Question 1

If the discount rate is lowered,banks choose to borrow

Accepted Answer

A)  less from the Fed so reserves increase.
B)  less from the Fed so reserves decrease.
C)  more from the Fed so reserves increase.
D)  more from the Fed so reserves decrease.E) A) and B)
F) C) and D)

Question 2

Which of the following defer payments?

Accepted Answer

A)  credit cards and debit cards
B)  neither credit cards or debit cards
C)  credit cards but not debit cards
D)  debit cards but not credit cardsE) None of the above
F) B) and C)

Question 3

Treasury Bonds are

Accepted Answer

A)  liquid, but not a store of value.
B)  a store of value, but not liquid.
C)  both liquid and a store of value.
D)  neither liquid nor a store of valueE) A) and B)
F) B) and C)

Question 4

In recent years the Federal Open Market Committee has focused on a target for

Accepted Answer

A)  M1 growth.
B)  the federal funds rate.
C)  the number of Treasury Securities issued by the federal government.
D)  total reserves of banks.E) A) and D)
F) All of the above

Question 5

What does the text mean by the question,"Where Is All the Currency?" How does it answer the question?

Accepted Answer

The amount of currency per person is ove...

Question 6

Suppose that in a country people gain more confidence in the banking system and so hold relatively less currency and more deposits,then bank reserves will

Accepted Answer

A)  decrease and the money supply will eventually decrease.
B)  decrease and the money supply will eventually increase.
C)  increase and the money supply will eventually decrease.
D)  increase and the money supply will eventually increase.E) B) and D)
F) A) and D)

Question 7

What is the difference between money and wealth?

Accepted Answer

Money is defined as the set of...

Question 8

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

Question 9

The amount of currency per person in the United States is about

Accepted Answer

A)  $200.
B)  $800.
C)  $1,600.
D)  $3,100.E) None of the above
F) A) and B)

Question 10

The interest rate the Fed charges on loans it makes to banks is called

Accepted Answer

A)  the prime rate.
B)  the federal funds rate.
C)  the discount rate.
D)  the LIBOR.E) B) and D)
F) B) and C)

Question 11

M1 includes

Accepted Answer

A)  currency.
B)  demand deposits.
C)  travelers' checks.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 12

Use the balance sheet for the following questions.
Table 29-3
 
-Refer to Table 29-3.If the Last Bank of Cedar Bend is holding $10,000 in excess reserves,then the reserve requirement is

Accepted Answer

A)  2 percent.
B)  5 percent.
C)  7 percent.
D)  10 percent.E) B) and D)
F) C) and D)

Question 13

Which of the following does the Federal Reserve not do?

Accepted Answer

A)  conduct monetary policy
B)  act as a lender of last resort
C)  convert Federal Reserve Notes into gold
D)  serve as a bank regulatorE) A) and C)
F) B) and D)

Question 14

Bank runs

Accepted Answer

A)  will affect neither the money supply nor the money multiplier.
B)  are only a problem for insolvent banks.
C)  can be neither prevented nor stopped by the Federal Reserve.
D)  are a problem because banks only hold a fraction of deposits as reserves.E) A) and B)
F) All of the above

Question 15

A bank's assets include

Accepted Answer

A)  both its reserves and the deposits of its customers.
B)  neither its reserves nor the deposits of its customers.
C)  its reserves, but not the deposits of its customers.
D)  the deposits of its customers, but not its reserves.E) B) and C)
F) B) and D)

Question 16

Joe wants to trade eggs for sausage.Lashonda wants to trade sausage for eggs.Joe and Lashonda have a double-coincidence of wants.

Accepted Answer

A) True 
 B)False

Question 17

In order for currency to be widely used as a medium of exchange,it is sufficient for the government to designate it as legal tender.

Accepted Answer

A) True 
 B)False

Question 18

In December 1999 people feared that there might be computer problems at banks as the century changed.Consequently,people wanted to hold relatively more in currency and relatively less in deposits.In anticipation banks raised their reserve ratios to have enough cash on hand to meet depositors' demands.These actions by the public

Accepted Answer

A)  would increase the multiplier.If the Fed wanted to offset the effect of this on the size of the money supply, it could have sold bonds.
B)  would increase the multiplier.If the Fed wanted to offset the effect of this on the size of the money supply, it could have bought bonds.
C)  would reduce the multiplier.If the Fed wanted to offset the effect of this on the size of the money supply, it could have sold bonds.
D)  would reduce the multiplier.If the Fed wanted to offset the effect of this on the size of the money supply, it could have bought bonds.E) None of the above
F) A) and D)

Question 19

Table 29-5
 
-Refer to Figure 29-5.If all banks hold only the required 4 percent of deposits as reserves,then what is the money multiplier?

Accepted Answer

A)  4
B)  16
C)  20
D)  25E) A) and B)
F) B) and D)

Question 20

Which of the following lists two things that both decrease the money supply?

Accepted Answer

A)  make open market purchases, raise the reserve requirement ratio
B)  make open market purchases, lower the reserve requirement ratio
C)  make open market sales, raise the reserve requirement ratio
D)  make open market sales, lower the reserve requirement ratioE) A) and C)
F) C) and D)

Exam 29: The Monetary System

Joe wants to trade eggs for sausage.Lashonda wants to trade sausage for eggs.Joe and Lashonda have a double-coincidence of wants.

Correct Answer
verified

Use the balance sheet for the following questions. Table 29-3 -Refer to Table 29-3.If the Last Bank of Cedar Bend is holding $10,000 in excess reserves,then the reserve requirement is

Correct Answer
verified

M1 includes

Correct Answer
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The interest rate the Fed charges on loans it makes to banks is called

Correct Answer
verified

Table 29-5 -Refer to Figure 29-5.If all banks hold only the required 4 percent of deposits as reserves,then what is the money multiplier?

Correct Answer
verified

In recent years the Federal Open Market Committee has focused on a target for

Correct Answer
verified

Bank runs

Correct Answer
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Which of the following defer payments?

Correct Answer
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Correct Answer
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What does the text mean by the question,"Where Is All the Currency?" How does it answer the question?

Correct Answer
verified
The amount of currency per person is ove...
View Answer

A bank's assets include

Correct Answer
verified

If the discount rate is lowered,banks choose to borrow

Correct Answer
verified

Suppose that in a country people gain more confidence in the banking system and so hold relatively less currency and more deposits,then bank reserves will

Correct Answer
verified

In order for currency to be widely used as a medium of exchange,it is sufficient for the government to designate it as legal tender.

Correct Answer
verified

Which of the following lists two things that both decrease the money supply?

Correct Answer
verified

Treasury Bonds are

Correct Answer
verified

What is the difference between money and wealth?

Correct Answer
verified
Money is defined as the set of...
View Answer

Which of the following does the Federal Reserve not do?

Correct Answer
verified

Over one time horizon or another Fed policy decisions influence

Correct Answer
verified

The amount of currency per person in the United States is about

Correct Answer
verified

Exam 29: The Monetary System

Joe wants to trade eggs for sausage.Lashonda wants to trade sausage for eggs.Joe and Lashonda have a double-coincidence of wants.

Correct AnswerverifiedShow Answer

Use the balance sheet for the following questions. Table 29-3 -Refer to Table 29-3.If the Last Bank of Cedar Bend is holding $10,000 in excess reserves,then the reserve requirement is

Correct AnswerverifiedShow Answer

M1 includes

Correct AnswerverifiedShow Answer

The interest rate the Fed charges on loans it makes to banks is called

Correct AnswerverifiedShow Answer

Table 29-5 -Refer to Figure 29-5.If all banks hold only the required 4 percent of deposits as reserves,then what is the money multiplier?

Correct AnswerverifiedShow Answer

In recent years the Federal Open Market Committee has focused on a target for

Correct AnswerverifiedShow Answer

Bank runs

Correct AnswerverifiedShow Answer

Which of the following defer payments?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What does the text mean by the question,"Where Is All the Currency?" How does it answer the question?

Correct AnswerverifiedThe amount of currency per person is ove...View AnswerShow Answer

A bank's assets include

Correct AnswerverifiedShow Answer

If the discount rate is lowered,banks choose to borrow

Correct AnswerverifiedShow Answer

Suppose that in a country people gain more confidence in the banking system and so hold relatively less currency and more deposits,then bank reserves will

Correct AnswerverifiedShow Answer

In order for currency to be widely used as a medium of exchange,it is sufficient for the government to designate it as legal tender.

Correct AnswerverifiedShow Answer

Which of the following lists two things that both decrease the money supply?

Correct AnswerverifiedShow Answer

Treasury Bonds are

Correct AnswerverifiedShow Answer

What is the difference between money and wealth?

Correct AnswerverifiedMoney is defined as the set of...View AnswerShow Answer

Which of the following does the Federal Reserve not do?

Correct AnswerverifiedShow Answer

Over one time horizon or another Fed policy decisions influence

Correct AnswerverifiedShow Answer

The amount of currency per person in the United States is about

Correct AnswerverifiedShow Answer

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The amount of currency per person is ove...
View 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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Correct Answer
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Money is defined as the set of...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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