Question 1

Over one time horizon or another, Fed policy decisions influence

Accepted Answer

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

Question 2

Demand deposits are a type of

Accepted Answer

A)   checking account.
B)   time deposit.
C)   money market mutual fund.
D)   savings deposit.E) A) and B)
F) B) and D)

Question 3

The Federal Reserve

Accepted Answer

A)   is responsible for conducting the nation's monetary policy, and it plays a role in regulating banks.
B)   is responsible for conducing the nation's monetary policy, but it plays no role in regulating banks.
C)   is not responsible for conducting the nation's monetary policy, and it plays a role in regulating banks.
D)   is not responsible for conducing the nation's monetary policy, and it plays no role in regulating banks.E) B) and D)
F) A) and B)

Question 4

During the Great Depression in the early 1930s,

Accepted Answer

A)   bank runs closed many banks.
B)   the money supply rose sharply.
C)   the Fed decreased reserve requirements.
D)   both a and b are correct.E) C) and D)
F) B) and D)

Question 5

The Fed's policy decisions have an important influence on

Accepted Answer

A)   inflation in the long run and employment and production in the short run.
B)   inflation in the long run and employment and production in the long run.
C)   inflation in the short run and employment and production in the short run.
D)   inflation in the short run and employment and production in the long run.E) B) and D)
F) A) and D)

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Scenario 29-2.
The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi. The local unit of currency is the taz. Aggregate banking statistics show that collectively the banks of Tazi hold 300 million tazes of required reserves, 75 million tazes of excess reserves, have issued 7,500 million tazes of deposits, and hold 225 million tazes of Tazian Treasury bonds. Tazians prefer to use only demand deposits and so all money is on deposit at the bank.
-Refer to Scenario 29-2. 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 D)
F) None of the above

Question 8

Table 29-7.
 
-Refer to Table 29-7. If the Bank of Springfield has lent out all the money it can given its level of deposits, then what is the reserve requirement?

Accepted Answer

A)   8.1 percent
B)   11.0 percent
C)   12.4 percent
D)   89.0 percentE) A) and B)
F) A) and C)

Question 9

The members of the Federal Reserve's Board of Governors

Accepted Answer

A)   are elected to office by the public every fourteen years.
B)   are nominated by the U.S. Senate banking committee and confirmed by the U.S. house of representatives.
C)   are elected by bankers in each Federal Reserve Region.
D)   are appointed by the president of the U.S. and confirmed by the U.S. Senate.E) A) and C)
F) A) and B)

Question 10

A bank has a 5 percent reserve requirement, $5,000 in deposits, and has loaned out all it can given the reserve requirement.

Accepted Answer

A)   It has $25 in reserves and $4,975 in loans.
B)   It has $250 in reserves and $4,750 in loans.
C)   It has $1,000 in reserves and $4,000 in loans.
D)   None of the above is correct.E) A) and D)
F) B) and D)

Question 11

Table 29-8
 
-Refer to Table 29-8. The required reserve ratio is 12 percent. Which of the following is true?

Accepted Answer

A)   This banks reserve ratio is 12 percent. Its excess reserves are $0.
B)   This banks reserve ratio is 13.3 percent. Its excess reserves are $120.
C)   This banks reserve ratio is 15 percent. Its excess reserves are $240.
D)   This banks reserve ratio is 10 percent. Its excess reserves are $300.E) A) and B)
F) All of the above

Question 12

The confidence you have that a retailer will accept dollars in exchange for goods is based primarily on money

Accepted Answer

A)   being a unit of account.
B)   being a medium of exchange.
C)   serving as a store of value.
D)   having intrinsic value.E) C) and D)
F) B) and D)

Question 13

Bank runs

Accepted Answer

A)   will affect neither the money supply nor the money multiplier.
B)   increase the money supply.
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) B) and C)

Question 14

List two examples of commodity money.

Accepted Answer

Commodity money refers to mone...

Question 15

Which two of the Ten Principles of Economics imply that the Fed can profoundly affect the economy?

Accepted Answer

1. Prices rise when the govern...

Question 16

You saved $500 in currency in your piggy bank to purchase a new laptop. The $500 you kept in your piggy bank illustrates money's function as a . The laptop's price is posted as $500. The $500 price illustrates money's function as a . You use the $500 to purchase the laptop. This transaction illustrates money's function as a ______.

Accepted Answer

A)   store of value, medium of exchange, unit of account
B)   store of value, unit of account, medium of exchange
C)   medium of exchange, unit of account, store of value
D)   medium of exchange, store of value, unit of accountE) B) and D)
F) B) and C)

Question 17

If you withdraw $500 from your savings account and deposit it in your checking account, then M1 will change by and M2 will change by .

Accepted Answer

The answer of If you withdraw $500 from your savings...

Question 18

Demand deposits are balances in bank accounts that depositors can access by writing a check or using a debit card.

Accepted Answer

A) True 
 B)False

Question 19

Suppose the required reserve ratio is 20%. What is the maximum amount of total money supply that can be created from an initial deposit of $200? In general, why might the actual amount of total money creation be less than the maximum?

Accepted Answer

The money multiplier is the reciprocal o...

Question 20

Small time 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) None of the above
F) B) and C)

Exam 16: The Monetary System

List two examples of commodity money.

Correct Answer
verified
Commodity money refers to mone...
View Answer

Bank runs

Correct Answer
verified

Correct Answer
verified

During the Great Depression in the early 1930s,

Correct Answer
verified

Demand deposits are a type of

Correct Answer
verified

Which two of the Ten Principles of Economics imply that the Fed can profoundly affect the economy?

Correct Answer
verified
1. Prices rise when the govern...
View Answer

The Fed's policy decisions have an important influence on

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

The confidence you have that a retailer will accept dollars in exchange for goods is based primarily on money

Correct Answer
verified

The members of the Federal Reserve's Board of Governors

Correct Answer
verified

Small time deposits are included in

Correct Answer
verified

The Federal Reserve

Correct Answer
verified

Table 29-7. -Refer to Table 29-7. If the Bank of Springfield has lent out all the money it can given its level of deposits, then what is the reserve requirement?

Correct Answer
verified

Demand deposits are balances in bank accounts that depositors can access by writing a check or using a debit card.

Correct Answer
verified

Table 29-8 -Refer to Table 29-8. The required reserve ratio is 12 percent. Which of the following is true?

Correct Answer
verified

Suppose the required reserve ratio is 20%. What is the maximum amount of total money supply that can be created from an initial deposit of $200? In general, why might the actual amount of total money creation be less than the maximum?

Correct Answer
verified
The money multiplier is the reciprocal o...
View Answer

Over one time horizon or another, Fed policy decisions influence

Correct Answer
verified

A bank has a 5 percent reserve requirement, $5,000 in deposits, and has loaned out all it can given the reserve requirement.

Correct Answer
verified

If you withdraw $500 from your savings account and deposit it in your checking account, then M1 will change by and M2 will change by .

Correct Answer
verified

Exam 16: The Monetary System

List two examples of commodity money.

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

Bank runs

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

During the Great Depression in the early 1930s,

Correct AnswerverifiedShow Answer

Demand deposits are a type of

Correct AnswerverifiedShow Answer

Which two of the Ten Principles of Economics imply that the Fed can profoundly affect the economy?

Correct Answerverified1. Prices rise when the govern...View AnswerShow Answer

The Fed's policy decisions have an important influence on

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The confidence you have that a retailer will accept dollars in exchange for goods is based primarily on money

Correct AnswerverifiedShow Answer

The members of the Federal Reserve's Board of Governors

Correct AnswerverifiedShow Answer

Small time deposits are included in

Correct AnswerverifiedShow Answer

The Federal Reserve

Correct AnswerverifiedShow Answer

Table 29-7. -Refer to Table 29-7. If the Bank of Springfield has lent out all the money it can given its level of deposits, then what is the reserve requirement?

Correct AnswerverifiedShow Answer

Demand deposits are balances in bank accounts that depositors can access by writing a check or using a debit card.

Correct AnswerverifiedShow Answer

Table 29-8 -Refer to Table 29-8. The required reserve ratio is 12 percent. Which of the following is true?

Correct AnswerverifiedShow Answer

Suppose the required reserve ratio is 20%. What is the maximum amount of total money supply that can be created from an initial deposit of $200? In general, why might the actual amount of total money creation be less than the maximum?

Correct AnswerverifiedThe money multiplier is the reciprocal o...View AnswerShow Answer

Over one time horizon or another, Fed policy decisions influence

Correct AnswerverifiedShow Answer

A bank has a 5 percent reserve requirement, $5,000 in deposits, and has loaned out all it can given the reserve requirement.

Correct AnswerverifiedShow Answer

If you withdraw $500 from your savings account and deposit it in your checking account, then M1 will change by and M2 will change by .

Correct AnswerverifiedShow Answer

Correct Answer
verified
Commodity money refers to mone...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
1. Prices rise when the govern...
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

Correct Answer
verified
The money multiplier is the reciprocal o...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified