Chapter 16 Quiz Macroeconomics

A bank's reserve ratio is 5 percent and the bank has $2,280 in reserve. Its deposits amount to $114. $2,166. $2,400. $45,600.

$45,600.

M1 includes currency. demand deposits. traveler's checks. All of the above are correct.

All the above

The Federal Reserve was created in 1913. is the U.S.'s central bank. has other duties in addition to controlling the money supply. All of the above are correct.

All the above

Which of the following is a store of value? Correct Answer cash and stocks cash but not stocks stocks but not cash neither cash nor stocks

Correct Answer cash and stocks

The existence of money leads to greater specialization in production, but not to a higher standard of living. a higher standard of living, but not to greater specialization. Correct Answer greater specialization and to a higher standard of living. neither greater specialization nor to a higher standard of living.

Correct Answer greater specialization and to a higher standard of living.

If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold fewer reserves, so the reserve ratio will fall. fewer reserves, so the reserve ratio will rise. more reserves, so the reserve ratio will fall. Correct Answer more reserves, so the reserve ratio will rise.

Correct Answer more reserves, so the reserve ratio will rise.

Credit cards represent the largest component of M1. are not included in M1 but are included in M2. are a form of money unique to the U.S. are not considered money.

are not considered money.

Which of the following is not included in M1? currency demand deposits traveler's checks credit cards

credit cards

When the Fed makes open-market purchases bank withdrawals and lending increase. withdrawals increase and lending decreases. deposits and lending increase. deposits increase and lending decreases.

deposits and lending increase.

The Board of Governors is chaired by the U.S. Secretary of the Treasury. members are elected by the U.S. public. has 7 members. All of the above are correct.

has 7 members

If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold fewer reserves, so the money multiplier will fall. fewer reserves, so the money multiplier will rise. more reserves, so the money multiplier will fall. more reserves, so the money multiplier will rise.

more reserves, so the money multiplier will fall.

Dollar bills, rare paintings, and emerald necklaces are all media of exchange. units of account. stores of value. All of the above are correct.

stores of value.

Liquidity refers to the ease with which an asset is converted to the medium of exchange. the measurement of the intrinsic value of commodity money. the measurement of the durability of a good. how many time a dollar circulates in a given year.

the ease with which an asset is converted to the medium of exchange.

In an economy that relies upon barter, trade does not require a double coincidence of wants. scarce resources are allocated just as easily as they are in economies that do not rely upon barter. there is no item in the economy that is widely accepted in exchange for goods and services. All of the above are correct.

there is no item in the economy that is widely accepted in exchange for goods and services.

M1 equals currency plus demand deposits plus nothing else. other checkable deposits. traveler's checks plus other checkable deposits. traveler's checks plus other checkable deposits plus savings deposits.

traveler's checks plus other checkable deposits.