Question 1

Money allows people to specialize in what they do best,thereby raising everyone's standard of living.

Accepted Answer

A) True 
 B)False

Question 2

If the money multiplier decreased from 20 to 12.5,then

Accepted Answer

A)   the Fed increased the reserve ratio from 5 percent to 8 percent.
B)   the Fed increased the fed funds rate from 5 percent to 8 percent..
C)   the Fed decreased the reserve ratio from 8 percent to 5 percent.
D)   the Fed decreased the fed funds rate from 8 percent to 5 percent.E) A) and C)
F) A) and D)

Question 3

Given the following information,what are the values of M1 and M2?

Accepted Answer

A)   M1 = $800 billion,M2 = $4,950 billion.
B)   M1 = $250 billion,M2 = $6,050 billion.
C)   M1 = $850 billion,M2 = $4,900 billion.
D)   M1 = $850 billion,M2 = $6,100 billion.E) A) and B)
F) A) and C)

Question 4

Which of the following can the Fed do to change the money supply?

Accepted Answer

A)   change reserves or change the reserve ratio
B)   change reserves but not change the reserve ratio
C)   change the reserve ratio but not change the reserve ratio
D)   neither change reserves nor change the reserve ratioE) C) and D)
F) B) and D)

Question 5

When in France you notice that prices are posted in euros,this best illustrates money's function as

Accepted Answer

A)   a store of value.
B)   a medium of exchange.
C)   a unit of account.
D)   a method of barter.E) C) and D)
F) None of the above

Question 6

Which of the following individuals serve a four-year term?

Accepted Answer

A)   the members of the Board of Governors
B)   the Chair of the Board of Governors
C)   the members of the FOMC
D)   All of the above are correct.E) C) and D)
F) None of the above

Question 7

The chair of the Board of Governors regularly testifies to Congress about Fed policy.

Accepted Answer

A) True 
 B)False

Question 8

Why is the president of the New York Fed always a voting member of the FOMC?

Accepted Answer

New York is the financial capitol of the...

Question 9

When the Soviet Union began breaking up in the late 1980s,cigarettes began replacing the ruble as the medium of exchange even though the ruble was legal tender.The cigarettes provide an example of commodity money.

Accepted Answer

A) True 
 B)False

Question 10

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) A) and B)
F) A) and C)

Question 11

Table 16-7
Metropolis National Bank is currently holding 2% of its deposits as excess reserves.
 
-Refer to Scenario 16-1.Suppose the Central Bank of Namdia loaned the banks of Namdia 5 million dias.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 of Namdia change?

Accepted Answer

A)   60 million dias
B)   50 million dias
C)   40 million dias
D)   None of the above is correct.E) B) and C)
F) A) and D)

Question 12

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 purchased 50 million tazes of Tazian Treasury Bonds from the banks.Suppose also that both the reserve requirement and the percentage of deposits held as excess reserves stay the same.By how much does the money supply change?

Accepted Answer

A)   625 million tazes
B)   1,000 million tazes
C)   1,250 million tazes
D)   None of the above is correct.E) B) and D)
F) B) and C)

Question 13

If the Fed raised the reserve requirement,the demand for reserves would

Accepted Answer

A)   increase,so the federal funds rate would fall.
B)   increase,so the federal funds rate would rise.
C)   decrease,so the federal funds rate would fall.
D)   decrease,so the federal funds rate would rise.E) B) and D)
F) A) and B)

Question 14

During a bank run,depositors decide to hold more currency relative to deposits and banks decide to hold more excess reserves relative to deposits.

Accepted Answer

A)   Both the decision to hold relatively more currency and the decision to hold relatively more excess reserves would make the money supply increase
B)   Both the decision to hold relatively more currency and the decision to hold relatively more excess reserves would make the money supply decrease.
C)   The decision to hold relatively more currency would make the money supply increase.The decision to hold relatively more excess reserves would make the money supply decrease.
D)   the decision to hold relatively more currency would make the money supply increase.The decision to hold relatively more excess reserves would make the money supply decrease.E) C) and D)
F) None of the above

Question 15

Commodity money is

Accepted Answer

A)   backed by gold.
B)   the principal type of money in use today.
C)   money with intrinsic value.
D)   receipts created in international trade that are used as a medium of exchange.E) A) and B)
F) A) and C)

Question 16

In the 19th century,when crop failures often led to bank runs,banks would make relatively fewer loans and hold relatively more excess reserves.By itself,these actions by the banks should have

Accepted Answer

A)   increased the money multiplier and the money supply.
B)   decreased the money multiplier and increased the money supply.
C)   increased the money multiplier and decreased the money supply.
D)   decreased both the money multiplier and the money supply.E) A) and D)
F) B) and C)

Question 17

Table 16-5.
 
-Refer to Table 16-5.The Bank of Pleasantville's reserve ratio is

Accepted Answer

A)   1 percent.
B)   5 percent.
C)   10 percent.
D)   20 percent.E) B) and D)
F) B) and C)

Question 18

Which of the following increase when the Fed makes open market purchases?

Accepted Answer

A)   currency and reserves
B)   currency but not reserves
C)   reserves but not currency
D)   neither currency nor reservesE) A) and B)
F) B) and D)

Question 19

Today,bank runs are not a major problem for the U.S.banking system because

Accepted Answer

A)   bank runs are now illegal.
B)   banks now hold 100 percent of their deposits in reserve.
C)   banks are now all government-operated.
D)   the federal government now guarantees the safety of deposits at most banks.E) All of the above
F) None of the above

Question 20

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) B) and C)

Exam 29: The Monetary System

Commodity money is

Correct Answer
verified

Given the following information,what are the values of M1 and M2?

Correct Answer
verified

Today,bank runs are not a major problem for the U.S.banking system because

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

When the Soviet Union began breaking up in the late 1980s,cigarettes began replacing the ruble as the medium of exchange even though the ruble was legal tender.The cigarettes provide an example of commodity money.

Correct Answer
verified

Which of the following individuals serve a four-year term?

Correct Answer
verified

The chair of the Board of Governors regularly testifies to Congress about Fed policy.

Correct Answer
verified

If the money multiplier decreased from 20 to 12.5,then

Correct Answer
verified

Money allows people to specialize in what they do best,thereby raising everyone's standard of living.

Correct Answer
verified

In the 19th century,when crop failures often led to bank runs,banks would make relatively fewer loans and hold relatively more excess reserves.By itself,these actions by the banks should have

Correct Answer
verified

Why is the president of the New York Fed always a voting member of the FOMC?

Correct Answer
verified
New York is the financial capitol of the...
View Answer

Which of the following can the Fed do to change the money supply?

Correct Answer
verified

Treasury Bonds are

Correct Answer
verified

During a bank run,depositors decide to hold more currency relative to deposits and banks decide to hold more excess reserves relative to deposits.

Correct Answer
verified

Correct Answer
verified

Which of the following increase when the Fed makes open market purchases?

Correct Answer
verified

Table 16-5. -Refer to Table 16-5.The Bank of Pleasantville's reserve ratio is

Correct Answer
verified

When in France you notice that prices are posted in euros,this best illustrates money's function as

Correct Answer
verified

If the Fed raised the reserve requirement,the demand for reserves would

Correct Answer
verified

Exam 29: The Monetary System

Commodity money is

Correct AnswerverifiedShow Answer

Given the following information,what are the values of M1 and M2?

Correct AnswerverifiedShow Answer

Today,bank runs are not a major problem for the U.S.banking system because

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When the Soviet Union began breaking up in the late 1980s,cigarettes began replacing the ruble as the medium of exchange even though the ruble was legal tender.The cigarettes provide an example of commodity money.

Correct AnswerverifiedShow Answer

Which of the following individuals serve a four-year term?

Correct AnswerverifiedShow Answer

The chair of the Board of Governors regularly testifies to Congress about Fed policy.

Correct AnswerverifiedShow Answer

If the money multiplier decreased from 20 to 12.5,then

Correct AnswerverifiedShow Answer

Money allows people to specialize in what they do best,thereby raising everyone's standard of living.

Correct AnswerverifiedShow Answer

In the 19th century,when crop failures often led to bank runs,banks would make relatively fewer loans and hold relatively more excess reserves.By itself,these actions by the banks should have

Correct AnswerverifiedShow Answer

Why is the president of the New York Fed always a voting member of the FOMC?

Correct AnswerverifiedNew York is the financial capitol of the...View AnswerShow Answer

Which of the following can the Fed do to change the money supply?

Correct AnswerverifiedShow Answer

Treasury Bonds are

Correct AnswerverifiedShow Answer

During a bank run,depositors decide to hold more currency relative to deposits and banks decide to hold more excess reserves relative to deposits.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following increase when the Fed makes open market purchases?

Correct AnswerverifiedShow Answer

Table 16-5. -Refer to Table 16-5.The Bank of Pleasantville's reserve ratio is

Correct AnswerverifiedShow Answer

When in France you notice that prices are posted in euros,this best illustrates money's function as

Correct AnswerverifiedShow Answer

If the Fed raised the reserve requirement,the demand for reserves would

Correct AnswerverifiedShow 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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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
New York is the financial capitol of the...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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