Question 1

In the nation of Wiknam,the money supply is $80,000 and reserves are $18,000.Assuming that people hold only deposits and no currency,and that banks hold no excess reserves,then the reserve requirement is

Accepted Answer

A)   29 percent.
B)   22.5 percent.
C)   16 percent.
D)   None of the above is correct.E) A) and C)
F) A) and B)

Question 2

A bank has a 10 percent reserve requirement,$4,000 in deposits,and has loaned out all it can given the reserve requirement.

Accepted Answer

A)   It has $40 in reserves and $3,960 in loans.
B)   It has $400 in reserves and $3,600 in loans.
C)   It has $444 in reserves and $3,556 in loans.
D)   None of the above is correct.E) A) and B)
F) All of the above

Question 3

If the Fed buys bonds in the open market,the money supply decreases.

Accepted Answer

A) True 
 B)False

Question 4

On a bank's T-account,which are part of the banks assets?

Accepted Answer

A)   both deposits made by its customers and reserves
B)   deposits made by its customers but not reserves
C)   reserves but not deposits made by its customers
D)   neither deposits made by its customers nor reservesE) None of the above
F) A) and D)

Question 5

Economists argue that the move from barter to money increased trade and production.How is this possible?

Accepted Answer

The use of money allows people...

Question 6

M1 includes

Accepted Answer

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

Question 7

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

Question 8

Which of the following is not included in M1?

Accepted Answer

A)   currency
B)   demand deposits
C)   traveler's checks
D)   credit cardsE) A) and B)
F) All of the above

Question 9

Table 16-7
Metropolis National Bank is currently holding 2% of its deposits as excess reserves.
 
-Refer to Balance Sheet of Metropolis National Bank.Metropolis National Bank is currently holding 2% of deposits as excess reserves.Assume that no banks in the economy want to hold excess reserves and that people only hold deposits and no currency.How much does the money supply ultimately increase when Metropolis National Bank lends out its excess reserves?

Accepted Answer

A)   $100,000
B)   $110,000
C)   $120,000
D)   None of the above are correct.E) A) and D)
F) All of the above

Question 10

The manager of the bank where you work tells you that the bank has $300 million in deposits and $255 million dollars in loans.If the reserve requirement is 10 percent,how much is the bank holding in excess reserves?

Accepted Answer

A)   $15 million
B)   $19.5 million
C)   $25.5 million
D)   $30 millionE) A) and D)
F) All of the above

Question 11

Which of the following is not a tool of monetary policy?

Accepted Answer

A)   open market operations
B)   reserve requirements
C)   changing the discount rate
D)   increasing the government budget deficitE) None of the above
F) B) and C)

Question 12

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 13

M1 includes savings deposits.

Accepted Answer

A) True 
 B)False

Question 14

The Federal Reserve is a privately operated commercial bank.

Accepted Answer

A) True 
 B)False

Question 15

During recessions,banks typically choose to hold more excess reserves relative to their deposits.This action

Accepted Answer

A)   increases the money multiplier and increases the money supply.
B)   decreases the money multiplier and decreases the money supply.
C)   does not change the money multiplier,but increases the money supply.
D)   does not change the money multiplier,but decreases the money supply.E) A) and B)
F) All of the above

Question 16

In an economy that relies upon barter,

Accepted Answer

A)   trade does not require a double coincidence of wants.
B)   scarce resources are allocated just as easily as they are in economies that do not rely upon barter.
C)   there is no item in the economy that is widely accepted in exchange for goods and services.
D)   All of the above are correct.E) A) and C)
F) A) and B)

Question 17

The Federal Open Market Committee meets approximately

Accepted Answer

A)   every three weeks
B)   every six weeks
C)   every 3 months
D)   every 6 months.E) B) and C)
F) A) and D)

Question 18

Which of the following will not help to prevent bank runs?

Accepted Answer

A)   government insurance of deposits
B)   fractional reserve banking
C)   100% reserve banking
D)   All of the above prevent bank runs.E) All of the above
F) B) and D)

Question 19

Prisoners sometimes determine a single good to be used as money.This good becomes

Accepted Answer

A)   a medium of exchange and a unit of account.
B)   a medium of exchange,but not a unit of account.
C)   a unit of account,but not a medium of exchange.
D)   neitehr a unit of account nor a medium of exchange.E) C) and D)
F) All of the above

Question 20

Which of the following is a store of value?

Accepted Answer

A)   currency
B)   U.S.government bonds
C)   fine art
D)   All of the above are correct.E) None of the above
F) A) and C)

Exam 29: The Monetary System

The Federal Reserve is a privately operated commercial bank.

Correct Answer
verified

M1 includes

Correct Answer
verified

If the Fed buys bonds in the open market,the money supply decreases.

Correct Answer
verified

During recessions,banks typically choose to hold more excess reserves relative to their deposits.This action

Correct Answer
verified

The Federal Open Market Committee meets approximately

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

Which of the following is not included in M1?

Correct Answer
verified

In an economy that relies upon barter,

Correct Answer
verified

A bank has a 10 percent reserve requirement,$4,000 in deposits,and has loaned out all it can given the reserve requirement.

Correct Answer
verified

On a bank's T-account,which are part of the banks assets?

Correct Answer
verified

Economists argue that the move from barter to money increased trade and production.How is this possible?

Correct Answer
verified
The use of money allows people...
View Answer

M1 includes savings deposits.

Correct Answer
verified

Which of the following is not a tool of monetary policy?

Correct Answer
verified

In the nation of Wiknam,the money supply is $80,000 and reserves are $18,000.Assuming that people hold only deposits and no currency,and that banks hold no excess reserves,then the reserve requirement is

Correct Answer
verified

Prisoners sometimes determine a single good to be used as money.This good becomes

Correct Answer
verified

The manager of the bank where you work tells you that the bank has $300 million in deposits and $255 million dollars in loans.If the reserve requirement is 10 percent,how much is the bank holding in excess reserves?

Correct Answer
verified

Which of the following will not help to prevent bank runs?

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

Correct Answer
verified

Which of the following is a store of value?

Correct Answer
verified

Exam 29: The Monetary System

The Federal Reserve is a privately operated commercial bank.

Correct AnswerverifiedShow Answer

M1 includes

Correct AnswerverifiedShow Answer

If the Fed buys bonds in the open market,the money supply decreases.

Correct AnswerverifiedShow Answer

During recessions,banks typically choose to hold more excess reserves relative to their deposits.This action

Correct AnswerverifiedShow Answer

The Federal Open Market Committee meets approximately

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

Which of the following is not included in M1?

Correct AnswerverifiedShow Answer

In an economy that relies upon barter,

Correct AnswerverifiedShow Answer

A bank has a 10 percent reserve requirement,$4,000 in deposits,and has loaned out all it can given the reserve requirement.

Correct AnswerverifiedShow Answer

On a bank's T-account,which are part of the banks assets?

Correct AnswerverifiedShow Answer

Economists argue that the move from barter to money increased trade and production.How is this possible?

Correct AnswerverifiedThe use of money allows people...View AnswerShow Answer

M1 includes savings deposits.

Correct AnswerverifiedShow Answer

Which of the following is not a tool of monetary policy?

Correct AnswerverifiedShow Answer

In the nation of Wiknam,the money supply is $80,000 and reserves are $18,000.Assuming that people hold only deposits and no currency,and that banks hold no excess reserves,then the reserve requirement is

Correct AnswerverifiedShow Answer

Prisoners sometimes determine a single good to be used as money.This good becomes

Correct AnswerverifiedShow Answer

The manager of the bank where you work tells you that the bank has $300 million in deposits and $255 million dollars in loans.If the reserve requirement is 10 percent,how much is the bank holding in excess reserves?

Correct AnswerverifiedShow Answer

Which of the following will not help to prevent bank runs?

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

Correct AnswerverifiedShow Answer

Which of the following is a store of value?

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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The use of money allows people...
View Answer

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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Correct Answer
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Correct Answer
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Correct Answer
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