ECON: Chapter 15

d

A bank's capital is: a. the value of all its assets, including loans. b. the value of all its assets, excluding loans. c. the value of its physical plant, including buildings, computers, and automatic teller machines. d. the difference between its assets and liabilities.

a

A decrease in the excess reserves banks want to hold, together with people depositing currency into their demand deposit accounts, would: a. increase the money supply. b. decrease the money supply. c. leave the money supply unchanged. d. have an indeterminate effect on the money supply.

d

A decrease in the excess reserves banks want to hold, together with people taking currency out of their demand deposit accounts, would: a. increase the money supply. b. decrease the money supply. c. leave the money supply unchanged. d. have an indeterminate effect on the money supply.

d

An increase in the excess reserves banks want to hold, together with people depositing currency into their demand deposit accounts, would: a. increase the money supply. b. decrease the money supply. c. leave the money supply unchanged. d. have an indeterminate effect on the money supply.

a

Bank runs ____ bank reserves and ____ the money supply. a. decrease; decrease b. decrease; increase c. increase; increase d. increase; decrease

c

Banks are considered a safer place to deposit money now than they were prior to 1933 because: a. gold reserves have increased. b. reserve requirements are higher. c. they are more closely regulated. d. the FDIC was created.

c

Can bankers create money? a. No, they do not have this power. b. No, unless they have a special charter which permits it. c. Yes, through multiple deposit creation. d. Yes, by printing checks for customers.

a

Loans are: a. assets of banks, liabilities of borrowers. b. liabilities of banks, assets of borrowers. c. assets of banks and their borrowers. d. liabilities of banks and their borrowers.

b

M1 includes: a. cash and travelers' checks. b. cash, checking account balances, and travelers' checks. c. cash, travelers checks', and bank deposits d. cash, checking account balances, and saving account balances.

d

M1 includes: a. cash and travelers' checks. b. cash, checking account balances, and travelers' checks. c. cash, travelers checks', and bank deposits d. cash, checking account balances, and saving account balances.

a

Paper money in the U.S. is: a. fiat money. b. more than half of M2. c. only partially backed by gold and silver in Fort Knox. d. convertible into specie (gold or silver) at the holder's request.

d

The money ____ equals 1 divided by the reserve requirement. The larger the reserve requirement, the ____ the money multiplier. a. supply; larger b. multiplier; larger c. supply; smaller d. multiplier; smaller

d

The primary benefit of monetary exchange compared to barter exchange is: a. the possibility of tracking trade for tax purposes. b. increased time devoted to finding trade partners. c. increased time devoted to shopping for what we want. d. increased efficiency in arranging transactions.

d

The problem of double coincidence of wants is associated with: a. paper money. b. insurance. c. credit cards. d. barter system.

False

True or False: Credit cards should be included in M1 because they are just like checks.

False

True or False: If a person buries his money in his backyard, he is using money as a medium of exchange.

False

True or False: Money functioning as a medium of exchange results in an increase in transactions costs.

True

True or False: Money would generally be a more efficient store of value than wheat when there is not rapid inflation.

True

True or False: People continue to value money because they have confidence in its convertibility into goods and services.

False

True or False: Savings accounts are the most liquid of all assets because they can be quickly and easily transferred.

True

True or False: The higher the interest rate paid on certificates of deposit and other non-transaction deposits, other things being equal, the less people would be expected to hold in demand deposits.

False

True or False: The more widely held and accepted credit cards are, the more money people would be expected to hold in the form of currency.

True

True or False: paper money is fiat money because it has been declared by government as a means of exchange.

True

True or False:The existence of inflation and other possible uncertainties reduces the usefulness of money as a store of value.

c

Which of the following is not one of the functions of money? a. unit of account b. means of deferred payment c. encouraging people to barter d. medium of exchange