Question 1

Traveler's checks 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) C) and D)

Question 2

Mia puts money into a piggy bank so she can spend it later.What function of money does this illustrate?

Accepted Answer

A)   store of value
B)   medium of exchange
C)   unit of account
D)   None of the above is correct.E) B) and C)
F) A) and D)

Question 3

Given the following information,what are the values of M1 and M2? Small time deposits
$1,100 billion
Demand deposits and other checkable deposits
$800 billion
Savings deposits
$1,350 billion
Money market mutual funds
$900 billion
Traveler's checks
$30 billion
Large time deposits
$750 billion
Currency
$150 billion
Miscellaneous categories in M2
$40 billion

Accepted Answer

A)   M1 = $830 billion,M2 = $4,370 billion.
B)   M1 = $980 billion,M2 = $4,370 billion.
C)   M1 = $980 billion,M2 = $3,390 billion.
D)   M1 = $1,020 billion,M2 = $3,390 billion.E) B) and C)
F) B) and D)

Question 4

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) A) and B)
F) A) and D)

Question 5

Suppose banks desire to hold no excess reserves and that the Fed has set a reserve requirement of 10 percent.If you deposit $9,000 into First Jayhawk Bank,

Accepted Answer

A)   First Jayhawk's required reserves increase by $900.
B)   First Jayhawk will be able to lend out $8,100.
C)   First Jayhawk's assets and liabilities both will increase by $9,000.
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 6

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 C)
F) B) and D)

Question 7

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) All of the above

Question 8

The Federal Reserve

Accepted Answer

A)   was created in 1913.
B)   is the U.S.'s central bank.
C)   has other duties in addition to controlling the money supply.
D)   All of the above are correct.E) C) and D)
F) B) and C)

Question 9

The Fed can directly protect a bank during a bank run by

Accepted Answer

A)   increasing reserve requirements.
B)   selling government bonds to the bank.
C)   lending reserves to the bank.
D)   doing any of the above.E) None of the above
F) A) and B)

Question 10

M1 equals currency plus demand deposits plus

Accepted Answer

A)   nothing else.
B)   other checkable deposits.
C)   traveler's checks plus other checkable deposits.
D)   traveler's checks plus other checkable deposits plus savings deposits.E) All of the above
F) B) and D)

Question 11

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

Question 12

Table 21-6.
 
-Refer to Table 21-6.If the Fed requires a reserve ratio of 6 percent,then what quantity of excess reserves does the Bank of Springfield now hold?

Accepted Answer

A)   $1,200
B)   $2,400
C)   $2,880
D)   $4,800E) A) and B)
F) A) and C)

Question 13

If the reserve ratio is 12.5 percent,then $5,600 of money can be generated by

Accepted Answer

A)   $64 of new reserves.
B)   $448 of new reserves.
C)   $700 of new reserves.
D)   $800 of new reserves.E) A) and C)
F) B) and C)

Question 14

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 15

If the discount rate is raised then banks borrow

Accepted Answer

A)   more from the Fed so reserves increase.
B)   more from the Fed so reserves decrease.
C)   less from the Fed so reserves increase.
D)   less from the Fed so reserves decrease.E) B) and C)
F) A) and B)

Question 16

Which of the following is correct concerning the FOMC?

Accepted Answer

A)   the members of the Board of Governors have the majority of the votes
B)   the New York Federal Reserve Bank District President is always a voting member
C)   all Federal Reserve Bank presidents attend the meetings
D)   All of the above are correct.E) A) and B)
F) C) and D)

Question 17

Bank runs

Accepted Answer

A)   will affect neither the money supply nor the money multiplier.
B)   are only a problem for insolvent banks.
C)   can be neither prevented nor mitigated by the Federal Reserve.
D)   are a problem because banks only hold a fraction of deposits as reserves.E) A) and B)
F) A) and C)

Question 18

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

Question 19

When you purchase school supplies at the book store using cash,you are using money as a medium of exchange.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 21: The Monetary System

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

Correct Answer
verified

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

Correct Answer
verified

The Federal Reserve

Correct Answer
verified

If the reserve ratio is 12.5 percent,then $5,600 of money can be generated by

Correct Answer
verified

Money market mutual funds are included in

Correct Answer
verified

The Fed can directly protect a bank during a bank run by

Correct Answer
verified

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

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

When you purchase school supplies at the book store using cash,you are using money as a medium of exchange.

Correct Answer
verified

Which of the following is correct concerning the FOMC?

Correct Answer
verified

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

Correct Answer
verified

Suppose banks desire to hold no excess reserves and that the Fed has set a reserve requirement of 10 percent.If you deposit $9,000 into First Jayhawk Bank,

Correct Answer
verified

Correct Answer
verified

Bank runs

Correct Answer
verified

Mia puts money into a piggy bank so she can spend it later.What function of money does this illustrate?

Correct Answer
verified

Table 21-6. -Refer to Table 21-6.If the Fed requires a reserve ratio of 6 percent,then what quantity of excess reserves does the Bank of Springfield now hold?

Correct Answer
verified

Traveler's checks are included in

Correct Answer
verified

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

Correct Answer
verified
Neither credit cards nor debit cards are...
View Answer

If the discount rate is raised then banks borrow

Correct Answer
verified

M1 equals currency plus demand deposits plus

Correct Answer
verified

Exam 21: The Monetary System

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Federal Reserve

Correct AnswerverifiedShow Answer

If the reserve ratio is 12.5 percent,then $5,600 of money can be generated by

Correct AnswerverifiedShow Answer

Money market mutual funds are included in

Correct AnswerverifiedShow Answer

The Fed can directly protect a bank during a bank run by

Correct AnswerverifiedShow Answer

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

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

When you purchase school supplies at the book store using cash,you are using money as a medium of exchange.

Correct AnswerverifiedShow Answer

Which of the following is correct concerning the FOMC?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose banks desire to hold no excess reserves and that the Fed has set a reserve requirement of 10 percent.If you deposit $9,000 into First Jayhawk Bank,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Bank runs

Correct AnswerverifiedShow Answer

Mia puts money into a piggy bank so she can spend it later.What function of money does this illustrate?

Correct AnswerverifiedShow Answer

Table 21-6. -Refer to Table 21-6.If the Fed requires a reserve ratio of 6 percent,then what quantity of excess reserves does the Bank of Springfield now hold?

Correct AnswerverifiedShow Answer

Traveler's checks are included in

Correct AnswerverifiedShow Answer

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

If the discount rate is raised then banks borrow

Correct AnswerverifiedShow Answer

M1 equals currency plus demand deposits plus

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Correct Answer
verified
Neither credit cards nor debit cards are...
View Answer

Correct Answer
verified

Correct Answer
verified