Question 1

Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 8 percent, and excess reserves amount to $5 billion. What is the level of deposits?

Accepted Answer

A)   $5,000 billion
B)   $4,937.5 billion
C)   $5,062.5 billion
D)   $4,995 billionE) B) and D)
F) B) and C)

Question 2

When we say that trade is roundabout we mean that

Accepted Answer

A)   people sometimes trade goods for goods.
B)   trades require a double coincidence of wants.
C)   currency is accepted primarily to make further trades.
D)   people must spend time searching for the products they wish to purchase.E) B) and D)
F) All of the above

Question 3

Why do Federal Reserve Board of Governors have long 14 year) terms?

Accepted Answer

Long terms allow Fed Board of ...

Question 4

Which of the following is not correct?

Accepted Answer

A)   The regional Federal Reserve Banks play a role in regulating banks and ensuring the health of the banking system.
B)   The President of the New York Federal Reserve Regional Bank always gets to vote on the decisions made by the Federal Open Market Committee.
C)   U.S. monetary policy is made by the Federal Open Market Committee.
D)   The Federal Open Market Committee meets every 12 weeks.E) A) and B)
F) A) and C)

Question 5

The interest rate the Fed charges on loans it makes to banks is called

Accepted Answer

A)   the prime rate.
B)   the federal funds rate.
C)   the discount rate.
D)   the LIBOR.E) A) and D)
F) All of the above

Question 6

When conducting an open-market sale, the Fed

Accepted Answer

A)   buys government bonds, and in so doing increases the money supply.
B)   buys government bonds, and in so doing decreases the money supply.
C)   sells government bonds, and in so doing increases the money supply.
D)   sells government bonds, and in so doing decreases the money supply.E) None of the above
F) B) and C)

Question 7

If the money multiplier is 3 and the Fed wants to increase the money supply by $900,000, it could

Accepted Answer

A)   buy $300,000 worth of bonds.
B)   buy $225,000 worth of bonds.
C)   sell $300,000 worth of bonds.
D)   sell $225,000 worth of bonds.E) A) and D)
F) A) and C)

Question 8

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 C)
F) A) and D)

Question 9

If the Fed raised the reserve requirement, the demand for reserves would

Accepted Answer

A)   increase, so the federal funds rate would fall.
B)   increase, so the federal funds rate would rise.
C)   decrease, so the federal funds rate would fall.
D)   decrease, so the federal funds rate would rise.E) A) and C)
F) B) and D)

Question 10

Which of the following is correct?

Accepted Answer

A)   The Federal Reserve has 14 regional banks. The Board of Governors has 12 members who serve 7-year terms.
B)   The Federal Reserve has 14 regional banks. The Board of Governors has 7 members who serve 14-year terms.
C)   The Federal Reserve has 12 regional banks. The Board of Governors has 12 members who serve 7-year terms.
D)   The Federal Reserve has 12 regional banks. The Board of Governors has 7 members who serve 14-year terms.E) A) and B)
F) None of the above

Question 11

What is meant by the term "lender of last resort?" In what circumstances might the Fed be a lender of last resort?

Accepted Answer

A "lender of last resort" is a lender to...

Question 12

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) A) and C)

Question 13

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) B) and C)
F) None of the above

Question 14

Are credit cards and debit cards money? What's the difference between credit and debit cards?

Accepted Answer

Neither credit cards nor debit cards are...

Question 15

If the reserve ratio is 12 percent, then the money multiplier is

Accepted Answer

A)   9.3.
B)   8.3.
C)   7.3.
D)   12.E) A) and C)
F) B) and C)

Question 16

Scenario 29-2.
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 29-2. Suppose the Bank of Tazi purchased 50 million tazes of Tazian Treasury Bonds from the banks. Suppose also that both the reserve requirement and the percentage of deposits held as excess reserves stay the same. By how much does the money supply change?

Accepted Answer

A)   625 million tazes
B)   1,000 million tazes
C)   1,250 million tazes
D)   None of the above is correct.E) A) and D)
F) A) and B)

Question 17

Table 29-4.
 
-Refer to Table 29-4. If $800 is deposited into the First Bank of Fairfield, and the bank takes no other actions, its

Accepted Answer

A)   reserves will increase by $100.
B)   liabilities will increase by $800.
C)   assets will decrease by $800.
D)   loans will increase by $800.E) All of the above
F) C) and D)

Question 18

The "yardstick" people use to post prices and record debts is called

Accepted Answer

A)   a medium of exchange.
B)   a unit of account.
C)   a store of value.
D)   liquidity.E) A) and B)
F) B) and D)

Question 19

The Federal Reserve

Accepted Answer

A)   was created in 1913.
B)   is the U.S.'s central bank.
C)   has other duties in addition to controlling the money supply.
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 20

U.S. dollars are an example of commodity money and hides used to make trades are an example of fiat money.

Accepted Answer

A) True 
 B)False

Exam 21: The Monetary System

Which of the following is not correct?

Correct Answer
verified

When conducting an open-market sale, the Fed

Correct Answer
verified

The Federal Reserve

Correct Answer
verified

If the Fed raised the reserve requirement, the demand for reserves would

Correct Answer
verified

The "yardstick" people use to post prices and record debts is called

Correct Answer
verified

What is meant by the term "lender of last resort?" In what circumstances might the Fed be a lender of last resort?

Correct Answer
verified
A "lender of last resort" is a lender to...
View Answer

Money is

Correct Answer
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When we say that trade is roundabout we mean that

Correct Answer
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If the reserve ratio is 12 percent, then the money multiplier is

Correct Answer
verified

Correct Answer
verified

Table 29-4. -Refer to Table 29-4. If $800 is deposited into the First Bank of Fairfield, and the bank takes no other actions, its

Correct Answer
verified

The Federal Reserve was created

Correct Answer
verified

U.S. dollars are an example of commodity money and hides used to make trades are an example of fiat money.

Correct Answer
verified

Money

Correct Answer
verified

Which of the following is correct?

Correct Answer
verified

The interest rate the Fed charges on loans it makes to banks is called

Correct Answer
verified

If the money multiplier is 3 and the Fed wants to increase the money supply by $900,000, it could

Correct Answer
verified

Why do Federal Reserve Board of Governors have long 14 year) terms?

Correct Answer
verified
Long terms allow Fed Board of ...
View Answer

Are credit cards and debit cards money? What's the difference between credit and debit cards?

Correct Answer
verified
Neither credit cards nor debit cards are...
View Answer

Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 8 percent, and excess reserves amount to $5 billion. What is the level of deposits?

Correct Answer
verified

Exam 21: The Monetary System

Which of the following is not correct?

Correct AnswerverifiedShow Answer

When conducting an open-market sale, the Fed

Correct AnswerverifiedShow Answer

The Federal Reserve

Correct AnswerverifiedShow Answer

If the Fed raised the reserve requirement, the demand for reserves would

Correct AnswerverifiedShow Answer

The "yardstick" people use to post prices and record debts is called

Correct AnswerverifiedShow Answer

What is meant by the term "lender of last resort?" In what circumstances might the Fed be a lender of last resort?

Correct AnswerverifiedA "lender of last resort" is a lender to...View AnswerShow Answer

Money is

Correct AnswerverifiedShow Answer

When we say that trade is roundabout we mean that

Correct AnswerverifiedShow Answer

If the reserve ratio is 12 percent, then the money multiplier is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 29-4. -Refer to Table 29-4. If $800 is deposited into the First Bank of Fairfield, and the bank takes no other actions, its

Correct AnswerverifiedShow Answer

The Federal Reserve was created

Correct AnswerverifiedShow Answer

U.S. dollars are an example of commodity money and hides used to make trades are an example of fiat money.

Correct AnswerverifiedShow Answer

Money

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

The interest rate the Fed charges on loans it makes to banks is called

Correct AnswerverifiedShow Answer

If the money multiplier is 3 and the Fed wants to increase the money supply by $900,000, it could

Correct AnswerverifiedShow Answer

Why do Federal Reserve Board of Governors have long 14 year) terms?

Correct AnswerverifiedLong terms allow Fed Board of ...View AnswerShow Answer

Are credit cards and debit cards money? What's the difference between credit and debit cards?

Correct AnswerverifiedNeither credit cards nor debit cards are...View AnswerShow Answer

Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 8 percent, and excess reserves amount to $5 billion. What is the level of deposits?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
A "lender of last resort" is a lender to...
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

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Long terms allow Fed Board of ...
View Answer

Correct Answer
verified
Neither credit cards nor debit cards are...
View Answer

Correct Answer
verified