Question 1

M1 includes

Accepted Answer

A)   small time deposits.
B)   savings deposits.
C)   other checkable deposits.
D)   money market mutual funds.E) B) and D)
F) B) and C)

Question 2

Given the following information, what are the values of M1 and M2? Small time deposits $600 billion
Demand deposits and other checkable deposits $400 billion
Savings deposits $800 billion
Money market mutual funds $700 billion
Traveler's checks $30 billion
Large time deposits $400 billion
Currency $250 billion
Miscellaneous categories in M2 $20 billion

Accepted Answer

A)   M1 = $650 billion, M2 = $2,830 billion.
B)   M1 = $400 billion, M2 = $3,080 billion.
C)   M1 = $680 billion, M2 = $2,800 billion.
D)   M1 = $680 billion, M2 = $3,200 billion.E) A) and B)
F) All of the above

Question 3

Which of the following is not included in M1?

Accepted Answer

A)   currency
B)   demand deposits
C)   savings deposits
D)   traveler's checksE) All of the above
F) C) and D)

Question 4

The Fed purchases $200 worth of government bonds from the public. The reserve requirement is 12.5 percent, people hold no currency, and the banking system keeps no excess reserves. The U.S. money supply eventually increases by

Accepted Answer

A)   $25.
B)   between $200 and $300.
C)   $1,600.
D)   $2,500.E) All of the above
F) B) and C)

Question 5

To increase the money supply, the Fed could

Accepted Answer

A)   sell government bonds.
B)   increase the discount rate.
C)   decrease the reserve requirement.
D)   None of the above is correct.E) C) and D)
F) None of the above

Question 6

The banking system currently has $100 billion of reserves, none of which are excess. People hold only deposits and no currency, and the reserve requirement is 10 percent. If the Fed lowers the reserve requirement to 5 percent and at the same time buys $10 billion worth of bonds, then by how much does the money supply change?

Accepted Answer

A)   It rises by $200 billion.
B)   It rises by $800 billion.
C)   It rises by $1,200 billion.
D)   None of the above is correct.E) None of the above
F) A) and B)

Question 7

Consider five high school students working on homework in study hall.  Which of the following pairs of students has a double coincidence of wants?

Accepted Answer

A)   Rosie and Piper
B)   Piper and Molly
C)   Dewey and Molly
D)   Bob and DeweyE) A) and D)
F) B) and C)

Question 8

The Federal Reserve was created in 1913 after a series of bank failures in 1907.

Accepted Answer

A) True 
 B)False

Question 9

Economists argue that the move from barter to money increased trade and production. How is this possible?

Accepted Answer

The use of money allows people...

Question 10

Given the following information, what are the values of M1 and M2? Small time deposits $2,200 billion
Demand deposits and other checkable deposits $1,700 billion
Savings deposits $2,600 billion
Money market mutual funds $1,500 billion
Traveler's checks $60 billion
Large time deposits $1,500 billion
Currency $350 billion
Miscellaneous categories in M2 $75 billion

Accepted Answer

A)   M1 = $4,310 billion, M2 = $6,285 billion.
B)   M1 = $2,050 billion, M2 = $9,985 billion.
C)   M1 = $2,110 billion, M2 = $8,485 billion.
D)   M1 = $3,610 billion, M2 = $9,985 billion.E) A) and B)
F) A) and C)

Question 11

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

Question 12

Table 29-5.
 
-Refer to Table 29-5. If the bank is holding $4,000 in excess reserves, then the reserve requirement with which it must comply is

Accepted Answer

A)   17 percent.
B)   12 percent.
C)   13 percent.
D)   14 percent.E) B) and C)
F) A) and D)

Question 13

In a system of 100-percent-reserve banking, the purpose of a bank is to

Accepted Answer

A)   make loans to households.
B)   influence the money supply.
C)   give depositors a safe place to keep their money.
D)   buy and sell gold.E) All of the above
F) None of the above

Question 14

Reserves are

Accepted Answer

A)   the central bank of the U.S.
B)   deposits that banks hold in excess of the required amount.
C)   the purchase of bonds by the Federal Open Market Committee.
D)   deposits that banks have received but have not yet loaned out.E) All of the above
F) A) and C)

Question 15

A bank's assets equal its liabilities under

Accepted Answer

A)   both 100-percent-reserve banking and fractional-reserve banking.
B)   100-percent-reserve banking but not under fractional-reserve banking.
C)   fractional-reserve banking but not under 100-percent-reserve banking.
D)   neither 100-percent-reserve banking nor fractional-reserve banking.E) C) and D)
F) A) and B)

Question 16

When colonists in Virginia used tobacco as money, their money

Accepted Answer

A)   was commodity money.
B)   had no intrinsic value.
C)   was fiat money.
D)   had no store of value.E) B) and D)
F) None of the above

Question 17

Credit cards

Accepted Answer

A)   defer payments.
B)   are a store of value.
C)   have led to wider use of currency.
D)   are part of the money supply.E) None of the above
F) A) and C)

Question 18

In many circumstances, prisoners are not allowed to possess cash. Does this mean there is no money in prison? Explain.

Accepted Answer

No.
Any good that provides the three fun...

Question 19

Which of the following is correct?

Accepted Answer

A)   The Fed can control the money supply precisely.
B)   The amount of money in the economy does not depend on the behavior of depositors.
C)   The amount of money in the economy depends in part on the behavior of banks.
D)   None of the above is correct.E) All of the above
F) A) and B)

Question 20

Federal Reserve governors are given long terms to insulate them from politics.

Accepted Answer

A) True 
 B)False

Exam 21: The Monetary System

In a system of 100-percent-reserve banking, the purpose of a bank is to

Correct Answer
verified

Which of the following is correct?

Correct Answer
verified

Correct Answer
verified

The Fed purchases $200 worth of government bonds from the public. The reserve requirement is 12.5 percent, people hold no currency, and the banking system keeps no excess reserves. The U.S. money supply eventually increases by

Correct Answer
verified

Credit cards

Correct Answer
verified

Correct Answer
verified

To increase the money supply, the Fed could

Correct Answer
verified

Table 29-5. -Refer to Table 29-5. If the bank is holding $4,000 in excess reserves, then the reserve requirement with which it must comply is

Correct Answer
verified

The New York Federal Reserve Bank

Correct Answer
verified

A bank's assets equal its liabilities under

Correct Answer
verified

Correct Answer
verified

Federal Reserve governors are given long terms to insulate them from politics.

Correct Answer
verified

Which of the following is not included in M1?

Correct Answer
verified

In many circumstances, prisoners are not allowed to possess cash. Does this mean there is no money in prison? Explain.

Correct Answer
verified
No.
Any good that provides the three fun...
View Answer

M1 includes

Correct Answer
verified

The Federal Reserve was created in 1913 after a series of bank failures in 1907.

Correct Answer
verified

Economists argue that the move from barter to money increased trade and production. How is this possible?

Correct Answer
verified
The use of money allows people...
View Answer

When colonists in Virginia used tobacco as money, their money

Correct Answer
verified

Consider five high school students working on homework in study hall. Which of the following pairs of students has a double coincidence of wants?

Correct Answer
verified

Reserves are

Correct Answer
verified

Exam 21: The Monetary System

In a system of 100-percent-reserve banking, the purpose of a bank is to

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Fed purchases $200 worth of government bonds from the public. The reserve requirement is 12.5 percent, people hold no currency, and the banking system keeps no excess reserves. The U.S. money supply eventually increases by

Correct AnswerverifiedShow Answer

Credit cards

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

To increase the money supply, the Fed could

Correct AnswerverifiedShow Answer

Table 29-5. -Refer to Table 29-5. If the bank is holding $4,000 in excess reserves, then the reserve requirement with which it must comply is

Correct AnswerverifiedShow Answer

The New York Federal Reserve Bank

Correct AnswerverifiedShow Answer

A bank's assets equal its liabilities under

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Federal Reserve governors are given long terms to insulate them from politics.

Correct AnswerverifiedShow Answer

Which of the following is not included in M1?

Correct AnswerverifiedShow Answer

In many circumstances, prisoners are not allowed to possess cash. Does this mean there is no money in prison? Explain.

Correct AnswerverifiedNo.Any good that provides the three fun...View AnswerShow Answer

M1 includes

Correct AnswerverifiedShow Answer

The Federal Reserve was created in 1913 after a series of bank failures in 1907.

Correct AnswerverifiedShow Answer

Economists argue that the move from barter to money increased trade and production. How is this possible?

Correct AnswerverifiedThe use of money allows people...View AnswerShow Answer

When colonists in Virginia used tobacco as money, their money

Correct AnswerverifiedShow Answer

Consider five high school students working on homework in study hall. Which of the following pairs of students has a double coincidence of wants?

Correct AnswerverifiedShow Answer

Reserves are

Correct AnswerverifiedShow Answer

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No.
Any good that provides the three fun...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The use of money allows people...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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