Question 1

If the reserve requirement is 10 percent, a bank desires to hold no excess reserves, and it receives a new deposit of $500, it

Accepted Answer

A)  must increase required reserves by $50.
B)  will initially see reserves increase by $500.
C)  will be able to use this deposit to make new loans amounting to $450.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 2

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) C) and D)
F) B) and D)

Question 3

The president of each regional Federal Reserve Bank is appointed by

Accepted Answer

A)  the U.S. president with the approval of the Senate.
B)  the Board of Governors.
C)  the voting members of the Federal Open Market Committee.
D)  the board of directors of that regional Federal Reserve Bank.E) A) and B)
F) A) and D)

Question 4

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) None of the above

Question 5

In many circumstances, prisoners are not allowed to possess cash. Does this mean there is no money in prison? Explain.

Accepted Answer

No.
Any good that provides the three fun...

Question 6

The agency responsible for regulating the U.S. monetary system is the

Accepted Answer

A)  U.S. Treasury
B)  Federal Reserve
C)  Department of Justice
D)  Federal Trade CommissionE) B) and D)
F) A) and C)

Question 7

If R represents the reserve ratio for all banks in the economy, then the money multiplier is

Accepted Answer

A)  1/(1-R) .
B)  1/R.
C)  1/(1+R) .
D)  (1+R) /R.E) C) and D)
F) None of the above

Question 8

If the reserve requirement is 5 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 $10.50.
C)  will be able to make new loans up to a maximum of $9.50.
D)  All of the above are correct.E) A) and D)
F) A) and C)

Question 9

If an economy used gold as money, its money would be

Accepted Answer

A)  commodity money, but not fiat money.
B)  fiat money, but not commodity money.
C)  both fiat and commodity money.
D)  functioning as a store of value and as a unit of account, but not as a medium of exchange.E) None of the above
F) All of the above

Question 10

Which of the following is not included in either M1 or M2?

Accepted Answer

A)  money market deposit accounts
B)  large time deposit
C)  demand deposits
D)  money market mutual fundsE) None of the above
F) A) and C)

Question 11

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

Question 12

Reserve requirements are regulations concerning

Accepted Answer

A)  the amount banks are allowed to borrow from the Fed.
B)  the amount of reserves banks must hold against deposits.
C)  reserves banks must hold based on the number and type of loans they make.
D)  the interest rate at which banks can borrow from the Fed.E) C) and D)
F) All of the above

Question 13

The money multiplier equals

Accepted Answer

A)  1/R, where R represents the quantity of reserves in the economy.
B)  1/R, where R represents the reserve ratio for all banks in the economy.
C)  1/(1+R) , where R represents the quantity of reserves in the economy.
D)  1/(1+R) , where R represents the reserve ratio for all banks in the economy.E) All of the above
F) A) and B)

Question 14

Monetary policy has an important influence on _____ and _____ in the short run.

Accepted Answer

inflation,...

Question 15

​The 2008 credit crunch occurred when banks reduced lending in response to

Accepted Answer

A)  ​the loss of asset value for mortgage backed securities and mortgage loans.
B)  ​having too little capital to satisfy capital requirements.
C)  ​an excess of bank capital.
D)  ​an increase in the required reserve ratio.E) C) and D)
F) None of the above

Question 16

Consider five high school students working on homework in study hall.  Which of the following pairs of students has a double coincidence of wants?

Accepted Answer

A)  Rosie and Piper
B)  Piper and Molly
C)  Dewey and Molly
D)  Bob and DeweyE) B) and C)
F) A) and D)

Question 17

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. Assume that banks desire to continue holding the same ratio of excess reserves to deposits. What is the reserve requirement and the reserve ratio for Tazian Banks?

Accepted Answer

A)  5 percent, 8 percent
B)  4 percent, 8 percent
C)  4 percent, 5 percent
D)  None of the above is correct.E) None of the above
F) A) and B)

Question 18

Commodity money cannot be used as a unit of account.

Accepted Answer

A) True 
 B)False

Question 19

Table 29-5. 
-Refer to Table 29-5. If the bank faces a reserve requirement of 6 percent, then the bank

Accepted Answer

A)  is in a position to make a new loan of $12,000.
B)  is in a position to make a new loan of $18,000.
C)  has excess reserves of $12,000.
D)  None of the above is correct.E) B) and D)
F) C) and D)

Question 20

Diana tutors Tiago for two hours before his economics final exam. Tiago pays Diana through a direct transfer from his bank on a payment app. Diana then uses her debit card to buy pizza for dinner from the local pizza parlor. This is an example of

Accepted Answer

A)  ​the exchange of money facilitating production and trade.
B)  trade between two people who each have a good or service that the other wants.
C)  ​an inefficient allocation of scarce resources.
D)  ​the creation of money through monetary policy.E) C) and D)
F) B) and D)

Exam 29: The Monetary System

Monetary policy has an important influence on _ and _ in the short run.

Correct Answer
verified
inflation,...
View Answer

Consider five high school students working on homework in study hall. Which of the following pairs of students has a double coincidence of wants?

Correct Answer
verified

Diana tutors Tiago for two hours before his economics final exam. Tiago pays Diana through a direct transfer from his bank on a payment app. Diana then uses her debit card to buy pizza for dinner from the local pizza parlor. This is an example of

Correct Answer
verified

Table 29-5. -Refer to Table 29-5. If the bank faces a reserve requirement of 6 percent, then the bank

Correct Answer
verified

If the reserve requirement is 10 percent, a bank desires to hold no excess reserves, and it receives a new deposit of $500, it

Correct Answer
verified

Which of the following is correct?

Correct Answer
verified

Reserve requirements are regulations concerning

Correct Answer
verified

The 2008 credit crunch occurred when banks reduced lending in response to

Correct Answer
verified

Correct Answer
verified

In many circumstances, prisoners are not allowed to possess cash. Does this mean there is no money in prison? Explain.

Correct Answer
verified
No.
Any good that provides the three fun...
View Answer

If an economy used gold as money, its money would be

Correct Answer
verified

The money multiplier equals

Correct Answer
verified

When conducting an open-market sale, the Fed

Correct Answer
verified

The president of each regional Federal Reserve Bank is appointed by

Correct Answer
verified

Which of the following is not included in either M1 or M2?

Correct Answer
verified

Commodity money cannot be used as a unit of account.

Correct Answer
verified

If the reserve requirement is 5 percent, a bank desires to hold no excess reserves, and it receives a new deposit of $10, then this bank

Correct Answer
verified

The regional Federal Reserve Banks

Correct Answer
verified

The agency responsible for regulating the U.S. monetary system is the

Correct Answer
verified

If R represents the reserve ratio for all banks in the economy, then the money multiplier is

Correct Answer
verified

Exam 29: The Monetary System

Monetary policy has an important influence on _____ and _____ in the short run.

Correct Answerverifiedinflation,...View AnswerShow Answer

Consider five high school students working on homework in study hall. Which of the following pairs of students has a double coincidence of wants?

Correct AnswerverifiedShow Answer

Diana tutors Tiago for two hours before his economics final exam. Tiago pays Diana through a direct transfer from his bank on a payment app. Diana then uses her debit card to buy pizza for dinner from the local pizza parlor. This is an example of

Correct AnswerverifiedShow Answer

Table 29-5. -Refer to Table 29-5. If the bank faces a reserve requirement of 6 percent, then the bank

Correct AnswerverifiedShow Answer

If the reserve requirement is 10 percent, a bank desires to hold no excess reserves, and it receives a new deposit of $500, it

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Reserve requirements are regulations concerning

Correct AnswerverifiedShow Answer

​The 2008 credit crunch occurred when banks reduced lending in response to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In many circumstances, prisoners are not allowed to possess cash. Does this mean there is no money in prison? Explain.

Correct AnswerverifiedNo.Any good that provides the three fun...View AnswerShow Answer

If an economy used gold as money, its money would be

Correct AnswerverifiedShow Answer

The money multiplier equals

Correct AnswerverifiedShow Answer

When conducting an open-market sale, the Fed

Correct AnswerverifiedShow Answer

The president of each regional Federal Reserve Bank is appointed by

Correct AnswerverifiedShow Answer

Which of the following is not included in either M1 or M2?

Correct AnswerverifiedShow Answer

Commodity money cannot be used as a unit of account.

Correct AnswerverifiedShow Answer

If the reserve requirement is 5 percent, a bank desires to hold no excess reserves, and it receives a new deposit of $10, then this bank

Correct AnswerverifiedShow Answer

The regional Federal Reserve Banks

Correct AnswerverifiedShow Answer

The agency responsible for regulating the U.S. monetary system is the

Correct AnswerverifiedShow Answer

If R represents the reserve ratio for all banks in the economy, then the money multiplier is

Correct AnswerverifiedShow Answer

Monetary policy has an important influence on _ and _ in the short run.

Correct Answer
verified
inflation,...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The 2008 credit crunch occurred when banks reduced lending in response to

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
No.
Any good that provides the three fun...
View Answer

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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Correct Answer
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Correct Answer
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