Question 1

Which of the following is not included in M1?

Accepted Answer

A)   currency
B)   demand deposits
C)   savings deposits
D)   traveler's checksE) A) and B)
F) None of the above

Question 2

Table 29-8 
-Refer to Table 29-8. This bank's leverage ratio is

Accepted Answer

A)   2.
B)   50.
C)   13.3.
D)   7.5.E) A) and C)
F) None of the above

Question 3

Just after the terrorist attack on September 11, 2001, the Fed stood ready to lend financial institutions funds. When the Fed did this, it was acting in its role of lender of last resort.

Accepted Answer

A) True 
 B)False

Question 4

If a bank desires to hold no excess reserves, the reserve requirement is 8 percent, and it receives a new deposit of $500,

Accepted Answer

A)   its required reserves increase by $40.
B)   its total reserves initially increase by $460.
C)   it will be able to make a new loan of up to $492.
D)   All of the above are correct.E) A) and B)
F) All of the above

Question 5

Treasury Bonds are

Accepted Answer

A)   both a store of value and a medium of exchange.
B)   a store of value, but not a medium of exchange
C)   a medium of exchange, but not a store of value.
D)   neither a store of value nor a medium of exchange.E) A) and B)
F) A) and C)

Question 6

Are credit cards and debit cards money? What's the difference between credit and debit cards?

Accepted Answer

Neither credit cards nor debit cards are...

Question 7

Table 29-6. 
-Refer to Table 29-6. Assume there is a reserve requirement and the Bank of Pleasantville is exactly in compliance with that requirement. Assume the same is true for all other banks. Lastly, assume people hold only deposits and no currency. What is the money multiplier?

Accepted Answer

A)   6
B)   16.7
C)   15.6
D)   6.4E) C) and D)
F) None of the above

Question 8

Table 29-5. 
-Refer to Table 29-5. If the bank faces a reserve requirement of 6 percent, then the bank

Accepted Answer

A)   is in a position to make a new loan of $12,000.
B)   is in a position to make a new loan of $18,000.
C)   has excess reserves of $12,000.
D)   None of the above is correct.E) B) and D)
F) All of the above

Question 9

A bank loans Greg's Ice Cream $250,000 to remodel a building near campus to use as a new store. On their respective balance sheets, this loan is

Accepted Answer

A)   a liability for the bank and an asset for Greg's Ice Cream. The loan increases the money supply.
B)   a liability for the bank and an asset for Greg's Ice Cream. The loan does not increase the money supply.
C)   an asset for the bank and a liability for Greg's Ice Cream. The loan increases the money supply.
D)   an asset for the bank and a liability for Greg's Ice Cream. The loan does not increase the money supply.E) C) and D)
F) A) and B)

Question 10

The agency responsible for regulating the money supply in the United States is

Accepted Answer

A)   the Comptroller of the Currency.
B)   the U.S. Treasury.
C)   the Federal Reserve.
D)   the U.S. Bank.E) C) and D)
F) None of the above

Question 11

When the Fed decreases the discount rate, banks will

Accepted Answer

A)   borrow more from the Fed and lend more to the public. The money supply increases.
B)   borrow more from the Fed and lend less to the public. The money supply decreases.
C)   borrow less from the Fed and lend more to the public. The money supply increases.
D)   borrow less from the Fed and lend less to the public. The money supply decreases.E) A) and B)
F) A) and C)

Question 12

Banks are able to create money only when

Accepted Answer

A)   interest rates are above 2%.
B)   the Fed sells U.S. government bonds.
C)   the reserve ratio is 100%.
D)   only a fraction of deposits are held in reserve.E) All of the above
F) B) and C)

Question 13

The ease with which an asset can be converted into the economy's medium of exchange is known as__________________.

Accepted Answer

The answer of The ease with which an asset can...

Question 14

When the Fed makes open-market purchases 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) A) and D)
F) B) and D)

Question 15

If the reserve ratio is 15 percent, the money multiplier is
A)  6.7.

Accepted Answer

A)   7.7.
B)   5.7.
C)   15.D) A) and C)
E) B) and C)

Question 16

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

Accepted Answer

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

Question 17

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 C)

Question 18

The use of money allows trade to be roundabout.

Accepted Answer

A) True 
 B)False

Question 19

List two examples of commodity money.

Accepted Answer

Commodity money refers to mone...

Question 20

The Fed's policy decisions have an important influence on

Accepted Answer

A)   inflation in the long run and employment and production in the short run.
B)   inflation in the long run and employment and production in the long run.
C)   inflation in the short run and employment and production in the short run.
D)   inflation in the short run and employment and production in the long run.E) A) and C)
F) A) and D)

Exam 29: The Monetary System

When the Fed decreases the discount rate, banks will

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Banks are able to create money only when

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The use of money allows trade to be roundabout.

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Treasury Bonds are

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Just after the terrorist attack on September 11, 2001, the Fed stood ready to lend financial institutions funds. When the Fed did this, it was acting in its role of lender of last resort.

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A bank loans Greg's Ice Cream $250,000 to remodel a building near campus to use as a new store. On their respective balance sheets, this loan is

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

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The ease with which an asset can be converted into the economy's medium of exchange is known as__________________.

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Table 29-6. -Refer to Table 29-6. Assume there is a reserve requirement and the Bank of Pleasantville is exactly in compliance with that requirement. Assume the same is true for all other banks. Lastly, assume people hold only deposits and no currency. What is the money multiplier?

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Table 29-8 -Refer to Table 29-8. This bank's leverage ratio is

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The agency responsible for regulating the money supply in the United States is

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The Fed's policy decisions have an important influence on

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If the reserve ratio is 15 percent, the money multiplier is A) 6.7.

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When the Fed makes open-market purchases bank

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If a bank desires to hold no excess reserves, the reserve requirement is 8 percent, and it receives a new deposit of $500,

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List two examples of commodity money.

Correct AnswerverifiedCommodity money refers to mone...View AnswerShow Answer

Table 29-5. -Refer to Table 29-5. If the bank faces a reserve requirement of 6 percent, then the bank

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Which of the following defer payments?

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Are credit cards and debit cards money? What's the difference between credit and debit cards?

Correct AnswerverifiedNeither credit cards nor debit cards are...View AnswerShow Answer

Which of the following is not included in M1?

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Commodity money refers to mone...
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Neither credit cards nor debit cards are...
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Correct Answer
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