FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 21: The Monetary System

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 181

Multiple Choice

Review LaterAdd Note

Review Later

When prisoners use cigarettes or some other good as money,cigarettes become

A) commodity money,but do not function as a unit of account.
B) commodity money and function as a unit of account.
C) fiat money,but do not function as a unit of account.
D) fiat money and function as a unit of account.

E) All of the above
F) A) and C)

Correct Answer

verified

Show Answer

Question 182

Multiple Choice

Review LaterAdd Note

Review Later

If the federal funds rate were above the level the Federal Reserve had targeted,the Fed could move the rate back towards its target by

A) buying bonds.This buying would reduce reserves.
B) buying bonds.This buying would increase reserves.
C) selling bonds.This selling would reduce reserves.
D) selling bonds.This selling would increase reserves.

E) A) and C)
F) None of the above

Correct Answer

verified

Show Answer

Question 183

True/False

Review LaterAdd Note

Assume that when $100 of new reserves enter the banking system,the money supply ultimately increases by $625.Assume also that no banks hold excess reserves and that the entire money supply consists of bank deposits.If,at a point in time,reserves for all banks amount to $500,then at that same point in time,loans for all banks amount to $2,625.

A debit card is more similar to a credit card than to a check.

The interest rate that the Fed charges banks that borrow reserves from it is the

Which of the following items is included in M2?

Members of the Board of Governors are appointed by the president of the U.S.and confirmed by the U.S.Senate.

The amount of currency per person in the United States is about

Treasury Bonds are

The manager of the bank where you work tells you that your bank has $5 million in excess reserves.She also tells you that the bank has $300 million in deposits and $255 million dollars in loans.Given this information you find that the reserve requirement must be

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

Which of the following is not included in M1?

When the Fed conducts open-market sales,

Scenario 21-1. The monetary policy of Namdian is determined by the Namdian Central Bank.The local currency is the dia.Namdian banks collectively hold 100 million dias of required reserves,25 million dias of excess reserves,250 million dias of Namdian Treasury Bonds,and their customers hold 1,000 million dias of deposits.Namdians prefer to use only demand deposits and so the money supply consists of demand deposits. -Refer to Scenario 21-1.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?

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

The manager of the bank where you work tells you that your bank has $10 million in excess reserves.She also tells you that the bank has $400 million in deposits and $355 million dollars in loans.Given this information you find that the reserve requirement must be

Describe the two things that limit the precision of the Fed's control of the money supply and explain how each limits that control.

Table 21-5. -Refer to Table 21-5.From the table it follows that the Bank of Pleasantville operates in a

The manager of the bank where you work tells you that the bank has $400 million in deposits and $340 million dollars in loans.The Fed then raises the reserve requirement from 10 percent to 15 percent.Assuming everything else stays the same,how much is the bank holding in excess reserves after the increase in the reserve requirement?

Suppose the Fed requires banks to hold 10 percent of their deposits as reserves.A bank has $20,000 of excess reserves and then sells the Fed a Treasury bill for $9,000.How much does this bank now have to lend out if it decides to hold only required reserves?