Question 1

If banks hold any amount of their deposits in reserve,then they do not have the ability to influence the money supply.

Accepted Answer

A) True 
 B)False

Question 2

Money market mutual funds are included in

Accepted Answer

A)   M1 but not M2.
B)   M1 and M2.
C)   M2 but not M1.
D)   neither M1 nor M2.E) None of the above
F) B) and C)

Question 3

Table 16-7
Metropolis National Bank is currently holding 2% of its deposits as excess reserves.
 
-Refer to Scenario 16-2.Assuming the only other thing Tazian banks have on their balance sheets is loans,what is the value of existing loans made by Tazian banks?

Accepted Answer

A)   6,900 million tazes
B)   7,125 million tazes
C)   7,350 million tazes
D)   None of the above is correct.E) B) and C)
F) A) and D)

Question 4

Currently,bank runs are a major problem for the U.S.banking system and the Fed.

Accepted Answer

A) True 
 B)False

Question 5

The Fed can reduce the federal funds rate by

Accepted Answer

A)   decreasing the money supply.To decrease the money supply it could sell bonds.
B)   decreasing the money supply.To decrease the money supply it could buy bonds.
C)   increasing the money supply.To increase the money supply it could sell bonds.
D)   increasing the money supply.To increase the money supply it could buy bonds.E) A) and B)
F) A) and D)

Question 6

Table 16-6.
 
-Refer to Table 16-6.Assuming the Bank of Springfield and all other banks have the same reserve ratio,then what is the value of the money multiplier?

Accepted Answer

A)   5.0
B)   7.5
C)   10.00
D)   12.5E) B) and C)
F) B) and D)

Question 7

If a bank desires to hold no excess reserves,the reserve requirement is 5 percent,and it receives a new deposit of $1,000

Accepted Answer

A)   its required reserves increase by $50.
B)   its total reserves initially increase by $1,000.
C)   it will be able to make a new loan of up to $950.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 8

For purposes of analyzing the money stock and its relationship to relevant economic variables,money is best thought of as

Accepted Answer

A)   those items that can be readily accessed and used to buy goods and services.
B)   currency only.
C)   currency plus all bank accounts.
D)   currency plus all bank accounts plus bonds.E) C) and D)
F) None of the above

Question 9

List the two main functions performed by the Fed?

Accepted Answer

The Fed performs two main func...

Question 10

List two examples of commodity money.

Accepted Answer

Commodity money refers to mone...

Question 11

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) B) and C)
F) C) and D)

Question 12

Which of the following is correct?

Accepted Answer

A)   A bank's deposits at the Federal Reserves counts as part of the bank's reserves.The Federal Reserve pays interest on these deposits.
B)   A bank's deposits at the Federal Reserves counts as part of the bank's reserves.The Federal Reserve does not pay interest on these deposits.
C)   A bank's deposits at the Federal Reserves does not count as part of the bank's reserves.The Federal Reserve pays interest on these deposits.
D)   A bank's deposits at the Federal Reserves does not counts as part of the bank's reserves.The Federal Reserve does not pay interest on these deposits.E) B) and D)
F) A) and D)

Question 13

A bank's reserve ratio is 10 percent and the bank has $2,000 in deposits.Its reserves amount to

Accepted Answer

A)   $20.
B)   $200.
C)   $400.
D)   $1,800.E) All of the above
F) B) and C)

Question 14

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) All of the above
F) A) and D)

Question 15

The discount rate is

Accepted Answer

A)   the interest rate the Fed charges banks.
B)   one divided by the difference between one and the reserve ratio.
C)   the interest rate banks receive on reserve deposits with the Fed.
D)   the interest rate that banks charge on overnight loans to other banks.E) All of the above
F) C) and D)

Question 16

If the Fed decreases reserve requirements,the money supply will increase.

Accepted Answer

A) True 
 B)False

Question 17

When the Fed conducts open-market purchases,

Accepted Answer

A)   banks buy Treasury securities from Fed,which increases the money supply.
B)   banks buy Treasury securities from the Fed,which decreases the money supply.
C)   it buys Treasury securities,which increases the money supply.
D)   it buys Treasury securities,which decreases the money supply.E) A) and B)
F) A) and C)

Question 18

Which list ranks assets from most to least liquid?

Accepted Answer

A)   money,bonds,cars,houses
B)   money,cars,houses,bonds
C)   bonds,money,cars,houses
D)   bonds,cars,money,housesE) B) and D)
F) A) and B)

Question 19

When we measure and record economic value,we use money as the

Accepted Answer

A)   liquid asset.
B)   medium of exchange.
C)   unit of account.
D)   store of value.E) C) and D)
F) B) and D)

Question 20

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

Exam 29: The Monetary System

The discount rate is

Correct AnswerverifiedShow Answer

Currently,bank runs are a major problem for the U.S.banking system and the Fed.

Correct AnswerverifiedShow Answer

List two examples of commodity money.

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

The Fed can reduce the federal funds rate by

Correct AnswerverifiedShow Answer

When the Fed conducts open-market purchases,

Correct AnswerverifiedShow Answer

A bank's reserve ratio is 10 percent and the bank has $2,000 in deposits.Its reserves amount to

Correct AnswerverifiedShow Answer

For purposes of analyzing the money stock and its relationship to relevant economic variables,money is best thought of as

Correct AnswerverifiedShow Answer

Which list ranks assets from most to least liquid?

Correct AnswerverifiedShow Answer

Table 16-6. -Refer to Table 16-6.Assuming the Bank of Springfield and all other banks have the same reserve ratio,then what is the value of the money multiplier?

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Money market mutual funds are included in

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

If the Fed decreases reserve requirements,the money supply will increase.

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

List the two main functions performed by the Fed?

Correct AnswerverifiedThe Fed performs two main func...View AnswerShow Answer

If a bank desires to hold no excess reserves,the reserve requirement is 5 percent,and it receives a new deposit of $1,000

Correct AnswerverifiedShow Answer

If banks hold any amount of their deposits in reserve,then they do not have the ability to influence the money supply.

Correct AnswerverifiedShow Answer

When we measure and record economic value,we use money as the

Correct AnswerverifiedShow Answer

Table 16-7 Metropolis National Bank is currently holding 2% of its deposits as excess reserves. -Refer to Scenario 16-2.Assuming the only other thing Tazian banks have on their balance sheets is loans,what is the value of existing loans made by Tazian banks?

Correct AnswerverifiedShow Answer

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Commodity money refers to mone...
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The Fed performs two main func...
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Correct Answer
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