Question 1

If the reserve ratio is 100-percent, then a new deposit of $1000 into a bank account

Accepted Answer

A)   eventually increases the money supply by $1000.
B)   leaves the size of the money supply unchanged.
C)   eventually decreases the size of the money supply by $1000.
D)   eventually increases the money supply by $2000.E) A) and D)
F) B) and D)

Question 2

Which of the following functions of money is also a common function of most other financial assets?

Accepted Answer

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

Question 3

Which list ranks assets from most to least liquid?

Accepted Answer

A)   currency, fine art, stocks
B)   currency, stocks, fine art
C)   fine art, currency, stocks
D)   fine art, stocks, currencyE) A) and D)
F) B) and D)

Question 4

Why is the president of the New York Fed always a voting member of the FOMC?

Accepted Answer

New York is the financial capitol of the...

Question 5

Which group within the Federal Reserve System meets to discuss changes in the economy and determine monetary policy?

Accepted Answer

A)   the Board of Governors
B)   the FOMC
C)   the regional Federal Reserve Bank presidents
D)   the Central Bank Policy CommissionE) A) and B)
F) None of the above

Question 6

Which of the following will not help to prevent bank runs?

Accepted Answer

A)   government insurance of deposits
B)   fractional reserve banking
C)   100% reserve banking
D)   All of the above prevent bank runs.E) B) and D)
F) B) and C)

Question 7

Which of the following is a function of money?

Accepted Answer

A)   a unit of account
B)   a store of value
C)   medium of exchange
D)   All of the above are correct.E) A) and B)
F) B) and C)

Question 8

The existence of money makes trade easier. How is it that money can also increase the standard of living?

Accepted Answer

The existence of money means the economy...

Question 9

When the Fed purchases government bonds the money supply and the federal funds rate .

Accepted Answer

increases,...

Question 10

A problem that the Fed faces when it attempts to control the money supply is that

Accepted Answer

A)   since the U.S. has a fractional-reserve banking system, the amount of money in the economy depends in part on the behavior of depositors and bankers.
B)   the Fed has to get the approval of the U.S. Treasury Department whenever it uses any of its monetary policy tools.
C)   while the Fed has the ability to change the money supply by a large amount, it does not have the ability to change it by a small amount.
D)   federal legislation in the 1950s stripped the Fed of its power to act as a lender of last resort to banks.E) A) and D)
F) B) and D)

Question 11

The Federal Reserve was created in 1913 after a series of bank failures in 1907.

Accepted Answer

A) True 
 B)False

Question 12

Credit cards are

Accepted Answer

A)   a medium of exchange.
B)   counted as part of M2 but not as part of M1.
C)   important for analyzing the monetary system.
D)   All of the above are correct.E) A) and C)
F) C) and D)

Question 13

At any given time, the voting members of the Federal Open Market Committee include

Accepted Answer

A)   five of the presidents of the regional Federal Reserve banks.
B)   the president of the Federal Reserve Bank of New York.
C)   the seven members of the Board of Governors.
D)   All of the above are correct.E) None of the above
F) A) and D)

Question 14

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 C)
F) A) and D)

Question 15

In Ugoland, the money supply is $8 million and reserves are $1 million. Assuming that people hold only deposits and no currency, and that banks hold no excess reserves, then the reserve requirement is

Accepted Answer

A)   14 percent.
B)   12.5 percent.
C)   8 percent.
D)   None of the above is correct.E) A) and C)
F) B) and D)

Question 16

Which of the following individuals serve a four-year term?

Accepted Answer

A)   the members of the Board of Governors
B)   the Chair of the Board of Governors
C)   the members of the FOMC
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 17

Table 29-9
Metropolis National Bank is currently holding 2% of its deposits as excess reserves.
 
-Refer to Table 29-9. Metropolis National Bank is currently holding 2% of deposits as excess reserves. Assume that no banks in the economy want to hold excess reserves and that people only hold deposits and no currency. How much does the money supply ultimately increase when Metropolis National Bank lends out its excess reserves?

Accepted Answer

A)   $100,000
B)   $110,000
C)   $120,000
D)   None of the above are correct.E) A) and D)
F) None of the above

Question 18

Which of the following entities actually executes open-market operations?

Accepted Answer

A)   the Board of Governors
B)   the New York Federal Reserve Bank
C)   the Federal Open Market Committee
D)   the Open Market Committees of the regional Federal Reserve BanksE) A) and B)
F) B) and C)

Question 19

Which of the following is an example of barter?

Accepted Answer

A)   A parent gives a teenager a $10 bill in exchange for her babysitting services.
B)   A homeowner gives an exterminator a check for $50 in exchange for extermination services.
C)   A barber gives a plumber a haircut in exchange for the plumber fixing the barber's leaky faucet.
D)   All of the above are examples of barter.E) None of the above
F) A) and B)

Question 20

Which of the following does the U.S. president appoint and the U.S. Senate confirm?

Accepted Answer

A)   members of the Board of Governors and regional Federal Reserve Bank Presidents.
B)   members of the Board of Governors but not the regional Federal Reserve Bank Presidents.
C)   the regional Federal Reserve Bank Presidents, but not members of the Board of Governors.
D)   neither members of the Board of Governors nor regional Federal Reserve Bank Presidents.E) C) and D)
F) A) and B)

Exam 11: The Monetary System

Credit cards are

Correct Answer
verified

Why is the president of the New York Fed always a voting member of the FOMC?

Correct Answer
verified
New York is the financial capitol of the...
View Answer

At any given time, the voting members of the Federal Open Market Committee include

Correct Answer
verified

When the Fed purchases government bonds the money supply and the federal funds rate .

Correct Answer
verified
increases,...
View Answer

Correct Answer
verified

Which of the following is an example of barter?

Correct Answer
verified

If the reserve ratio is 100-percent, then a new deposit of $1000 into a bank account

Correct Answer
verified

Which of the following functions of money is also a common function of most other financial assets?

Correct Answer
verified

A problem that the Fed faces when it attempts to control the money supply is that

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

Which list ranks assets from most to least liquid?

Correct Answer
verified

In Ugoland, the money supply is $8 million and reserves are $1 million. Assuming that people hold only deposits and no currency, and that banks hold no excess reserves, then the reserve requirement is

Correct Answer
verified

Which of the following is a function of money?

Correct Answer
verified

Which group within the Federal Reserve System meets to discuss changes in the economy and determine monetary policy?

Correct Answer
verified

Which of the following does the U.S. president appoint and the U.S. Senate confirm?

Correct Answer
verified

Which of the following will not help to prevent bank runs?

Correct Answer
verified

The existence of money makes trade easier. How is it that money can also increase the standard of living?

Correct Answer
verified
The existence of money means the economy...
View Answer

Which of the following entities actually executes open-market operations?

Correct Answer
verified

The Federal Reserve was created in 1913 after a series of bank failures in 1907.

Correct Answer
verified

Which of the following individuals serve a four-year term?

Correct Answer
verified

Exam 11: The Monetary System

Credit cards are

Correct AnswerverifiedShow Answer

Why is the president of the New York Fed always a voting member of the FOMC?

Correct AnswerverifiedNew York is the financial capitol of the...View AnswerShow Answer

At any given time, the voting members of the Federal Open Market Committee include

Correct AnswerverifiedShow Answer

When the Fed purchases government bonds the money supply and the federal funds rate .

Correct Answerverifiedincreases,...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Which of the following is an example of barter?

Correct AnswerverifiedShow Answer

If the reserve ratio is 100-percent, then a new deposit of $1000 into a bank account

Correct AnswerverifiedShow Answer

Which of the following functions of money is also a common function of most other financial assets?

Correct AnswerverifiedShow Answer

A problem that the Fed faces when it attempts to control the money supply is that

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

Which list ranks assets from most to least liquid?

Correct AnswerverifiedShow Answer

In Ugoland, the money supply is $8 million and reserves are $1 million. Assuming that people hold only deposits and no currency, and that banks hold no excess reserves, then the reserve requirement is

Correct AnswerverifiedShow Answer

Which of the following is a function of money?

Correct AnswerverifiedShow Answer

Which group within the Federal Reserve System meets to discuss changes in the economy and determine monetary policy?

Correct AnswerverifiedShow Answer

Which of the following does the U.S. president appoint and the U.S. Senate confirm?

Correct AnswerverifiedShow Answer

Which of the following will not help to prevent bank runs?

Correct AnswerverifiedShow Answer

The existence of money makes trade easier. How is it that money can also increase the standard of living?

Correct AnswerverifiedThe existence of money means the economy...View AnswerShow Answer

Which of the following entities actually executes open-market operations?

Correct AnswerverifiedShow Answer

The Federal Reserve was created in 1913 after a series of bank failures in 1907.

Correct AnswerverifiedShow Answer

Which of the following individuals serve a four-year term?

Correct AnswerverifiedShow Answer

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Correct Answer
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New York is the financial capitol of the...
View Answer

Correct Answer
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Correct Answer
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increases,...
View Answer

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
The existence of money means the economy...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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