Question 1

The transaction motive for holding money

Accepted Answer

A)  varies inversely with income.
B)  varies directly with the number of times one is paid annually.
C)  are used to make expected expenditures.
D)  are held for the same reasons that precautionary cash balances are helD.
E)  are held to cover unpredictable expenditures.F) A) and B)
G) None of the above

Question 2

Statement I: Banks require a minimum balance of checking accounts because it cost them money to process each check.
Statement II: The American Bankers Association has successfully beaten back attempts to pass legislation requiring banks to provide free check-cashing services to the poor.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.E) B) and C)
F) C) and D)

Question 3

Money is created when banks ________.

Accepted Answer

The answer of Money is created when banks ________....

Question 4

If M3 is 5,000,small denomination time deposits are 700,and large denomination time deposits are 900,how much is M2?

Accepted Answer

M2 = 5,000...

Question 5

Statement I: The Federal Deposit Insurance Corporation prefers takeovers to payoffs.
Statement II: There are 12,000,000 automated teller machines (ATMs) in the U.S.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.E) All of the above
F) A) and D)

Question 6

Of the three motives for the demand for money recognized by John Maynard Keynes,which one is very sensitive to changes in interest rate?

Accepted Answer

A)  Transactions
B)  Medium of exchange
C)  Speculative
D)  PrecautionaryE) A) and B)
F) A) and C)

Question 7

The concept of the liquidity trap was formulated by

Accepted Answer

A)  John Maynard Keynes.
B)  Milton Friedman.
C)  Stephen Pizzo.
D)  Aristotle.
E)  Marshall McLuhan.F) C) and D)
G) A) and B)

Question 8

The M1 definition of the money supply

Accepted Answer

A)  includes only coins and currency.
B)  includes only things that can be used as a medium of exchange,while the M2 definition includes some things that cannot be used directly as a medium of exchange.
C)  includes some kinds of accounts that are not included in M2.
D)  tends to grow more rapidly than M2.E) A) and B)
F) A) and C)

Question 9

The desire to hold money to undertake unexpected transactions would define the _____ motive for holding money.

Accepted Answer

The answer of The desire to hold money to undertake...

Question 10

Statement I.The FDIC is now part of the Federal Reserve.
Statement II.The savings and loan crisis developed in the 1980s because the FDIC was much more lax about supervising the savings and loan associations than the commercial banks.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.E) A) and D)
F) None of the above

Question 11

The bulk of the M1 money supply is made up of

Accepted Answer

A)  travels checks.
B)  checkable deposits.
C)  Federal Reserve notes.
D)  currency.E) B) and D)
F) A) and B)

Question 12

A goldsmith with 100 gold coins in his safe and 100 receipts in circulation has a reserve rate of ________%.

Accepted Answer

The answer of A goldsmith with 100 gold coins in...

Question 13

Barter transactions

Accepted Answer

A)  involve directly exchanging goods for other goods.
B)  can occur without the "double coincidence of wants."
C)  are less costly than transactions involving money.
D)  involve the use of money as a medium of exchange.E) C) and D)
F) B) and D)

Question 14

Money is a good store of value

Accepted Answer

A)  when the average price level is rising.
B)  when the economy is experiencing severe inflation.
C)  when the average price level is falling.
D)  when the unemployment rate is high.E) None of the above
F) B) and C)

Question 15

Suppose a goldsmith (banker) had a certain number of gold coins in his safe and he kept writing more and more goldsmiths' receipts for people who came to him to borrow money.What would be happening to his reserve ratio?

Accepted Answer

A)  It would be rising.
B)  It would be falling.
C)  It would stay the same.
D)  There is not enough information to answer this question.E) A) and B)
F) C) and D)

Question 16

Which is the most accurate statement?

Accepted Answer

A)  The savings and loan associations got into financial hot water in the early 1980s partially because of the low-interest fixed rate mortgages they had given out in the 1950s and 1960s.
B)  There are more savings and loan associations operating today than there were in the early 1980s.
C)  The savings and loan associations began making very risky loans in the late 1960s.
D)  If criminals had not gained control of most savings and loan associations in the early 1980s,very few of them would have faileD.E) A) and B)
F) A) and D)

Question 17

Which statement is true?

Accepted Answer

A)  M1 is larger than M3.
B)  M2 is about five times the size of M1.
C)  M3 is three times the size of M2.
D)  None of the statements are true.E) B) and C)
F) A) and D)

Question 18

About _____ out of every ten dollars in our money supply consists of currency.

Accepted Answer

The answer of About _____ out of every ten dollars...

Question 19

The typical fee for overdraft privileges is

Accepted Answer

A)  $5-10.
B)  $10-20.
C)  $10-38.
D)  $40-60.E) B) and C)
F) A) and D)

Question 20

Which one of the following is presently a major deterrent to bank panics in the United States?

Accepted Answer

A)  The legal reserve requirement
B)  The fractional reserve system
C)  The gold standard
D)  FDIC insuranceE) C) and D)
F) B) and D)

Exam 13: Money and Banking

The typical fee for overdraft privileges is

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The M1 definition of the money supply

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Which statement is true?

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A goldsmith with 100 gold coins in his safe and 100 receipts in circulation has a reserve rate of ________%.

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Statement I: The Federal Deposit Insurance Corporation prefers takeovers to payoffs. Statement II: There are 12,000,000 automated teller machines (ATMs) in the U.S.

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The bulk of the M1 money supply is made up of

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If M3 is 5,000,small denomination time deposits are 700,and large denomination time deposits are 900,how much is M2?

Correct AnswerverifiedM2 = 5,000...View AnswerShow Answer

Money is created when banks ________.

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Barter transactions

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Money is a good store of value

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Statement I: Banks require a minimum balance of checking accounts because it cost them money to process each check. Statement II: The American Bankers Association has successfully beaten back attempts to pass legislation requiring banks to provide free check-cashing services to the poor.

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The transaction motive for holding money

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The concept of the liquidity trap was formulated by

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Which is the most accurate statement?

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Suppose a goldsmith (banker) had a certain number of gold coins in his safe and he kept writing more and more goldsmiths' receipts for people who came to him to borrow money.What would be happening to his reserve ratio?

Correct AnswerverifiedShow Answer

The desire to hold money to undertake unexpected transactions would define the _____ motive for holding money.

Correct AnswerverifiedShow Answer

Statement I.The FDIC is now part of the Federal Reserve. Statement II.The savings and loan crisis developed in the 1980s because the FDIC was much more lax about supervising the savings and loan associations than the commercial banks.

Correct AnswerverifiedShow Answer

Of the three motives for the demand for money recognized by John Maynard Keynes,which one is very sensitive to changes in interest rate?

Correct AnswerverifiedShow Answer

About _____ out of every ten dollars in our money supply consists of currency.

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Which one of the following is presently a major deterrent to bank panics in the United States?

Correct AnswerverifiedShow Answer

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M2 = 5,000...
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