Question 1

If an economy has no money, then all transactions must be conducted through the use of

Accepted Answer

A)   credit cards.
B)   barter.
C)   debit cards.
D)   tobacco or wampum.E) A) and D)
F) A) and C)

Question 2

Which of the following is NOT money?

Accepted Answer

A)   currency
B)   checking deposits
C)   checks in the checkbook
D)   All of the above are money.E) A) and D)
F) A) and C)

Question 3

Which Federal Reserve Bank president is always on the Federal Open Market Committee?

Accepted Answer

A)   New York
B)   Chicago
C)   St. Louis
D)   BostonE) None of the above
F) B) and C)

Question 4

The commercial banks in Fundland have
Reserves $500 million
Loans $3,500 million
Deposits $4,000 million
Total assets $5,000 million
The banks hold no unplanned reserves.
a) Calculate the banks' desired reserve ratio.
b) An immigrant arrives in Fundland with $10 million, which she deposits in a bank. How much does the immigrant's bank lend initially?

Accepted Answer

a) With no unplanned reserves, the desir...

Question 5

The monetary base is

Accepted Answer

A)   currency and reserves of depository institutions.
B)   currency minus depository institutions' reserves.
C)   depository institutions' reserves minus Federal Reserve notes.
D)   the money borrowed by banks from other banks.E) C) and D)
F) A) and D)

Question 6

List and discuss the four economic functions that depository institutions provide their customers.

Accepted Answer

Depository institutions create liquidity...

Question 7

The Federal Open Market Committee

Accepted Answer

A)   meets weekly to set Fed policy.
B)   has 7 voting members.
C)   always includes the president of the Federal Reserve Bank of New York as a member.
D)   does not include any members of the Board of Governors.E) A) and B)
F) A) and C)

Question 8

A bank creates money by

Accepted Answer

A)   lending its unplanned reserves.
B)   purchasing currency from the Federal Reserve.
C)   buying bonds from the Federal Reserve.
D)   printing more checks.E) B) and D)
F) B) and C)

Question 9

In the United States, the central bank is the

Accepted Answer

A)   Bank of America.
B)   Federal Reserve System.
C)   Federal Reserve Bank of New York.
D)   Federal Reserve Bank of Washington D.C.E) None of the above
F) A) and D)

Question 10

The quantity of real money demanded is

Accepted Answer

A)   negatively related to the price level.
B)   positively related to the price level.
C)   independent of the price level.
D)   proportional to the price levelE) A) and B)
F) A) and C)

Question 11

Which of the following is the central bank of the United States?

Accepted Answer

A)   Comptroller of the Currency
B)   Treasury Department
C)   Federal Reserve System
D)   Office of the BudgetE) C) and D)
F) B) and D)

Question 12

"By definition, all parts of M2 are money." Is the previous statement correct or not? Explain your answer.

Accepted Answer

The statement is incorrect. Many of the ...

Question 13

When the nominal interest rate rises, the quantity of money demanded decreases because

Accepted Answer

A)   people will buy fewer goods and hence hold less money.
B)   the price level also rises and people decrease their demand for money.
C)   people shift funds from interest-bearing assets into money.
D)   people shift funds from money holdings to interest-bearing assets.E) A) and D)
F) A) and B)

Question 14

Reserve requirements are the

Accepted Answer

A)   minimum percentages of deposits that banks must hold as reserves.
B)   minimum amount of an owner's financial resources that must be placed in a depository institution.
C)   rules covering the types of deposits that banks may offer.
D)   rules covering the types of assets that banks may purchase.E) A) and B)
F) C) and D)

Question 15

Which of the following is NOT part of the monetary base?

Accepted Answer

A)   currency
B)   reserves of depository institutions
C)   the public's checking deposits at commercial banks
D)   commercial banks' reserves.E) B) and D)
F) All of the above

Question 16

-The above table has the demand for money schedule.
a) If the Fed supplies $1.1 trillion dollars, what is the equilibrium interest rate?
b) Discuss how equilibrium is restored if the interest rate is greater than the equilibrium rate found in part (a).

Accepted Answer

a) The equilibrium interest rate is 4 pe...

Question 17

Members of the Federal Reserve System's Board of Governors

Accepted Answer

A)   are elected for life.
B)   hold 14-year staggered terms.
C)   are a special subcommittee of the Senate.
D)   are elected at large by district banks.E) A) and B)
F) All of the above

Question 18

University National Bank Balance Sheet

-The above table has the balance of the University National Bank. All figures are in millions of dollars. The desired reserve ratio is 20 percent. What would be the total increase in loans at this bank if all unplanned reserves were loaned out?

Accepted Answer

A)   $528 million
B)   $352 million
C)   $232 million
D)   $0E) C) and D)
F) B) and C)

Question 19

If the price level doubles, the

Accepted Answer

A)   nominal demand for money doubles.
B)   nominal demand for money drops by half.
C)   real demand for money drops by half.
D)   real demand for money doubles.E) A) and C)
F) A) and B)

Question 20

When money is accepted as payment in a market transaction, it is functioning as a

Accepted Answer

A)   store of value.
B)   unit of accounting.
C)   medium of exchange.
D)   unit of investment.E) All of the above
F) None of the above

Exam 8: Money, the Price Level, and Inflation

-The above table has the demand for money schedule. a) If the Fed supplies $1.1 trillion dollars, what is the equilibrium interest rate? b) Discuss how equilibrium is restored if the interest rate is greater than the equilibrium rate found in part (a).

Correct Answer
verified
a) The equilibrium interest rate is 4 pe...
View Answer

When the nominal interest rate rises, the quantity of money demanded decreases because

Correct Answer
verified

In the United States, the central bank is the

Correct Answer
verified

Reserve requirements are the

Correct Answer
verified

The monetary base is

Correct Answer
verified

A bank creates money by

Correct Answer
verified

Correct Answer
verified
a) With no unplanned reserves, the desir...
View Answer

The Federal Open Market Committee

Correct Answer
verified

Which of the following is NOT part of the monetary base?

Correct Answer
verified

University National Bank Balance Sheet -The above table has the balance of the University National Bank. All figures are in millions of dollars. The desired reserve ratio is 20 percent. What would be the total increase in loans at this bank if all unplanned reserves were loaned out?

Correct Answer
verified

The quantity of real money demanded is

Correct Answer
verified

When money is accepted as payment in a market transaction, it is functioning as a

Correct Answer
verified

Which Federal Reserve Bank president is always on the Federal Open Market Committee?

Correct Answer
verified

Which of the following is the central bank of the United States?

Correct Answer
verified

"By definition, all parts of M2 are money." Is the previous statement correct or not? Explain your answer.

Correct Answer
verified
The statement is incorrect. Many of the ...
View Answer

If an economy has no money, then all transactions must be conducted through the use of

Correct Answer
verified

Members of the Federal Reserve System's Board of Governors

Correct Answer
verified

Which of the following is NOT money?

Correct Answer
verified

List and discuss the four economic functions that depository institutions provide their customers.

Correct Answer
verified
Depository institutions create liquidity...
View Answer

If the price level doubles, the

Correct Answer
verified

Exam 8: Money, the Price Level, and Inflation

-The above table has the demand for money schedule. a) If the Fed supplies $1.1 trillion dollars, what is the equilibrium interest rate? b) Discuss how equilibrium is restored if the interest rate is greater than the equilibrium rate found in part (a).

Correct Answerverifieda) The equilibrium interest rate is 4 pe...View AnswerShow Answer

When the nominal interest rate rises, the quantity of money demanded decreases because

Correct AnswerverifiedShow Answer

In the United States, the central bank is the

Correct AnswerverifiedShow Answer

Reserve requirements are the

Correct AnswerverifiedShow Answer

The monetary base is

Correct AnswerverifiedShow Answer

A bank creates money by

Correct AnswerverifiedShow Answer

Correct Answerverifieda) With no unplanned reserves, the desir...View AnswerShow Answer

The Federal Open Market Committee

Correct AnswerverifiedShow Answer

Which of the following is NOT part of the monetary base?

Correct AnswerverifiedShow Answer

University National Bank Balance Sheet -The above table has the balance of the University National Bank. All figures are in millions of dollars. The desired reserve ratio is 20 percent. What would be the total increase in loans at this bank if all unplanned reserves were loaned out?

Correct AnswerverifiedShow Answer

The quantity of real money demanded is

Correct AnswerverifiedShow Answer

When money is accepted as payment in a market transaction, it is functioning as a

Correct AnswerverifiedShow Answer

Which Federal Reserve Bank president is always on the Federal Open Market Committee?

Correct AnswerverifiedShow Answer

Which of the following is the central bank of the United States?

Correct AnswerverifiedShow Answer

"By definition, all parts of M2 are money." Is the previous statement correct or not? Explain your answer.

Correct AnswerverifiedThe statement is incorrect. Many of the ...View AnswerShow Answer

If an economy has no money, then all transactions must be conducted through the use of

Correct AnswerverifiedShow Answer

Members of the Federal Reserve System's Board of Governors

Correct AnswerverifiedShow Answer

Which of the following is NOT money?

Correct AnswerverifiedShow Answer

List and discuss the four economic functions that depository institutions provide their customers.

Correct AnswerverifiedDepository institutions create liquidity...View AnswerShow Answer

If the price level doubles, the

Correct AnswerverifiedShow Answer

Correct Answer
verified
a) The equilibrium interest rate is 4 pe...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a) With no unplanned reserves, the desir...
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
The statement is incorrect. Many of the ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Depository institutions create liquidity...
View Answer

Correct Answer
verified