Macro practice questions
In order to influence the interest rate, the Federal Reserve System adjusts the: A. reserves of the banking system B. inflation level C. unemployment rate D. taxes that citizens must pay E. amount the government borrows
A.
The largest category of commercial banks' assets is: A. loans B. reserves C. currency D. securities E. checkable deposits
A.
The monetary base is equal to the sum of coins, A. currency and banks' reserves at the Federal Reserve B. currency plus checkable deposits at banks C. currency, banks' reserves at the federal reserve and checkable deposits at banks D. checkable deposits at banks E. US government securities owned by the Federal Reserve and Federal Reserve notes
A.
Which of the following are included in the M1 definition of money? A. currency and checkable deposits B. currency and savings deposits C. traveler's checks and money market mutual funds D. currency and small time deposits E. traveler's checks and saving deposits
A.
If the Fed buys government securities, then: A. the quantity of money is not changed, just its composition B. new bank reserves are created C. quantity of money decreases D. bank reserves are destroyed E. banks' excess reserves decrease
B.
Money serves as a: A. means of payment, legal obligation, and public tax B. medium of exchange, unit of account, and store of value C. means of setting debts, transaction lubricant, and private commodity D. means of worker exploitation and capitalist enrichment E. means to conduct barter transactions
B.
The amount of loans that a bank can create is limited by: A. a law enacted by Congress B. the bank's excess reserves C. a directive from the Federal Reserve System, which takes into account the bank's financial stability D. the real interest rate E. the bank's government securities
B.
The money multiplier is the: A. fraction of the monetary base that is kept in currency B. factor by which a change in the monetary base is multiplied to give the change in the quantity base C. factor by which a change in the deposits base is multiplied to give the change in the monetary base D. proportion by which a change in the quantity of money changes the monetary base E. number of times that the Fed conducts open market operations in a month
B.
When the Fed buys or sells securities, it is conducting _________ operation. A. government debt B. open market C. money multiplier D. deposit E. currency
B.
Barter is... A. the exchange of goods and services for money B. the pricing of goods and services with one agreed upon standard C. the exchange of goods and services directly for other goods and services D. generally accepted means of payment E. storing money for use at a later date
C.
Money is best defined as... A. dollar bills B. credit cards C. whatever is generally accepted as means of payment D. whatever is used in a barter system E. gold
C.
The Board of Governors of the Federal Reserve System has: A. 12 members appointed by the president of the United States B. 12 members elected by the public C. 7 members appointed by the president of the United States D. 7 members elected by the public
C.
Banks can make loans as long as they have: A. deposits B. reserves C. required reserves D. excess reserves E. excess government securities
D.
Banks create money by: A. printing money B. asking the Fed to print more currency C. lending to the Fed D. making loans E. buying government securities
D.
Which of the following are customers of Federal Reserve district banks? A. only large business firms B. households and business firms C. only foreign governments D. banks and the US government E. only the US government
D.
Which of the following is NOT held as an asset by banks? A. reserves B. loans C. securities D. currency in the bank's vaults E. checkable deposits
E.