ECON 252 Chapter 11

M1 includes a. demand deposits. b. currency. c. traveler's checks. d. All of the above are correct. Feedback

D

At any given time, the voting members of the Federal Open Market Committee include a. All of the above are correct. b. five of the presidents of the regional Federal Reserve banks. c. the president of the Federal Reserve Bank of New York. d. the seven members of the Board of Governors.

a

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

a store of value

Small time deposits are included in

M2 but not M1

Which of the following is correct?

The Federal Reserve has 12 regional banks. The Board of Governors has 7 members who serve 14-year terms.

Which of the following is correct?

The amount of money in the economy depends in part on the behavior of banks.

Which of the following best illustrates the unit of account function of money?

You list prices for candy sold on your Web site, www.sweettooth.com, in dollars

Which of the following best illustrates the medium of exchange function of money?

You pay for your oil change using currency

Treasury Bonds are

both liquid and a store of value

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

commodity money, but not fiat money.

The Fed's primary tool to change the money supply is

conducting open market operations

The existence of money leads to

greater specialization and to a higher standard of living.

The Board of Governors

has 7 members.

Fiat money

has no intrinsic value.

Which of the following is not a tool of monetary policy?

increasing the government budget deficit

The federal funds rate is the

interest rate at which banks lend reserves to each other overnight.

When there is a reserve requirement, banks

may hold more than, but not less than, the required quantity of reserves

Which list ranks assets from most to least liquid?

money, bonds, cars, houses

Credit card limits are included in

neither M1 nor M2

To decrease the money supply, the Fed can

sell government bonds or increase the discount rate.

When conducting an open-market sale, the Fed

sells government bonds, and in so doing decreases the money supply.

The Fed has the power to increase or decrease the number of dollars in the economy through the decisions of

the FOMC

Reserve requirements are regulations concerning

the amount of reserves banks must hold against deposits.

Economists use the term "money" to refer to

those types of wealth that are regularly accepted by sellers in exchange for goods and services.