Question 1

A decrease in the money supply might indicate that the Fed had

Accepted Answer

A)  purchased bonds in an attempt to increase the federal funds rate.
B)  purchased bonds in an attempt to reduce the federal funds rate.
C)  sold bonds in an attempt to increase the federal funds rate.
D)  sold bonds in an attempt to reduce the federal funds rate.E) None of the above
F) A) and C)

Question 2

Which of the following defer payments?

Accepted Answer

A)  credit cards and debit cards
B)  neither credit cards nor debit cards
C)  credit cards but not debit cards
D)  debit cards but not credit cardsE) C) and D)
F) A) and B)

Question 3

You saved $500 in currency in your piggy bank to purchase a new laptop. The $500 you kept in your piggy bank illustrates money's function as a _______. The laptop's price is posted as $500. The $500 price illustrates money's function as a _____. You use the $500 to purchase the laptop. This transaction illustrates money's function as a ______.

Accepted Answer

A)  store of value, medium of exchange, unit of account
B)  store of value, unit of account, medium of exchange
C)  medium of exchange, unit of account, store of value
D)  medium of exchange, store of value, unit of accountE) None of the above
F) All of the above

Question 4

The Federal Reserve is a privately operated commercial bank.

Accepted Answer

A) True 
 B)False

Question 5

List the two main functions performed by the Fed?

Accepted Answer

The Fed performs two main func...

Question 6

​You write a check to your landlord to pay the rent on your apartment. To your landlord, your check represents

Accepted Answer

A)  ​a claim to goods and services in the future.
B)  ​a good with intrinsic value.
C)  ​a double coincidence of wants.
D)  ​a good with immediate value.E) A) and D)
F) A) and C)

Question 7

Demand deposits 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) A) and D)
F) All of the above

Question 8

A bank has $30,000 in deposits and has $5,400 in reserves. What is its reserve ratio?

Accepted Answer

The answer of A bank has $30,000 in deposits and...

Question 9

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) A) and D)
F) None of the above

Question 10

The federal funds rate is the interest rate

Accepted Answer

A)  the Federal Reserve charges for loans it makes to the federal government.
B)  the Federal Reserve charges banks for short-term loans.
C)  banks charge each other for short-term loans of reserves.
D)  on newly issued one-year Treasury bonds.E) C) and D)
F) B) and D)

Question 11

Mia puts money into a piggy bank so she can spend it later. What function of money does this illustrate?

Accepted Answer

A)  store of value
B)  medium of exchange
C)  unit of account
D)  None of the above is correct.E) C) and D)
F) A) and B)

Question 12

A bank has $8,000 in deposits and $6,000 in loans. It has loaned out all it can given the reserve requirement. It follows that the reserve requirement is

Accepted Answer

A)  2.5 percent.
B)  33.3 percent.
C)  25 percent.
D)  75 percent.E) A) and B)
F) C) and D)

Question 13

Which of the following does the Federal Reserve not do?

Accepted Answer

A)  It controls the supply of money.
B)  It acts as a lender of last resort to banks.
C)  It makes loans to any qualified business that requests one.
D)  It tries to ensure the health of the banking system.E) A) and B)
F) B) and D)

Question 14

Table 29-8 
-Refer to Table 29-8. The required reserve ratio is 12 percent. Which of the following is true?

Accepted Answer

A)  This banks reserve ratio is 12 percent. Its excess reserves are $0.
B)  This banks reserve ratio is 13.3 percent. Its excess reserves are $120.
C)  This banks reserve ratio is 15 percent. Its excess reserves are $240.
D)  This banks reserve ratio is 10 percent. Its excess reserves are $300.E) C) and D)
F) A) and D)

Question 15

The Fed can reduce the federal funds rate by

Accepted Answer

A)  decreasing the money supply. To decrease the money supply it could sell bonds.
B)  decreasing the money supply. To decrease the money supply it could buy bonds.
C)  increasing the money supply. To increase the money supply it could sell bonds.
D)  increasing the money supply. To increase the money supply it could buy bonds.E) None of the above
F) A) and C)

Question 16

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

Accepted Answer

Leverage amplifies the impact from chang...

Question 17

Bank capital is

Accepted Answer

A)  the machinery, structures, and equipment of the bank.
B)  the resources that owners have put into the bank.
C)  the reserves of the bank.
D)  the bank's total assets.E) C) and D)
F) A) and B)

Question 18

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 19

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

Question 20

Consider five individuals with different occupations.  Which of the following pairs of individuals has a double coincidence of wants?

Accepted Answer

A)  Mary and Clark
B)  Clark and Nathan
C)  Nathan and Polly
D)  Polly and PaulE) B) and C)
F) C) and D)

Exam 29: The Monetary System

Demand deposits are included in

Correct Answer
verified

A bank has $30,000 in deposits and has $5,400 in reserves. What is its reserve ratio?

Correct Answer
verified

A decrease in the money supply might indicate that the Fed had

Correct Answer
verified

The Federal Reserve is a privately operated commercial bank.

Correct Answer
verified

Correct Answer
verified

Traveler's checks are included in

Correct Answer
verified

A bank has $8,000 in deposits and $6,000 in loans. It has loaned out all it can given the reserve requirement. It follows that the reserve requirement is

Correct Answer
verified

Consider five individuals with different occupations. Which of the following pairs of individuals has a double coincidence of wants?

Correct Answer
verified

Which of the following defer payments?

Correct Answer
verified

The federal funds rate is the interest rate

Correct Answer
verified

The Fed can reduce the federal funds rate by

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

The ease with which an asset can be

Correct Answer
verified

Which of the following does the Federal Reserve not do?

Correct Answer
verified

Mia puts money into a piggy bank so she can spend it later. What function of money does this illustrate?

Correct Answer
verified

Table 29-8 -Refer to Table 29-8. The required reserve ratio is 12 percent. Which of the following is true?

Correct Answer
verified

Bank capital is

Correct Answer
verified

You write a check to your landlord to pay the rent on your apartment. To your landlord, your check represents

Correct Answer
verified

List the two main functions performed by the Fed?

Correct Answer
verified
The Fed performs two main func...
View 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 Answer
verified

Exam 29: The Monetary System

Demand deposits are included in

Correct AnswerverifiedShow Answer

A bank has $30,000 in deposits and has $5,400 in reserves. What is its reserve ratio?

Correct AnswerverifiedShow Answer

A decrease in the money supply might indicate that the Fed had

Correct AnswerverifiedShow Answer

The Federal Reserve is a privately operated commercial bank.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Traveler's checks are included in

Correct AnswerverifiedShow Answer

A bank has $8,000 in deposits and $6,000 in loans. It has loaned out all it can given the reserve requirement. It follows that the reserve requirement is

Correct AnswerverifiedShow Answer

Consider five individuals with different occupations. Which of the following pairs of individuals has a double coincidence of wants?

Correct AnswerverifiedShow Answer

Which of the following defer payments?

Correct AnswerverifiedShow Answer

The federal funds rate is the interest rate

Correct AnswerverifiedShow Answer

The Fed can reduce the federal funds rate by

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

The ease with which an asset can be

Correct AnswerverifiedShow Answer

Which of the following does the Federal Reserve not do?

Correct AnswerverifiedShow Answer

Mia puts money into a piggy bank so she can spend it later. What function of money does this illustrate?

Correct AnswerverifiedShow Answer

Table 29-8 -Refer to Table 29-8. The required reserve ratio is 12 percent. Which of the following is true?

Correct AnswerverifiedShow Answer

Bank capital is

Correct AnswerverifiedShow Answer

​You write a check to your landlord to pay the rent on your apartment. To your landlord, your check represents

Correct AnswerverifiedShow Answer

List the two main functions performed by the Fed?

Correct AnswerverifiedThe Fed performs two main func...View AnswerShow 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

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

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

You write a check to your landlord to pay the rent on your apartment. To your landlord, your check represents

Correct Answer
verified

Correct Answer
verified
The Fed performs two main func...
View Answer

Correct Answer
verified