Question 1

Central banks:

Accepted Answer

A)   exist in almost every major nation.
B)   are common only to industrialized nations.
C)   in the United States oversee the U.S. economy, as well as some developing nations who do not have a central bank.
D)   stopped being used after events like the Great Depression proved them useless.E) None of the above
F) A) and B)

Question 2

If money has intrinsic value, it has value:

Accepted Answer

A)   unrelated to its use as money.
B)   only as its use as money.
C)   that sets its value as money.
D)   based on how often people use it for payment.E) A) and C)
F) All of the above

Question 3

The Federal Reserve System consists of 12 ___________ and 7 ______________.

Accepted Answer

A)   regional banks; Board of Governor's members
B)   Board of Governor's members; regional banks
C)   regional banks; member banks
D)   member banks; regional banksE) A) and B)
F) A) and C)

Question 4

The Board of Governors:

Accepted Answer

A)   are experts in banking, finance, and monetary policy.
B)   are appointed by the U.S. president and confirmed by the Senate to 14 year terms.
C)   Both these are true.
D)   Neither of these are true.E) A) and B)
F) A) and C)

Question 5

If the money multiplier is approximated to be 4, then the reserve ratio must be:

Accepted Answer

A)   25 percent.
B)   2.5 percent.
C)   5 percent.
D)   4 percent.E) None of the above
F) B) and C)

Question 6

The cash that a bank keeps in its vault is called its:

Accepted Answer

A)   reserves.
B)   deposits.
C)   loans.
D)   savings.E) A) and B)
F) A) and C)

Question 7

The goal of contractionary 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) A) and B)

Question 8

An increase in interest rates:

Accepted Answer

A)   decreases aggregate demand, slowing economic activity.
B)   decreases aggregate demand, increasing economic activity.
C)   increases aggregate demand, slowing economic activity.
D)   increases aggregate demand, increasing economic activity.E) B) and C)
F) A) and D)

Question 9

M1 is considered ___________ measure of money compared to M2.

Accepted Answer

A)   a more legitimate
B)   a less legitimate
C)   just as legitimate a
D)   a more stableE) All of the above
F) None of the above

Question 10

The Federal Open Market Committee includes:

Accepted Answer

A)   the Board of Governors.
B)   all regional bank presidents.
C)   the Chairman of the Treasury.
D)   the Secretary of State.E) A) and D)
F) A) and B)

Question 11

Which of the following tools is used most often by the Fed for changing the supply of money?

Accepted Answer

A)   Open market operations
B)   Reserve requirement
C)   Discount window
D)   Interest rateE) All of the above
F) B) and C)

Question 12

If the money supply in the economy were at MS2, and the Federal Reserve Bank used open market operations to move money supply to MS3, the overall direct result in the economy would be:

Accepted Answer

A)   Aggregate demand shifted in, causing GDP to fall.
B)   Aggregate supply shifted in, causing GDP to fall.
C)   Aggregate demand shifted out, causing GDP to rise
D)   LRAS move to the FE level of output.E) All of the above
F) A) and B)

Question 13

Giving the Fed a high degree of independence means all but:

Accepted Answer

A)   the Fed governors will not be as tempted by political pressure.
B)   it is less likely to expand the money supply simply to make it cheaper for the government to repay its debt.
C)   technocrats-rather than politicians-are in charge, which tends to increase people's trust in the stability of the dollar.
D)   The federal government will not have to borrow to finance its budget deficit.E) B) and D)
F) A) and C)

Exam 15: Money and the Monetary System

An increase in interest rates:

Correct Answer
verified

The Federal Reserve System consists of 12 _ and 7 ____.

Correct Answer
verified

M1 is considered ___________ measure of money compared to M2.

Correct Answer
verified

The goal of contractionary monetary policy is to:

Correct Answer
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The cash that a bank keeps in its vault is called its:

Correct Answer
verified

If money has intrinsic value, it has value:

Correct Answer
verified

The Board of Governors:

Correct Answer
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Central banks:

Correct Answer
verified

If the money multiplier is approximated to be 4, then the reserve ratio must be:

Correct Answer
verified

The Federal Open Market Committee includes:

Correct Answer
verified

Which of the following tools is used most often by the Fed for changing the supply of money?

Correct Answer
verified

If the money supply in the economy were at MS2, and the Federal Reserve Bank used open market operations to move money supply to MS3, the overall direct result in the economy would be:

Correct Answer
verified

Giving the Fed a high degree of independence means all but:

Correct Answer
verified

Exam 15: Money and the Monetary System

An increase in interest rates:

Correct AnswerverifiedShow Answer

The Federal Reserve System consists of 12 ___________ and 7 ______________.

Correct AnswerverifiedShow Answer

M1 is considered ___________ measure of money compared to M2.

Correct AnswerverifiedShow Answer

The goal of contractionary monetary policy is to:

Correct AnswerverifiedShow Answer

The cash that a bank keeps in its vault is called its:

Correct AnswerverifiedShow Answer

If money has intrinsic value, it has value:

Correct AnswerverifiedShow Answer

The Board of Governors:

Correct AnswerverifiedShow Answer

Central banks:

Correct AnswerverifiedShow Answer

If the money multiplier is approximated to be 4, then the reserve ratio must be:

Correct AnswerverifiedShow Answer

The Federal Open Market Committee includes:

Correct AnswerverifiedShow Answer

Which of the following tools is used most often by the Fed for changing the supply of money?

Correct AnswerverifiedShow Answer

If the money supply in the economy were at MS2, and the Federal Reserve Bank used open market operations to move money supply to MS3, the overall direct result in the economy would be:

Correct AnswerverifiedShow Answer

Giving the Fed a high degree of independence means all but:

Correct AnswerverifiedShow Answer

Correct Answer
verified

The Federal Reserve System consists of 12 _ and 7 ____.

Correct Answer
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Correct Answer
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