Question 1

Table 29-8
 
-Refer to Table 29-8. This bank's leverage ratio is

Accepted Answer

A)   2.
B)   50.
C)   13.3.
D)   7.5.E) A) and B)
F) None of the above

Question 2

The Fed has the power to increase or decrease the number of dollars in the economy through the decisions of

Accepted Answer

A)   the Board of Governors.
B)   the FOMC.
C)   the regional Federal Reserve Bank presidents.
D)   the U.S. Treasury.E) None of the above
F) A) and B)

Question 3

In a fractional-reserve banking system, a bank

Accepted Answer

A)   does not make loans.
B)   does not accept deposits.
C)   keeps only a fraction of its deposits in reserve.
D)   None of the above is correct.E) B) and D)
F) C) and D)

Question 4

Table 29-7.
 
-Refer to Table 29-7. Assuming the Bank of Springfield and all other banks have the same reserve ratio, then what is the value of the money multiplier?

Accepted Answer

A)   1.1
B)   12.3
C)   8.1
D)   9.1E) C) and D)
F) B) and D)

Question 5

Money is

Accepted Answer

A)   the most liquid asset and a perfect store of value.
B)   the most liquid asset but an imperfect store of value.
C)   not the most liquid asset but a perfect store of value.
D)   neither the most liquid asset and nor a perfect store of value.E) B) and D)
F) A) and D)

Question 6

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) B) and D)
F) B) and C)

Question 7

Which of the following is included in both M1 and M2?

Accepted Answer

A)   savings deposits
B)   demand deposits
C)   small time deposits
D)   money market mutual fundsE) A) and B)
F) None of the above

Question 8

Which list ranks assets from most to least liquid?

Accepted Answer

A)   currency, demand deposits, money market mutual funds
B)   currency, money market mutual funds, demand deposits
C)   money market mutual funds, demand deposits, currency
D)   demand deposits, money market mutual funds, currencyE) C) and D)
F) All of the above

Question 9

Suppose the Fed requires banks to hold 9 percent of their deposits as reserves. A bank has $18,000 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?

Accepted Answer

A)   $27,000
B)   $27,190
C)   $26,190
D)   $9,000E) None of the above
F) A) and B)

Question 10

Which of the following might explain why the United States has so much currency per person?

Accepted Answer

A)   U.S. citizens are holding a lot of foreign currency.
B)   Currency may be a preferable store of wealth for criminals.
C)   People use credit and debit cards more frequently.
D)   All of the above help explain the abundance of currency.E) A) and D)
F) A) and B)

Question 11

Today, bank runs are not a major problem for the U.S. banking system because

Accepted Answer

A)   bank runs are now illegal.
B)   banks now hold 100 percent of their deposits in reserve.
C)   banks are now all government-operated.
D)   the federal government now guarantees the safety of deposits at most banks.E) A) and C)
F) None of the above

Question 12

Table 29-5.
 
-Refer to Table 29-5. If the bank faces a reserve requirement of 8 percent, then the bank

Accepted Answer

A)   is in a position to make a new loan of $14,000.
B)   has fewer reserves than are required.
C)   has excess reserves of $16,400.
D)   None of the above is correct.E) C) and D)
F) B) and D)

Question 13

Imagine an economy in which: 1)  pieces of paper called dollars are the only thing that buyers give to sellers when they buy goods and services, so it would be common to use, say, 50 dollars to buy a pair of shoes; 2)  prices are posted in terms of yardsticks, so you might walk into a grocery store and see that, today, an apple is worth 2 yardsticks; and 3)  yardsticks disintegrate overnight, so no yardstick has any value for more than 24 hours. In this economy,

Accepted Answer

A)   the yardstick is a medium of exchange but it cannot serve as a unit of account.
B)   the yardstick is a unit of account but it cannot serve as a store of value.
C)   the yardstick is a medium of exchange but it cannot serve as a store of value, and the yollar is a unit of account.
D)   the yollar is a unit of account, but it is not a medium of exchange and it is not a liquid asset.E) B) and C)
F) A) and D)

Question 14

Designers of the Federal Reserve System were concerned that the Fed might form policy favorable to one part of the country or to a particular party. What are some ways that the organization of the Fed reflects such concerns?

Accepted Answer

1. The president appoints the Board of G...

Question 15

According to the article "Why Gold?', silver may be used as money. One problem with using silver as money is that

Accepted Answer

A)   silver is too abundant.
B)   silver tarnishes over time.
C)   it is not a precious metal.
D)   it has a high melting point.E) None of the above
F) C) and D)

Question 16

The federal funds rate is a long-term interest rate banks charge one another for loans.

Accepted Answer

A) True 
 B)False

Question 17

Bank runs and the accompanying increase in the money multiplier caused the U.S. money supply to rise by 28 percent from 1929 to 1933.

Accepted Answer

A) True 
 B)False

Question 18

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) All of the above
F) B) and C)

Question 19

The existence of money

Accepted Answer

A)   reduces specialization.
B)   makes trade easier.
C)   allows for barter.
D)   hinders production.E) A) and B)
F) A) and C)

Question 20

If the central bank in some country raised the reserve requirement, then the money multiplier for that country

Accepted Answer

A)   would increase.
B)   would not change.
C)   would decrease.
D)   could do any of the above.E) B) and C)
F) A) and B)

Exam 16: The Monetary System

Which of the following might explain why the United States has so much currency per person?

Correct Answer
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Correct Answer
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Table 29-7. -Refer to Table 29-7. Assuming the Bank of Springfield and all other banks have the same reserve ratio, then what is the value of the money multiplier?

Correct Answer
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The federal funds rate is a long-term interest rate banks charge one another for loans.

Correct Answer
verified

Correct Answer
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Money is

Correct Answer
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Table 29-5. -Refer to Table 29-5. If the bank faces a reserve requirement of 8 percent, then the bank

Correct Answer
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The existence of money

Correct Answer
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According to the article "Why Gold?', silver may be used as money. One problem with using silver as money is that

Correct Answer
verified

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

Correct Answer
verified

Bank runs and the accompanying increase in the money multiplier caused the U.S. money supply to rise by 28 percent from 1929 to 1933.

Correct Answer
verified

Table 29-8 -Refer to Table 29-8. This bank's leverage ratio is

Correct Answer
verified

Today, bank runs are not a major problem for the U.S. banking system because

Correct Answer
verified

Which of the following is included in both M1 and M2?

Correct Answer
verified

Designers of the Federal Reserve System were concerned that the Fed might form policy favorable to one part of the country or to a particular party. What are some ways that the organization of the Fed reflects such concerns?

Correct Answer
verified
1. The president appoints the Board of G...
View Answer

Which list ranks assets from most to least liquid?

Correct Answer
verified

The Fed has the power to increase or decrease the number of dollars in the economy through the decisions of

Correct Answer
verified

Suppose the Fed requires banks to hold 9 percent of their deposits as reserves. A bank has $18,000 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?

Correct Answer
verified

In a fractional-reserve banking system, a bank

Correct Answer
verified

If the central bank in some country raised the reserve requirement, then the money multiplier for that country

Correct Answer
verified

Exam 16: The Monetary System

Which of the following might explain why the United States has so much currency per person?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 29-7. -Refer to Table 29-7. Assuming the Bank of Springfield and all other banks have the same reserve ratio, then what is the value of the money multiplier?

Correct AnswerverifiedShow Answer

The federal funds rate is a long-term interest rate banks charge one another for loans.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Money is

Correct AnswerverifiedShow Answer

Table 29-5. -Refer to Table 29-5. If the bank faces a reserve requirement of 8 percent, then the bank

Correct AnswerverifiedShow Answer

The existence of money

Correct AnswerverifiedShow Answer

According to the article "Why Gold?', silver may be used as money. One problem with using silver as money is that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Bank runs and the accompanying increase in the money multiplier caused the U.S. money supply to rise by 28 percent from 1929 to 1933.

Correct AnswerverifiedShow Answer

Table 29-8 -Refer to Table 29-8. This bank's leverage ratio is

Correct AnswerverifiedShow Answer

Today, bank runs are not a major problem for the U.S. banking system because

Correct AnswerverifiedShow Answer

Which of the following is included in both M1 and M2?

Correct AnswerverifiedShow Answer

Designers of the Federal Reserve System were concerned that the Fed might form policy favorable to one part of the country or to a particular party. What are some ways that the organization of the Fed reflects such concerns?

Correct Answerverified1. The president appoints the Board of G...View AnswerShow Answer

Which list ranks assets from most to least liquid?

Correct AnswerverifiedShow Answer

The Fed has the power to increase or decrease the number of dollars in the economy through the decisions of

Correct AnswerverifiedShow Answer

Suppose the Fed requires banks to hold 9 percent of their deposits as reserves. A bank has $18,000 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?

Correct AnswerverifiedShow Answer

In a fractional-reserve banking system, a bank

Correct AnswerverifiedShow Answer

If the central bank in some country raised the reserve requirement, then the money multiplier for that country

Correct AnswerverifiedShow Answer

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1. The president appoints the Board of G...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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