Question 1

The Fed's primary tool to change the money supply is

Accepted Answer

A)   changing the interest rate on reserves.
B)   changing the reserve requirement.
C)   conducting open market operations.
D)   redeeming Federal Reserve notes.E) B) and C)
F) None of the above

Question 2

Dollar bills,rare paintings,and emerald necklaces are all

Accepted Answer

A)   media of exchange.
B)   units of account.
C)   stores of value.
D)   All of the above are correct.E) All of the above
F) C) and D)

Question 3

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 measurment of the durability of a good.
D)   how many time a dollar circulates in a given year.E) None of the above
F) B) and C)

Question 4

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) All of the above
F) B) and C)

Question 5

In the United States,currency holdings per person average about

Accepted Answer

A)   $125; one explanation for this relatively small average is that many people use credit and debit cards to make transactions.
B)   $125; one explanation for this relatively small average is that U.S.citizens hold a lot of foreign currency.
C)   $3,700; one explanation for this relatively large amount is that criminals probably prefer currency as a medium of exchange.
D)   $3,700; one explanation for this relatively large average is that U.S.citizens hold a lot of foreign currency.E) A) and B)
F) A) and C)

Question 6

During the Great Depression in the early 1930s,

Accepted Answer

A)   bank runs closed many banks.
B)   the money supply rose sharply.
C)   the Fed decreased reserve requirements.
D)   both a and b are correct.E) B) and C)
F) A) and D)

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Imagine an economy in which: (1) pieces of paper called yollars are the only thing that buyers give to sellers when they buy goods and services,so it would be common to use,say,50 yollars to buy a pair of shoes; (2) prices are posted in terms of yardsticks,so you might walk into a grocery store and see that,today,an apple is worth 2 yardsticks; and (3) yardsticks disintegrate overnight,so no yardstick has any value for more than 24 hours.In this economy,

Accepted Answer

A)   the yardstick is a medium of exchange but it cannot serve as a unit of account.
B)   the yardstick is a unit of account but it cannot serve as a store of value.
C)   the yardstick is a medium of exchange but it cannot serve as a store of value,and the yollar is a unit of account.
D)   the yollar is a unit of account,but it is not a medium of exchange and it is not a liquid asset.E) A) and C)
F) All of the above

Question 9

An increase in the reserve requirement ratio increases reserves and decreases the money supply.

Accepted Answer

A) True 
 B)False

Question 10

Values of Assets
 
-Refer to Value of Assets.What is the value of M2 in billions of dollars?

Accepted Answer

A)   9925
B)   8225
C)   7485
D)   7445E) B) and C)
F) A) and D)

Question 11

If the reserve ratio is 12.5 percent,then $2,000 of additional reserves can create up to

Accepted Answer

A)   $8,000 of new money.
B)   $16,000 of new money.
C)   $32,000 of new money.
D)   None of the above is correct.E) A) and B)
F) All of the above

Question 12

When the Fed makes open-market sales bank

Accepted Answer

A)   withdrawals and lending increase.
B)   withdrawals increase and lending decreases.
C)   deposits and lending increase.
D)   deposits increase and lending decreases.E) C) and D)
F) A) and D)

Question 13

Currency includes

Accepted Answer

A)   paper bills and coins.
B)   demand deposits.
C)   credit cards.
D)   Both (a) and (b) are correct.E) A) and B)
F) B) and C)

Question 14

A bank's assets equal its liabilities under

Accepted Answer

A)   both 100-percent-reserve banking and fractional-reserve banking.
B)   100-percent-reserve banking but not under fractional-reserve banking.
C)   fractional-reserve banking but not under 100-percent-reserve banking.
D)   neither 100-percent-reserve banking nor fractional-reserve banking.E) A) and D)
F) B) and D)

Question 15

Designers of the Federal Reserve System were concerned that the Fed might form policy favorable to one part of the country or to a particular party.What are some ways that the organization of the Fed reflects such concerns?

Accepted Answer

The answer of Designers of the Federal Reserve System were...

Question 16

The New York Federal Reserve Bank

Accepted Answer

A)   president always gets to vote at the FOMC meetings.
B)   conducts open market transactions.
C)   is one of 12 regional Federal Reserve Banks.
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 17

Consider five individuals with different occupations.  Which of the following pairs of individuals has a double coincidence of wants?

Accepted Answer

A)   Mary and Clark
B)   Clark and Nathan
C)   Nathan and Polly
D)   Polly and PaulE) A) and D)
F) B) and C)

Question 18

Which of the following best illustrates the concept of a store of value?

Accepted Answer

A)   You are a precious-metals dealer,and you are always aware of how many ounces of platinum trade for an ounce of gold.
B)   You sell items on eBay,and your prices are stated in terms of dollars.
C)   You keep 6 ounces of gold in your safe-deposit box at the bank for emergencies.
D)   None of the above is correct.E) A) and D)
F) B) and C)

Question 19

When the Fed purchases $200 worth of government bonds from the public,the U.S.money supply eventually increases by

Accepted Answer

A)   more than $200.
B)   exactly $200.
C)   less than $200.
D)   None of the above are correct.E) C) and D)
F) A) and B)

Question 20

Consider five high school students working on homework in study hall.  Which of the following pairs of students has a double coincidence of wants?

Accepted Answer

A)   Rosie and Piper
B)   Piper and Molly
C)   Dewey and Molly
D)   Bob and DeweyE) A) and C)
F) C) and D)

Exam 21: The Monetary System

Money

Correct Answer
verified

When the Fed makes open-market sales bank

Correct Answer
verified

Liquidity refers to

Correct Answer
verified

Values of Assets -Refer to Value of Assets.What is the value of M2 in billions of dollars?

Correct Answer
verified

Currency includes

Correct Answer
verified

Designers of the Federal Reserve System were concerned that the Fed might form policy favorable to one part of the country or to a particular party.What are some ways that the organization of the Fed reflects such concerns?

Correct Answer
verified

Dollar bills,rare paintings,and emerald necklaces are all

Correct Answer
verified

A bank's assets equal its liabilities under

Correct Answer
verified

An increase in the reserve requirement ratio increases reserves and decreases the money supply.

Correct Answer
verified

Correct Answer
verified

During the Great Depression in the early 1930s,

Correct Answer
verified

Consider five individuals with different occupations. Which of the following pairs of individuals has a double coincidence of wants?

Correct Answer
verified

Consider five high school students working on homework in study hall. Which of the following pairs of students has a double coincidence of wants?

Correct Answer
verified

When the Fed purchases $200 worth of government bonds from the public,the U.S.money supply eventually increases by

Correct Answer
verified

The Fed's primary tool to change the money supply is

Correct Answer
verified

Which of the following best illustrates the concept of a store of value?

Correct Answer
verified

In the United States,currency holdings per person average about

Correct Answer
verified

If the reserve ratio is 12.5 percent,then $2,000 of additional reserves can create up to

Correct Answer
verified

The New York Federal Reserve Bank

Correct Answer
verified

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

Correct Answer
verified

Exam 21: The Monetary System

Money

Correct AnswerverifiedShow Answer

When the Fed makes open-market sales bank

Correct AnswerverifiedShow Answer

Liquidity refers to

Correct AnswerverifiedShow Answer

Values of Assets -Refer to Value of Assets.What is the value of M2 in billions of dollars?

Correct AnswerverifiedShow Answer

Currency includes

Correct AnswerverifiedShow Answer

Designers of the Federal Reserve System were concerned that the Fed might form policy favorable to one part of the country or to a particular party.What are some ways that the organization of the Fed reflects such concerns?

Correct AnswerverifiedShow Answer

Dollar bills,rare paintings,and emerald necklaces are all

Correct AnswerverifiedShow Answer

A bank's assets equal its liabilities under

Correct AnswerverifiedShow Answer

An increase in the reserve requirement ratio increases reserves and decreases the money supply.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

During the Great Depression in the early 1930s,

Correct AnswerverifiedShow Answer

Consider five individuals with different occupations. Which of the following pairs of individuals has a double coincidence of wants?

Correct AnswerverifiedShow Answer

Consider five high school students working on homework in study hall. Which of the following pairs of students has a double coincidence of wants?

Correct AnswerverifiedShow Answer

When the Fed purchases $200 worth of government bonds from the public,the U.S.money supply eventually increases by

Correct AnswerverifiedShow Answer

The Fed's primary tool to change the money supply is

Correct AnswerverifiedShow Answer

Which of the following best illustrates the concept of a store of value?

Correct AnswerverifiedShow Answer

In the United States,currency holdings per person average about

Correct AnswerverifiedShow Answer

If the reserve ratio is 12.5 percent,then $2,000 of additional reserves can create up to

Correct AnswerverifiedShow Answer

The New York Federal Reserve Bank

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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