed can not control the exact amount of money supply.

Correct Answer
verified
1)The Fed can not control how much money...
View Answer

Which of the following is an example of barter?

Correct Answer
verified

Which of the following defer payments?

Correct Answer
verified

Demand deposits are included in

Correct Answer
verified

Which of the following can banks use to borrow from the Federal Reserve?

Correct Answer
verified

An open-market purchase

Correct Answer
verified

The agency responsible for regulating the U.S.monetary system is the

Correct Answer
verified

When there is a reserve requirement,banks

Correct Answer
verified

A problem that the Fed faces when it attempts to control the money supply is that

Correct Answer
verified

In a fractional-reserve banking system,an increase in reserve requirements

Correct Answer
verified

The Fed purchases $200 worth of government bonds from the public.The reserve requirement is 8 percent,people hold no currency,and the banking system keeps no excess reserves.The U.S.money supply eventually increases by

Correct Answer
verified

Correct Answer
verified

Economists use the word "money" to refer to

Correct Answer
verified

Exam 29: The Monetary System

In the months of November and December,people in the United States hold a larger part of their money in the form of currency because they intend to shop and travel for the holidays.As a result,other things the same,the money supply increases.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Money

Correct AnswerverifiedShow Answer

Today,bank runs are

Correct AnswerverifiedShow Answer

The Soviet government in the 1980's never abandoned the ruble as the official currency.However,the people of Moscow preferred to accept

Correct AnswerverifiedShow Answer

The Fed increases reserves if it conducts open market

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

List two reasons why the Fed can not control the exact amount of money supply.

Correct Answerverified1)The Fed can not control how much money...View AnswerShow Answer

Which of the following is an example of barter?

Correct AnswerverifiedShow Answer

Which of the following defer payments?

Correct AnswerverifiedShow Answer

Demand deposits are included in

Correct AnswerverifiedShow Answer

Which of the following can banks use to borrow from the Federal Reserve?

Correct AnswerverifiedShow Answer

An open-market purchase

Correct AnswerverifiedShow Answer

The agency responsible for regulating the U.S.monetary system is the

Correct AnswerverifiedShow Answer

When there is a reserve requirement,banks

Correct AnswerverifiedShow Answer

A problem that the Fed faces when it attempts to control the money supply is that

Correct AnswerverifiedShow Answer

In a fractional-reserve banking system,an increase in reserve requirements

Correct AnswerverifiedShow Answer

The Fed purchases $200 worth of government bonds from the public.The reserve requirement is 8 percent,people hold no currency,and the banking system keeps no excess reserves.The U.S.money supply eventually increases by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economists use the word "money" to refer to

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
1)The Fed can not control how much money...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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