Question 1

The cash you have in your wallet would be counted in which measure of money?

Accepted Answer

A)  Hard money
B)  M1
C)  M2
D)  It would be counted in all of theseE) B) and D)
F) A) and B)

Question 2

One of the difficulties in implementing monetary policy is:

Accepted Answer

A)  the time it takes to pass new monetary policy once the Fed has decided action is needed.
B)  the time it takes monetary policy to have an effect in the economy once enacted.
C)  the time it takes to enact monetary policy once the Fed has decided action is needed.
D)  All of these make monetary policy difficult to implement.E) None of the above
F) A) and B)

Question 3

In order to change the money supply,the Fed might use which of the following tools?

Accepted Answer

A)  Discount window
B)  Reserve requirement
C)  Open market operations
D)  The Fed could use all of theseE) C) and D)
F) A) and B)

Question 4

The set of all assets that are regularly used to directly purchase goods and services is called:

Accepted Answer

A)  money.
B)  consumption income.
C)  disposable income.
D)  fungible goods.E) C) and D)
F) A) and D) A

Question 5

The narrowest definition of money is:

Accepted Answer

A)  hard money.
B)  M1.
C)  M2.
D)  L.E) None of the above
F) A) and B)

Question 6

Which measure of money would we most likely use if we were interested in looking at spending in the economy?

Accepted Answer

A)  Hard money
B)  M1
C)  M2
D)  We would not use any of theseE) A) and B)
F) C) and D)

Question 7

Which of the following would cause the money demand curve to shift to the right?

Accepted Answer

A)  Inflation
B)  An increase in interest rates
C)  A decrease in GDP
D)  A technological advanceE) B) and C)
F) None of the above

Question 8

If the money multiplier is approximated to be 2,then the reserve ratio must be:

Accepted Answer

A)  50 percent.
B)  5 percent.
C)  2 percent.
D)  20 percent.E) A) and B)
F) B) and C)

Question 9

In the simple liquidity preference model,changes to the money supply will have a smaller effect on interest rates the:

Accepted Answer

A)  flatter,more elastic is the money demand curve.
B)  flatter,less elastic is the money demand curve.
C)  steeper,more elastic is the money demand curve.
D)  steeper,less elastic is the money demand curve.E) A) and D)
F) All of the above A

Question 10

If the Fed wishes to slow economic activity,it might actively pursue:

Accepted Answer

A)  expansionary fiscal policy.
B)  expansionary monetary policy.
C)  contractionary fiscal policy.
D)  contractionary monetary policy.E) All of the above
F) A) and C)

Question 11

Money has replaced the need to barter,which is:

Accepted Answer

A)  a certain amount of purchasing power that it retains over time.
B)  something you can use to purchase goods and services.
C)  something you can directly offer,like any good or service,in exchange for some good or service you want.
D)  a standard unit of comparison.E) B) and C)
F) A) and D)

Question 12

Expansionary monetary policy involves:

Accepted Answer

A)  actions that reduce the money supply in order to decrease aggregate demand.
B)  actions that increase the money supply in order to decrease aggregate demand.
C)  actions that reduce the money supply in order to increase aggregate demand.
D)  actions that increase the money supply in order to increase aggregate demand.E) All of the above
F) None of the above

Question 13

The ratio of money created by the lending activities of the banking system to the money created by the government's central bank is called the:

Accepted Answer

A)  money multiplier.
B)  reserve ratio.
C)  federal funds.
D)  demand deposits.E) All of the above
F) C) and D)

Question 14

Bartering is:

Accepted Answer

A)  very efficient compared to using money.
B)  slightly inefficient compared to using money.
C)  just as efficient as using money.
D)  extremely inefficient compared to using money.E) All of the above
F) A) and B)

Question 15

Over time,the money multiplier:

Accepted Answer

A)  was relatively stable until 2008,when it dropped dramatically.
B)  was relatively stable until 2008,when it rose dramatically.
C)  has historically followed the business cycle.
D)  runs counter cyclic to the business cycle.E) B) and C)
F) All of the above

Question 16

The Board of Governors is made up of experts in:

Accepted Answer

A)  finance.
B)  banking.
C)  monetary policy.
D)  All of these are true.E) A) and D)
F) None of the above

Question 17

The goal of expansionary monetary policy is to:

Accepted Answer

A)  reduce interest rates to stimulate the economy.
B)  increase interest rates to stimulate the economy.
C)  reduce interest rates to slow down the economy.
D)  increase interest rates to slow down the economy.E) None of the above
F) B) and D)

Question 18

Liquidity refers to:

Accepted Answer

A)  how easy an asset is to convert immediately to cash without losing value.
B)  how quickly the same dollar changes hands in the economy.
C)  how quickly the average household spends its disposable income.
D)  how easy money converts to assets in an economy.E) C) and D)
F) A) and B) A

Question 19

In the United States,the dollar was commodity backed:

Accepted Answer

A)  for over 100 years.
B)  until the Civil War.
C)  for about 50 years.
D)  until World War II.E) A) and B)
F) A) and C)

Question 20

Which of the following would cause the money demand curve to shift to the left?

Accepted Answer

A)  An increase in interest rates
B)  Inflation
C)  A technological advance,like online shopping
D)  An increase in GDPE) B) and D)
F) A) and B)

Exam 31: Money and the Monetary System

The cash you have in your wallet would be counted in which measure of money?

Correct AnswerverifiedShow Answer

One of the difficulties in implementing monetary policy is:

Correct AnswerverifiedShow Answer

In order to change the money supply,the Fed might use which of the following tools?

Correct AnswerverifiedShow Answer

The set of all assets that are regularly used to directly purchase goods and services is called:

Correct AnswerverifiedA

The narrowest definition of money is:

Correct AnswerverifiedShow Answer

Which measure of money would we most likely use if we were interested in looking at spending in the economy?

Correct AnswerverifiedShow Answer

Which of the following would cause the money demand curve to shift to the right?

Correct AnswerverifiedShow Answer

If the money multiplier is approximated to be 2,then the reserve ratio must be:

Correct AnswerverifiedShow Answer

In the simple liquidity preference model,changes to the money supply will have a smaller effect on interest rates the:

Correct AnswerverifiedA

If the Fed wishes to slow economic activity,it might actively pursue:

Correct AnswerverifiedShow Answer

Money has replaced the need to barter,which is:

Correct AnswerverifiedShow Answer

Expansionary monetary policy involves:

Correct AnswerverifiedShow Answer

The ratio of money created by the lending activities of the banking system to the money created by the government's central bank is called the:

Correct AnswerverifiedShow Answer

Bartering is:

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Over time,the money multiplier:

Correct AnswerverifiedShow Answer

The Board of Governors is made up of experts in:

Correct AnswerverifiedShow Answer

The goal of expansionary monetary policy is to:

Correct AnswerverifiedShow Answer

Liquidity refers to:

Correct AnswerverifiedA

In the United States,the dollar was commodity backed:

Correct AnswerverifiedShow Answer

Which of the following would cause the money demand curve to shift to the left?

Correct AnswerverifiedShow Answer

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