Question 1

Refer to
 Value Values of Assets
 
-Refer to Value of Assets. What is the value of M2 in billions of dollars?

Accepted Answer

A)   9925
B)   8225
C)   7485
D)   7445E) A) and B)
F) A) and D)

Question 2

All Fed purchases and sales of

Accepted Answer

A)   corporate stocks and bonds are conducted at the New York Fed's trading desk.
B)   government bonds are conducted at the New York Fed's trading desk.
C)   real estate and other real assets are conducted by the Federal Open Market Committee.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 3

An increase in the reserve requirement ratio increases reserves and decreases the money supply.

Accepted Answer

A) True 
 B)False

Question 4

If a bank has a reserve ratio of 8 percent, then

Accepted Answer

A)   government regulation requires the bank to use at least 8 percent of its deposits to make loans.
B)   the bank's ratio of loans to deposits is 8 percent.
C)   the bank keeps 8 percent of its deposits as reserves and loans out the rest.
D)   the bank keeps 8 percent of its assets as reserves and loans out the rest.E) All of the above
F) None of the above

Question 5

If the reserve requirement is 15 percent a bank desires to hold no excess reserves and it receives a new deposit of $10, then this bank

Accepted Answer

A)   must increase its required reserves by $10.
B)   will initially see its total reserves increase by $15.
C)   will be able to make new loans up to a maximum of $8.50.
D)   All of the above are correct.E) B) and D)
F) B) and C)

Question 6

The regional Federal Reserve Banks

Accepted Answer

A)   are not allowed to make loans to banks in their region.
B)   regulate banks in their regions.
C)   have more voting members on the FOMC than does the Board of Governors.
D)   are each headed by a member of the Board of Governors.E) B) and C)
F) A) and B)

Question 7

Roundabout trade decreases production.

Accepted Answer

A) True 
 B)False

Question 8

Scenario 11-1.
The monetary policy of Namdian is determined by the Namdian Central Bank. The local currency is the dia. Namdian banks collectively hold 100 million dias of required reserves, 25 million dias of excess reserves, 250 million dias of Namdian Treasury Bonds, and their customers hold 1,000 million dias of deposits. Namdians prefer to use only demand deposits and so the money supply consists of demand deposits.
-Refer to Scenario 11-1. Suppose the Central Bank of Namdia loaned the banks of Namdia 5 million dias. Suppose also that both the reserve requirement and the percentage of deposits held as excess reserves stay the same. By how much would the money supply of Namdia change?

Accepted Answer

A)   60 million dias
B)   50 million dias
C)   40 million dias
D)   None of the above is correct.E) All of the above
F) A) and C)

Question 9

The Fed's control of the money supply is not precise because

Accepted Answer

A)   Congress can also make changes to the money supply.
B)   there are not always government bonds available for purchase when the Fed wants to perform open-market operations.
C)   the Fed does not know where all U.S. currency is located.
D)   the amount of money in the economy depends in part on the behavior of depositors and bankers.E) None of the above
F) A) and C)

Question 10

Money

Accepted Answer

A)   is more efficient than barter.
B)   makes trades easier.
C)   allows greater specialization.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 11

Which of the following is a liability of a bank and an asset of its customers?

Accepted Answer

A)   deposits of its customers and loans to it customers
B)   deposits of its customers but not loans to its customers
C)   loans of its customers but not the deposits of its customers
D)   neither the deposits of its customers nor the loans to its customersE) B) and D)
F) A) and C)

Question 12

Who can vote on Federal Open Market Committee decisions?

Accepted Answer

A)   all of the members of the Board of Governors and all of the Federal Reserve Bank presidents
B)   all of the members of the Board of Governors and some of the Federal Reserve Bank presidents
C)   some of the members of the Board of Governors and all of the Federal Reserve Bank presidents
D)   some of the members of the Board of Governors and some of the Federal Reserve Bank presidentsE) A) and B)
F) B) and C)

Question 13

Table 11-1. The information in the table pertains to an imaginary economy.
 
-Refer to Table 11-1. What is the M1 money supply?

Accepted Answer

A)   $215 billion
B)   $216 billion
C)   $226 billion
D)   $301 billionE) C) and D)
F) All of the above

Question 14

What makes the New York Federal Reserve regional bank so important?

Accepted Answer

The president of the New York Federal Re...

Question 15

Scenario 11-2.
The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi. The local unit of currency is the taz. Aggregate banking statistics show that collectively the banks of Tazi hold 300 million tazes of required reserves, 75 million tazes of excess reserves, have issued 7,500 million tazes of deposits, and hold 225 million tazes of Tazian Treasury bonds. Tazians prefer to use only demand deposits and so all money is on deposit at the bank.
-Refer to Scenario 11-2. Assuming the only other thing Tazian banks have on their balance sheets is loans, what is the value of existing loans made by Tazian banks?

Accepted Answer

A)   6,900 million tazes
B)   7,125 million tazes
C)   7,350 million tazes
D)   None of the above is correct.E) C) and D)
F) None of the above

Question 16

Table 11-7
Metropolis National Bank is currently holding 2% of its deposits as excess reserves.
 
-Refer to Balance Sheet of Metropolis National Bank. Metropolis National Bank is currently holding 2% of deposits as excess reserves. Assume that no banks in the economy want to hold excess reserves and that people only hold deposits and no currency. How much does the money supply ultimately increase when Metropolis National Bank lends out its excess reserves?

Accepted Answer

A)   $100,000
B)   $110,000
C)   $120,000
D)   None of the above are correct.E) B) and C)
F) C) and D)

Question 17

If the reserve ratio is 100-percent, then a new deposit of $500 into a bank account

Accepted Answer

A)   eventually increases the money supply by $500.
B)   leaves the size of the money supply unchanged.
C)   eventually decreases the size of the money supply by $500.
D)   None of the above is correct.E) All of the above
F) A) and C)

Question 18

Traveler's checks are included in

Accepted Answer

A)   M1 but not M2.
B)   M2 but not M1.
C)   M1 and M2.
D)   neither M1 nor M2.E) C) and D)
F) A) and C)

Question 19

The Fed sets the interest that borrowers pay on loans from

Accepted Answer

A)   the discount window and the term auction facility
B)   the discount window but not the term auction facility
C)   the term auction facility but not the discount window
D)   neither the discount window nor the term auction facilityE) B) and C)
F) A) and D)

Question 20

The ease with which an asset can be

Accepted Answer

A)   traded for another asset determines whether or not that asset is a unit of account.
B)   transported from one place to another determines whether or not that asset could serve as fiat money.
C)   converted into a store of value determines the liquidity of that asset.
D)   converted into the economy's medium of exchange determines the liquidity of that asset.E) A) and B)
F) B) and D)

Exam 11: The Monetary System

If a bank has a reserve ratio of 8 percent, then

Correct Answer
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The Fed's control of the money supply is not precise because

Correct Answer
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Traveler's checks are included in

Correct Answer
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Roundabout trade decreases production.

Correct Answer
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An increase in the reserve requirement ratio increases reserves and decreases the money supply.

Correct Answer
verified

The regional Federal Reserve Banks

Correct Answer
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Correct Answer
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The ease with which an asset can be

Correct Answer
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All Fed purchases and sales of

Correct Answer
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Correct Answer
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The Fed sets the interest that borrowers pay on loans from

Correct Answer
verified

If the reserve ratio is 100-percent, then a new deposit of $500 into a bank account

Correct Answer
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Who can vote on Federal Open Market Committee decisions?

Correct Answer
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Refer to Value Values of Assets -Refer to Value of Assets. What is the value of M2 in billions of dollars?

Correct Answer
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Table 11-1. The information in the table pertains to an imaginary economy. -Refer to Table 11-1. What is the M1 money supply?

Correct Answer
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Which of the following is a liability of a bank and an asset of its customers?

Correct Answer
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What makes the New York Federal Reserve regional bank so important?

Correct Answer
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The president of the New York Federal Re...
View Answer

Money

Correct Answer
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If the reserve requirement is 15 percent a bank desires to hold no excess reserves and it receives a new deposit of $10, then this bank

Correct Answer
verified

Exam 11: The Monetary System

If a bank has a reserve ratio of 8 percent, then

Correct AnswerverifiedShow Answer

The Fed's control of the money supply is not precise because

Correct AnswerverifiedShow Answer

Traveler's checks are included in

Correct AnswerverifiedShow Answer

Roundabout trade decreases production.

Correct AnswerverifiedShow Answer

An increase in the reserve requirement ratio increases reserves and decreases the money supply.

Correct AnswerverifiedShow Answer

The regional Federal Reserve Banks

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The ease with which an asset can be

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

All Fed purchases and sales of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Fed sets the interest that borrowers pay on loans from

Correct AnswerverifiedShow Answer

If the reserve ratio is 100-percent, then a new deposit of $500 into a bank account

Correct AnswerverifiedShow Answer

Who can vote on Federal Open Market Committee decisions?

Correct AnswerverifiedShow Answer

Refer to Value Values of Assets -Refer to Value of Assets. What is the value of M2 in billions of dollars?

Correct AnswerverifiedShow Answer

Table 11-1. The information in the table pertains to an imaginary economy. -Refer to Table 11-1. What is the M1 money supply?

Correct AnswerverifiedShow Answer

Which of the following is a liability of a bank and an asset of its customers?

Correct AnswerverifiedShow Answer

What makes the New York Federal Reserve regional bank so important?

Correct AnswerverifiedThe president of the New York Federal Re...View AnswerShow Answer

Money

Correct AnswerverifiedShow Answer

If the reserve requirement is 15 percent a bank desires to hold no excess reserves and it receives a new deposit of $10, then this bank

Correct AnswerverifiedShow Answer

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The president of the New York Federal Re...
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