Question 1

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

Question 2

The Federal Deposit Insurance Corporation

Accepted Answer

A)   protects depositors in the event of bank failures.
B)   has become insolvent in recent years due to a large number of bank failures.
C)   is part of the Federal Reserve System.
D)   in practice has seldom been of much use.E) A) and B)
F) All of the above

Question 3

In a 100-percent-reserve banking system,if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits,then

Accepted Answer

A)   M1 would increase.
B)   M1 would decrease.
C)   M1 would not change.
D)   M1 might rise or fall.E) A) and B)
F) None of the above

Question 4

Why do Federal Reserve Bard of Governors have long (14 year)terms?

Accepted Answer

Long terms allow Fed Board of ...

Question 5

What is bank insolvancy?

Accepted Answer

Bank insolvancy is when bank c...

Question 6

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

Question 7

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

Accepted Answer

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

Question 8

Table 16-7
Metropolis National Bank is currently holding 2% of its deposits as excess reserves.
 
-Refer to Scenario 16-2.Suppose the Bank of Tazi loaned the banks of Tazi 10 million tazes.Suppose also that both the reserve requirement and the percentage of deposits held as excess reserves stay the same.By how much would the money supply change?

Accepted Answer

A)   250 million tazes
B)   200 million tazes
C)   125 million tazes
D)   None of the above is correct.E) A) and C)
F) B) and C)

Question 9

If people decide to hold less currency relative to deposits,the money supply

Accepted Answer

A)   falls.The Fed could lessen the impact of this by buying Treasury bonds.
B)   falls.The Fed could lessen the impact of this by selling Treasury bonds.
C)   rises.The Fed could lessen the impact of this by buying Treasury bonds.
D)   rises.The Fed could lessen the impact of this by selling Treasury bonds.E) B) and C)
F) A) and B)

Question 10

Sam wants to trade eggs for sausage.Sally wants to trade sausage for eggs.Sam and Sally have a double-coincidence of wants.

Accepted Answer

A) True 
 B)False

Question 11

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

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

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Savings deposits are included in

Accepted Answer

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

Question 14

The money supply increases when the Fed

Accepted Answer

A)   buys bonds.The increase will be larger,the smaller is the reserve ratio.
B)   buys bonds.The increase will be larger,the larger is the reserve ratio.
C)   sells bonds.The increase will be larger,the smaller is the reserve ratio.
D)   sells bonds.The increase will be larger,the larger is the reserve ratio.E) B) and C)
F) A) and C)

Question 15

Bank runs and the accompanying increase in the money multiplier caused the U.S.money supply to rise by 28 percent from 1929 to 1933.

Accepted Answer

A) True 
 B)False

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 B)
F) A) and C)

Question 17

Because of the multiple tools at its disposal,the Fed can control the money supply very precisely.

Accepted Answer

A) True 
 B)False

Question 18

Table 16-5.
 
-Refer to Table 16-5.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)   5
B)   10
C)   15
D)   20E) A) and D)
F) B) and C)

Question 19

Table 16-2.An economy starts with $10,000 in currency.All of this currency is deposited into a single bank,and the bank then makes loans totaling $9,250.The T-account of the bank is shown below.
 
-Refer to Table 16-2.If all banks in the economy have the same reserve ratio as this bank,then an increase in reserves of $150 for this bank has the potential to increase deposits for all banks by

Accepted Answer

A)   $866.67.
B)   $1,666.67.
C)   $2,000.00.
D)   an infinite amount.E) B) and C)
F) A) and C)

Question 20

If the Federal Open Market Committee decides to increase the money supply,then the Federal Reserve

Accepted Answer

A)   creates dollars and uses them to purchase government bonds from the public.
B)   sells government bonds from its portfolio to the public.
C)   creates dollars and uses them to purchase various types of stocks and bonds from the public.
D)   sells various types of stocks and bonds from its portfolio to the public.E) A) and B)
F) None of the above

Exam 29: The Monetary System

Why do Federal Reserve Bard of Governors have long (14 year)terms?

Correct Answer
verified
Long terms allow Fed Board of ...
View Answer

Because of the multiple tools at its disposal,the Fed can control the money supply very precisely.

Correct Answer
verified

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

Correct Answer
verified

The New York Federal Reserve Bank

Correct Answer
verified

Correct Answer
verified

When the Fed makes open-market purchases bank

Correct Answer
verified

The Federal Deposit Insurance Corporation

Correct Answer
verified

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

Correct Answer
verified

Bank runs and the accompanying increase in the money multiplier caused the U.S.money supply to rise by 28 percent from 1929 to 1933.

Correct Answer
verified

Sam wants to trade eggs for sausage.Sally wants to trade sausage for eggs.Sam and Sally have a double-coincidence of wants.

Correct Answer
verified

What is bank insolvancy?

Correct Answer
verified
Bank insolvancy is when bank c...
View Answer

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

Correct Answer
verified

If people decide to hold less currency relative to deposits,the money supply

Correct Answer
verified

The money supply increases when the Fed

Correct Answer
verified

Table 16-5. -Refer to Table 16-5.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?

Correct Answer
verified

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

Correct Answer
verified

In a 100-percent-reserve banking system,if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits,then

Correct Answer
verified

If the Federal Open Market Committee decides to increase the money supply,then the Federal Reserve

Correct Answer
verified

Savings deposits are included in

Correct Answer
verified

Correct Answer
verified

Exam 29: The Monetary System

Why do Federal Reserve Bard of Governors have long (14 year)terms?

Correct AnswerverifiedLong terms allow Fed Board of ...View AnswerShow Answer

Because of the multiple tools at its disposal,the Fed can control the money supply very precisely.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The New York Federal Reserve Bank

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When the Fed makes open-market purchases bank

Correct AnswerverifiedShow Answer

The Federal Deposit Insurance Corporation

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Bank runs and the accompanying increase in the money multiplier caused the U.S.money supply to rise by 28 percent from 1929 to 1933.

Correct AnswerverifiedShow Answer

Sam wants to trade eggs for sausage.Sally wants to trade sausage for eggs.Sam and Sally have a double-coincidence of wants.

Correct AnswerverifiedShow Answer

What is bank insolvancy?

Correct AnswerverifiedBank insolvancy is when bank c...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

If people decide to hold less currency relative to deposits,the money supply

Correct AnswerverifiedShow Answer

The money supply increases when the Fed

Correct AnswerverifiedShow Answer

Table 16-5. -Refer to Table 16-5.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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In a 100-percent-reserve banking system,if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits,then

Correct AnswerverifiedShow Answer

If the Federal Open Market Committee decides to increase the money supply,then the Federal Reserve

Correct AnswerverifiedShow Answer

Savings deposits are included in

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified
Long terms allow Fed Board of ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Bank insolvancy is when bank c...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified