Question 1

Paper dollars

Accepted Answer

A)  are commodity money and gold coins are fiat money.
B)  are fiat money and gold coins are commodity money.
C)  and gold coins are both commodity monies.
D)  and gold coins are both fiat monies.E) None of the above
F) B) and C)

Question 2

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 3

The reserve requirement is 4 percent, banks hold no excess reserves and people hold no currency. If the Fed sells $10,000 worth of bonds, what happens to the money supply?

Accepted Answer

A)  it increases by $250,000
B)  it increases by $200,000
C)  it decreases by $200,000
D)  it decreases by $250,000E) B) and C)
F) All of the above

Question 4

The chair of the Board of Governors regularly testifies to Congress about Fed policy.

Accepted Answer

A) True 
 B)False

Question 5

​If the reserve ratio increased from 5 percent to 10 percent, then the money multiplier would

Accepted Answer

A)  ​rise from 5 to 10.
B)  ​rise from 10 to 20.
C)  ​fall from 20 to 10.
D)  ​fall from 10 to 5.E) A) and B)
F) A) and C)

Question 6

If the federal funds rate were below 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 reduce reserves.
B)  buying bonds. This buying would increase reserves.
C)  selling bonds. This selling would reduce reserves.
D)  selling bonds. This selling would increase reserves.E) B) and D)
F) B) and C)

Question 7

When you purchase school supplies at the book store using cash, you are using money as a medium of exchange.

Accepted Answer

A) True 
 B)False

Question 8

Other things the same if reserve requirements are decreased, the reserve ratio

Accepted Answer

A)  decreases, the money multiplier increases, and the money supply decreases.
B)  increases, the money multiplier increases, and the money supply increases.
C)  decreases, the money multiplier increases, and the money supply increases.
D)  increases, the money multiplier increases, and the money supply decreases.E) C) and D)
F) All of the above

Question 9

Liquidity refers to

Accepted Answer

A)  the ease with which an asset is converted to the medium of exchange.
B)  the measurement of the intrinsic value of commodity money.
C)  the measurement of the durability of a good.
D)  how many time a dollar circulates in a given year.E) A) and C)
F) A) and B)

Question 10

The federal funds rate is a long-term interest rate banks charge one another for loans.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following items is included in M2?

Accepted Answer

A)  credit cards
B)  money market mutual funds
C)  corporate bonds
D)  large time depositsE) All of the above
F) C) and D)

Question 12

If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold

Accepted Answer

A)  fewer reserves, so the money multiplier will fall.
B)  fewer reserves, so the money multiplier will rise.
C)  more reserves, so the money multiplier will fall.
D)  more reserves, so the money multiplier will rise.E) B) and C)
F) A) and C)

Question 13

The Federal Reserve

Accepted Answer

A)  is responsible for conducting the nation's monetary policy, and it plays a role in regulating banks.
B)  is responsible for conducing the nation's monetary policy, but it plays no role in regulating banks.
C)  is not responsible for conducting the nation's monetary policy, and it plays a role in regulating banks.
D)  is not responsible for conducing the nation's monetary policy, and it plays no role in regulating banks.E) C) and D)
F) B) and D)

Question 14

Which of the following is included in M1 and M2?

Accepted Answer

A)  traveler's checks
B)  savings deposits
C)  money market mutual funds
D)  small time depositsE) B) and C)
F) A) and B)

Question 15

If the Federal Open Market Committee decides to increase the money supply, then the Federal Reserve

Accepted Answer

A)  creates dollars and uses them to purchase government bonds from the public.
B)  sells government bonds from its portfolio to the public.
C)  creates dollars and uses them to purchase various types of stocks and bonds from the public.
D)  sells various types of stocks and bonds from its portfolio to the public.E) B) and D)
F) A) and D)

Question 16

In measuring the stock of money in the U.S., M1 includes

Accepted Answer

A)  traveler's checks.
B)  savings deposits.
C)  credit cards
D)  none of the above.E) All of the above
F) A) and B)

Question 17

M1 includes

Accepted Answer

A)  currency.
B)  demand deposits.
C)  traveler's checks.
D)  All of the above are correct.E) B) and C)
F) None of the above

Question 18

Why is the president of the New York Fed always a voting member of the FOMC?

Accepted Answer

New York is the financial capitol of the...

Question 19

Scenario 29-1.
The monetary policy of Namdian is determined by the Namdian Central Bank. The local currency is the dia. Namdian banks collectively hold 100 million dias of required reserves, 25 million dias of excess reserves, 250 million dias of Namdian Treasury Bonds, and their customers hold 1,000 million dias of deposits. Namdians prefer to use only demand deposits and so the money supply consists of demand deposits.
-Refer to Scenario 29-1. Assume that banks desire to continue holding the same ratio of excess reserves to deposits. What is the reserve requirement and what is the reserve ratio?

Accepted Answer

A)  2 percent, 8 percent
B)  8 percent, 10 percent
C)  10 percent, 12.5 percent
D)  None of the above is correct.E) B) and D)
F) A) and D)

Question 20

What are the functions of money?

Accepted Answer

Medium of exchange, ...

Exam 29: The Monetary System

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

Correct Answer
verified

Which of the following items is included in M2?

Correct Answer
verified

In measuring the stock of money in the U.S., M1 includes

Correct Answer
verified

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

Correct Answer
verified

M1 includes

Correct Answer
verified

Liquidity refers to

Correct Answer
verified

If the reserve ratio increased from 5 percent to 10 percent, then the money multiplier would

Correct Answer
verified

Correct Answer
verified

The chair of the Board of Governors regularly testifies to Congress about Fed policy.

Correct Answer
verified

Why is the president of the New York Fed always a voting member of the FOMC?

Correct Answer
verified
New York is the financial capitol of the...
View Answer

If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold

Correct Answer
verified

Other things the same if reserve requirements are decreased, the reserve ratio

Correct Answer
verified

The Federal Reserve

Correct Answer
verified

The federal funds rate is a long-term interest rate banks charge one another for loans.

Correct Answer
verified

If the Federal Open Market Committee decides to increase the money supply, then the Federal Reserve

Correct Answer
verified

The reserve requirement is 4 percent, banks hold no excess reserves and people hold no currency. If the Fed sells $10,000 worth of bonds, what happens to the money supply?

Correct Answer
verified

Which of the following is included in M1 and M2?

Correct Answer
verified

Paper dollars

Correct Answer
verified

When you purchase school supplies at the book store using cash, you are using money as a medium of exchange.

Correct Answer
verified

What are the functions of money?

Correct Answer
verified
Medium of exchange, ...
View Answer

Exam 29: The Monetary System

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

Correct AnswerverifiedShow Answer

Which of the following items is included in M2?

Correct AnswerverifiedShow Answer

In measuring the stock of money in the U.S., M1 includes

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

M1 includes

Correct AnswerverifiedShow Answer

Liquidity refers to

Correct AnswerverifiedShow Answer

​If the reserve ratio increased from 5 percent to 10 percent, then the money multiplier would

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The chair of the Board of Governors regularly testifies to Congress about Fed policy.

Correct AnswerverifiedShow Answer

Why is the president of the New York Fed always a voting member of the FOMC?

Correct AnswerverifiedNew York is the financial capitol of the...View AnswerShow Answer

If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold

Correct AnswerverifiedShow Answer

Other things the same if reserve requirements are decreased, the reserve ratio

Correct AnswerverifiedShow Answer

The Federal Reserve

Correct AnswerverifiedShow Answer

The federal funds rate is a long-term interest rate banks charge one another for loans.

Correct AnswerverifiedShow Answer

If the Federal Open Market Committee decides to increase the money supply, then the Federal Reserve

Correct AnswerverifiedShow Answer

The reserve requirement is 4 percent, banks hold no excess reserves and people hold no currency. If the Fed sells $10,000 worth of bonds, what happens to the money supply?

Correct AnswerverifiedShow Answer

Which of the following is included in M1 and M2?

Correct AnswerverifiedShow Answer

Paper dollars

Correct AnswerverifiedShow Answer

When you purchase school supplies at the book store using cash, you are using money as a medium of exchange.

Correct AnswerverifiedShow Answer

What are the functions of money?

Correct AnswerverifiedMedium of exchange, ...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

If the reserve ratio increased from 5 percent to 10 percent, then the money multiplier would

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
New York is the financial capitol of the...
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
verified

Correct Answer
verified

Correct Answer
verified
Medium of exchange, ...
View Answer