Question 1

The series of bank failures in 1907 occurred despite the creation of the Federal Reserve many years earlier.

Accepted Answer

A) True 
 B)False

Question 2

Describe how the use of leverage affects the impact of bank investments.

Accepted Answer

Leverage amplifies the impact from chang...

Question 3

If the discount rate is raised then banks borrow

Accepted Answer

A)   more from the Fed so reserves increase.
B)   more from the Fed so reserves decrease.
C)   less from the Fed so reserves increase.
D)   less from the Fed so reserves decrease.E) All of the above
F) A) and C)

Question 4

In Ugoland,the money supply is $8 million and reserves are $1 million.Assuming that people hold only deposits and no currency,and that banks hold no excess reserves,then the reserve requirement is

Accepted Answer

A)   14 percent.
B)   12.5 percent.
C)   8 percent.
D)   None of the above is correct.E) None of the above
F) B) and C)

Question 5

What does the text mean by the question,"Where Is All the Currency?" How does it answer the question?

Accepted Answer

The amount of currency per person is nea...

Question 6

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

Accepted Answer

The answer of Which two of the Ten Principles of...

Question 7

Credit cards are

Accepted Answer

A)   a medium of exchange.
B)   counted as part of M2 but not as part of M1.
C)   important for analyzing the monetary system.
D)   All of the above are correct.E) None of the above
F) All of the above

Question 8

The banking system currently has $10 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 raises the reserve requirement to 20 percent and at the same time buys $1 billion worth of bonds,then by how much does the money supply change?

Accepted Answer

A)   It falls by $45 billion.
B)   It falls by $52 billion.
C)   It falls by $55 billion.
D)   None of the above is correct.E) C) and D)
F) None of the above

Question 9

If an economy used gold as money,its money would be

Accepted Answer

A)   commodity money,but not fiat money.
B)   fiat money,but not commodity money.
C)   both fiat and commodity money.
D)   functioning as a store of value and as a unit of account,but not as a medium of exchange.E) A) and C)
F) A) and B)

Question 10

The Fed can influence unemployment in

Accepted Answer

A)   the short run and in the long run.
B)   the short run,but not in the long run.
C)   the long run,but not in the short run.
D)   neither the short nor the long run.E) A) and B)
F) A) and C)

Question 11

Given the following information,what are the values of M1 and M2?

Accepted Answer

A)   M1 = $830 billion,M2 = $4,370 billion.
B)   M1 = $980 billion,M2 = $4,370 billion.
C)   M1 = $980 billion,M2 = $3,390 billion.
D)   M1 = $1,020 billion,M2 = $3,390 billion.E) A) and C)
F) A) and B)

Question 12

The Federal Reserve Board of Governors

Accepted Answer

A)   rotate each four years.
B)   are appointed by the President and confirmed by the Senate.
C)   are elected by popular vote.
D)   hold lifetime appointments.E) None of the above
F) A) and D)

Question 13

The Federal Reserve can alter the size of the money supply by changing reserves or changing reserve requirements.

Accepted Answer

A) True 
 B)False

Question 14

Which type of money has intrinsic value?

Accepted Answer

A)   commodity money
B)   fiat money
C)   both commodity money and fiat money
D)   neither commodity money nor fiat moneyE) B) and C)
F) A) and D)

Question 15

Which of the following items is included in M2?

Accepted Answer

A)   credit cards
B)   money market mutual funds
C)   corporate bonds
D)   large time depositsE) B) and D)
F) All of the above

Question 16

If a bank that desires to hold no excess reserves and has just enough reserves to meet the required reserve ratio of 10 percent receives a deposit of $400 it has a

Accepted Answer

A)   $400 increase in excess reserves and no increase in required reserves.
B)   $400 increase in required reserves and no increase in excess reserves.
C)   $360 increase in excess reserves and a $40 increase in required reserves.
D)   $40 increase in excess reserves and a $360 increase in required reserves.E) All of the above
F) B) and C)

Question 17

The Federal Reserve was created

Accepted Answer

A)   in 1913 by Congress
B)   as a result of the Great Depression
C)   according to the standards enforced by NATO
D)   by President KennedyE) A) and B)
F) None of the above

Question 18

Table 16-2.An economy starts with $10,000 in currency.All of this currency is deposited into a single bank,and the bank then makes loans totaling $9,250.The T-account of the bank is shown below.
 
-Refer to Table 16-2.The bank's reserve ratio is

Accepted Answer

A)   7.50 percent.
B)   8.12 percent.
C)   92.50 percent.
D)   100 percent.E) B) and C)
F) A) and C)

Question 19

The money multiplier equals 1/(1 - R),where R represents the reserve ratio.

Accepted Answer

A) True 
 B)False

Question 20

You receive money as payment for babysitting your neighbors' children.This best illustrates which function of money?

Accepted Answer

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

Exam 29: The Monetary System

Credit cards are

Correct Answer
verified

The money multiplier equals 1/(1 - R),where R represents the reserve ratio.

Correct Answer
verified

Table 16-2.An economy starts with $10,000 in currency.All of this currency is deposited into a single bank,and the bank then makes loans totaling $9,250.The T-account of the bank is shown below. -Refer to Table 16-2.The bank's reserve ratio is

Correct Answer
verified

What does the text mean by the question,"Where Is All the Currency?" How does it answer the question?

Correct Answer
verified
The amount of currency per person is nea...
View Answer

In Ugoland,the money supply is $8 million and reserves are $1 million.Assuming that people hold only deposits and no currency,and that banks hold no excess reserves,then the reserve requirement is

Correct Answer
verified

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

Correct Answer
verified

Which of the following items is included in M2?

Correct Answer
verified

The Fed can influence unemployment in

Correct Answer
verified

If a bank that desires to hold no excess reserves and has just enough reserves to meet the required reserve ratio of 10 percent receives a deposit of $400 it has a

Correct Answer
verified

The series of bank failures in 1907 occurred despite the creation of the Federal Reserve many years earlier.

Correct Answer
verified

The Federal Reserve Board of Governors

Correct Answer
verified

Correct Answer
verified

If an economy used gold as money,its money would be

Correct Answer
verified

You receive money as payment for babysitting your neighbors' children.This best illustrates which function of money?

Correct Answer
verified

Describe how the use of leverage affects the impact of bank investments.

Correct Answer
verified
Leverage amplifies the impact from chang...
View Answer

Which type of money has intrinsic value?

Correct Answer
verified

The Federal Reserve was created

Correct Answer
verified

Given the following information,what are the values of M1 and M2?

Correct Answer
verified

If the discount rate is raised then banks borrow

Correct Answer
verified

The Federal Reserve can alter the size of the money supply by changing reserves or changing reserve requirements.

Correct Answer
verified

Exam 29: The Monetary System

Credit cards are

Correct AnswerverifiedShow Answer

The money multiplier equals 1/(1 - R),where R represents the reserve ratio.

Correct AnswerverifiedShow Answer

Table 16-2.An economy starts with $10,000 in currency.All of this currency is deposited into a single bank,and the bank then makes loans totaling $9,250.The T-account of the bank is shown below. -Refer to Table 16-2.The bank's reserve ratio is

Correct AnswerverifiedShow Answer

What does the text mean by the question,"Where Is All the Currency?" How does it answer the question?

Correct AnswerverifiedThe amount of currency per person is nea...View AnswerShow Answer

In Ugoland,the money supply is $8 million and reserves are $1 million.Assuming that people hold only deposits and no currency,and that banks hold no excess reserves,then the reserve requirement is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following items is included in M2?

Correct AnswerverifiedShow Answer

The Fed can influence unemployment in

Correct AnswerverifiedShow Answer

If a bank that desires to hold no excess reserves and has just enough reserves to meet the required reserve ratio of 10 percent receives a deposit of $400 it has a

Correct AnswerverifiedShow Answer

The series of bank failures in 1907 occurred despite the creation of the Federal Reserve many years earlier.

Correct AnswerverifiedShow Answer

The Federal Reserve Board of Governors

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If an economy used gold as money,its money would be

Correct AnswerverifiedShow Answer

You receive money as payment for babysitting your neighbors' children.This best illustrates which function of money?

Correct AnswerverifiedShow Answer

Describe how the use of leverage affects the impact of bank investments.

Correct AnswerverifiedLeverage amplifies the impact from chang...View AnswerShow Answer

Which type of money has intrinsic value?

Correct AnswerverifiedShow Answer

The Federal Reserve was created

Correct AnswerverifiedShow Answer

Given the following information,what are the values of M1 and M2?

Correct AnswerverifiedShow Answer

If the discount rate is raised then banks borrow

Correct AnswerverifiedShow Answer

The Federal Reserve can alter the size of the money supply by changing reserves or changing reserve requirements.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified
The amount of currency per person is nea...
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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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Leverage amplifies the impact from chang...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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