Macro-Chapter 15-SmartBook

Funds held in bank accounts that can be withdrawn from banks at any time without advance notice are called _________ deposits. Multiple choice question. supply demand request necessary

demand

Money is a _____________ because it represents a certain amount of purchasing power that money retains over time. Multiple choice question. method of deferred payment store of value unit of account medium of exchange

store of value

The Fed can act as a lender of last resort, by loaning money to banks in need of reserves. This event occurs through the Multiple choice question. discount window. reserve requirement. reserve window. discount rate.

discount window.

If the Fed were to decrease the reserve requirement, the money supply would Multiple choice question. decrease. increase. not change.

increase.

Expansionary monetary policy increases the money supply in order to __________ aggregate demand. This, in turn, tends to ___________ the federal funds rate. Multiple choice question. reduce; reduce reduce; increase increase; increase increase; reduce

increase; reduce

When money has value that is unrelated to its role as a medium of exchange, it is said to have Multiple choice question. intrinsic value. fiat value. convenience. durability.

intrinsic value.

If the Fed conducts an open market sale of government bonds, the money supply curve will shift to the _____________.

left

When interest rates increase, the aggregate demand curve shifts to the ______________.

left

Assets used to purchase goods and services function as a _____. Multiple choice question. medium of exchange store of value unit of account

medium of exchange

Monetarist argue that Multiple choice question. money is neutral. money is irrelevant. monetary policy works in the long run. fiscal policy works in the short run.

money is neutral.

M1 contains assets that are _________ M2. Multiple choice question. more liquid than as liquid as less liquid than

more liquid than

The stated price of money is called the __________ interest rate. Multiple choice question. marginal nominal real

nominal

The amount of demand deposits that a bank must keep as vault cash or on deposit with the Fed is called Multiple choice question. reserves. reserve ratio. excess reserves. required reserves.

required reserves.

Deposits that a bank keeps in its vault or on deposit with the Federal Reserve bank are called Multiple choice question. excess reserves. reserves. required reserves. the reserve ratio.

reserves.

Apples rot. Currency doesn't. As such, currency functions as a better ______________ (Enter one word) of value.

store

According to the liquidity-preference model, the money supply curve is Multiple choice question. upward-sloping. vertical. horizontal. downward-sloping.

vertical

Suppose a bank has $1,000,000 in demand deposits. Of this, the bank hold on to $200,000 and loans out the remaining money to qualified borrowers. The reserve ratio equals ____________ %

20

Suppose you are offered two jobs of equal interest to you. One pays you $60,000 per year and the other one pays you $65,000 per year. All things (such as benefits and working environment) equal, you opt for the higher-paying job. In this case, money served as a unit of _______________ .

account

A form of money that can be legally exchanged for a fixed amount of a commodity is called __________ - backed money. Multiple choice question. fiat asset commodity

commodity

When GDP decreases, the demand for money Multiple choice question. does not change. decreases. increases.

decreases.

If the Fed conducts an open market purchase of government bonds, the money supply curve will shift to the ______________ .

right

What year was the Federal Reserve created? Multiple choice question. 1929 1913 1919 1907

1913

The M2 definition of the money supply includes Multiple select question. Everything in M3 Checking accounts Savings accounts Cash Certificates of deposit

Checking accounts Savings accounts Cash Certificates of deposit

Suppose an economy began using bricks as money in exchange for goods and services. What characteristic do bricks lack that prevent it from being "good" money? Multiple choice question. Acceptability Convenience Reliability Stability of value

Convenience

Which of the following actions on the part of the Fed constitute contractionary monetary policy? Multiple select question. Decrease the money supply Increase interest rates An open-market purchase of government bonds Decrease interest rates An open-market sale of government bonds

Decrease the money supply Increase interest rates An open-market sale of government bonds

When would the Fed conduct expansionary monetary policy? Multiple choice question. During a recession to stimulate the economy During an expansion to stimulate the economy During a recession to slow the economy During an expansion to slow the economy

During a recession to stimulate the economy

How many of the regional Federal Reserve bank presidents serve on the Federal Open Market Committee (FOMC)? Multiple choice question. Fourteen Five Seven Twelve

Five

Which of the following allow(s) banks to create money? Multiple select question. Silver coins Paper money Fractional-reserve banking Fiscal reserve banking

Fractional-reserve banking Paper money

How do dollar bills and gold differ in their role as money? Multiple choice question. Dollar bills do not have stability of value Gold does not have stability of value Gold has intrinsic value Dollar bills have intrinsic value

Gold has intrinsic value

Which of the following actions on the part of the Fed constitute expansionary monetary policy? Multiple select question. A reduction in the reserve requirement Increase the money supply An open market purchase of government bonds Increase the federal funds rate Decrease the money supply

Increase the money supply An open market purchase of government bonds A reduction in the reserve requirement

What role does the FOMC play in the economy? Multiple choice question. It conducts fiscal policy and prints money. It conducts monetary policy and guides the money supply. It conducts monetary policy and prints money. It conducts fiscal policy and guides the money supply.

It conducts monetary policy and guides the money supply.

In relation to fiscal policy, which of the following is true of monetary policy? Multiple choice question. It takes longer to implement. It takes the same amount of time to implement. It does not take as long to implement.

It does not take as long to implement.

What is the Fed's "dual mandate?" Multiple choice question. Maintain the money supply and price stability. Maintain full employment and price stability. Maintain full employment and the money supply.

Maintain full employment and price stability.

"In the long run, monetary policy is irrelevant."This statement would most likely be made by which type of economist? Multiple choice question. Keynesian Fiscalist Monetarist Fundamentalist

Monetarist

The Federal Reserve conducts what type of policy? Multiple choice question. Inflationary policy Public policy Monetary policy Fiscal policy

Monetary policy

Which of the following is the most used monetary policy tool? Multiple choice question. Reserve requirements The discount window Open-market operations

Open-market operations

When the Fed alters the amount that banks are required to hold as either vault-cash or on deposit at the Fed, it is using which of the following monetary policy tools? Multiple choice question. Open-market operations Reserve requirements Discount window

Reserve requirements

Suppose an economy began using raisins as money in exchange for goods and services. What characteristic do raisins lack that prevent them from being "good" money? Multiple choice question. Acceptability Stability of value Convenience Reliability

Stability of value

In general, who conducts fiscal policy? Multiple choice question. The U.S. Mint The Treasury Department The IRS The Federal Reserve

The Treasury Department

Which institution is responsible for managing the U.S. money supply? Multiple choice question. The central bank The Treasury Department The federal government Ways and Means committee

The central bank

When the Fed loans money to commercial banks, it does so using which monetary policy tool? Multiple choice question. The reserve requirement The discount window Open-market operations.

The discount window

If contractionary monetary policy is successful, what is the result? Multiple choice question. The money supply decreases and aggregate demand increases. The money supply and aggregate demand decrease. The money supply increases and aggregate demand decreases. The money supply and aggregate demand increase.

The money supply and aggregate demand decrease.

When money offers a standard unit of comparison, it functions as Multiple choice question. a store of value. a medium of exchange. a unit of account.

a unit of account.

Suppose you deposit $100 into a bank, it becomes a source of funds. In this instance, the bank now has a $100 ________. Since it must pay you the $100 whenever you ask for it, the bank has a $100 __________. Multiple choice question. liability; liability liability; asset asset; liability asset; asset

asset; liability

A _________ coordinates the banking system in order to ensure a sound economy. Multiple choice question. central bank Treasury department

central bank

Suppose you live in an economy where you can go to a bank at any time and exchange your paper bills for a fixed amount of copper. The money in this economy is Multiple choice question. commodity-backed money. reserve money. fiat money. coinage.

commodity-backed money.

If the Fed increases the discount rate, the money supply Multiple choice question. does not change. decreases. increases.

decreases.

The interest rate that the Fed charges for loans through the discount window is called the ___________ rate.

discount

The _________-_________ banking system makes it possible for banks to create money. Multiple choice question. commodity-based fractional-reserve frictional-reserve

fractional-reserve

The amount of demand deposits that a bank must keep as vault cash or on deposit with the Fed is called Multiple choice question. excess reserves. required reserves. reserves. reserve ratio.

required reserves.

When interest rates decrease, the aggregate demand curve shifts to the ____________.

right

Which policy does the Fed conduct to pursue its dual mandate? Multiple choice question. Fiscal policy Monetary policy Inflation policy Quantitative policy

Monetary policy

The nominal interest rate is given by Multiple choice question. the horizontal intercept of the vertical money supply curve. the intersection of the money demand curve and the money supply curve. the horizontal intercept of the downward-sloping money demand curve. the vertical intercept of the upward-sloping money supply curve.

the intersection of the money demand curve and the money supply curve.

Open market operations refer to Multiple choice question. the rate that the Fed charges banks for short-term loans. the sale or purchase of government securities by the Fed. the ability to change the amount that banks must hold on reserve.

the sale or purchase of government securities by the Fed.

Which of the following is an example of money that functions as a medium of exchange? Multiple choice question. A long-term labor contract A grocery store purchase A savings account balance A pricing mechanism

A grocery store purchase

The M1 definition of the money supply includes which of the following? Multiple select question. Checking account balances Savings account balances Everything in M2 Coins Bills

Bills Coins Checking account balances

Who is largely credited with saving the financial system during the 1907 financial crisis? Multiple choice question. Woodrow Wilson J.D. Rockefeller J.P. Morgan George Cortelyou

J.P. Morgan

What happens to money demand when interest rates fall? Multiple choice question. The demand curve for money shifts to the right. Money demand does not change. Money demand decreases. Money demand increases.

Money demand increases.

Which of the following is considered a pitfall of monetary policy? Multiple choice question. Well-timed contractionary policy increases aggregate demand. The need to allow politicians the opportunity to reach a consensus. Poorly-timed contractionary policy could make a recession worse.

Poorly-timed contractionary policy could make a recession worse.

What happens to money demand when interest rates rise? Multiple choice question. Quantity of money demanded increases. The demand curve for money shifts to the right. Quantity of money demanded decreases. Money demand does not change.

Quantity of money demanded decreases.

Which of the following is a reason that the money demand curve would increase? Multiple choice question. Interest rates rise Real GDP increases Real GDP decreases Unemployment increases.

Real GDP increases

What is true of the money supply in the liquidity-preference model? Multiple choice question. The money supply decreases as the interest rate decreases. The money supply decreases as the interest rate increases. The money supply is constant. The money supply increases as the interest rate increases.

The money supply is constant.