Econ Final Exam

Réussis tes devoirs et examens dès maintenant avec Quizwiz!

If the required reserve ratio is 0.2 in the federal buys $3000 of US government securities, the maximum amount by which the money supply can increase is________

$15,000

If r is the required reserve ratio, which of the following is the simple money multiplier?

1/r

If an increase in $10 million in excess reserves increases checkable deposits in the banking system by a maximum of $100 million, the required reserve ratio would be_______

10 percent

If the simple money multiplier is 10, the required reserve ratio must be equal to_____

10%

If a financial institution pays an interest of 1% to savers and charges borrowers 3%, they earn a profit of_______

2%

If the required reserve ratio is 5 percent, the simple money multiplier must be equal to____

20

If an increase in 10$ million in excess reserves increases checkable deposits in the banking system by a maximum of $50 million, the required reserve ratio would be_________

20%

If the simple money multiplier is 20, the required reserve ratio must be equal to______

5 percent

Raising the discount rate is______

A contractionary policy on the part of the Fed, because it raises the commercial banks cost of borrowing from it

Which of the following changes will shift the money demand curve leftward?

A decrease in real GDP

Which of the following is an example of an expansionary monetary policy?

A reduction in the required reserve ratio

Financial institutions_______

Accumulate funds from savers and lend them to borrowers

Which of the following is an example of a contractionary monetary policy m?

An increase in the discount rate

The FDIC insures deposits in_______

Any banking institution that purchases FDIC insurance

The members of the board of governors of the fed are_____

Appointed by the president with the approval of the senate

Banks act as financial intermediaries by_____

Attracting deposits from savers to lend to borrowers

The earliest type of exchange involved_______

Barter

The federal reserve system has the power to_______

Buy and sell federal government securities

To increase the money supply, the Fed might:

Buy bonds in the open market

Bank deposits that allow the account owner to draw down an account with a check or a debit card are called

Checkable deposits

The M1 money supply consists of______

Coins and currency held by the nonbank public, checkable deposits, and travelers checks

Which of the following was the earliest type of money?

Commodity money

_________ institutions obtain funds primarily by accepting customer deposits.

Depository

The Fed earns revenue from______

Discount lending and other services it provides to banks

Lowering the discount rate_____

Encourages banks to borrow from the Fed so they can more easily accommodate their customers needs for loans

The simple money multiplier______

Equals the reciprocal of the required reserve ratio

The law that established the federal reserve system is the______

Federal reserve act of 1913

Federal reserve notes are________

Flat money

Compared to M1, M2 is nearly_______

Four times larger

A lender of last resort is a financial institution that is willing and able to lend to_______

Fractional reserve system banks experiencing runs on their deposits

________ were among the first bankers.

Goldsmiths

Which of the following is not performed by the Fed?

Holding deposits of households and firms

The demand for money will be high in an economy experiencing________

Hyperinflation

Which of the following statements is true of a barter system?

In a barter system economy, there are as many different rates of exchange as there are pairs of goods to trade.

Which of the following statements is true of a barter system?

In a barter system, an individual offers one good or service to get another good or service

Identify the statement that is true of a barter system.

In a barter system, trade will only occur if there is a double coincidence of wants

If the required reserve ratio is 10 percent and the Fed buys a $1,000 security from a depository institution, the money supply______

Increases by $10,000

The opportunity cost of holding money is measured by the ______

Interest rate

Other things constant, the quantity of money demanded varies________

Inversely with the market interest rate

Which of the following is true of M1?

It is only a fraction of M2

Which of the following is correct regarding the discount rate?

It is the interest rate at which depository institutions can borrow from the federal reserve

Money that is acceptable because the government requires that it be excepted in payment of debt is______

Legal tender

Which of the following identities describes the equation of exchange?

M x P = P x Y

The narrow definition of money is _______

M1

M2 consists of______

M1 plus savings accounts, small-time deposits, money market mutual funds, and miscellaneous near-monies

Am important function of commercial banks is to_____.

Make loans

Which of the following is not an activity of the Fed?

Making loans to the public

The unit of account function of money______

Means that money is used to measure the value of all goods

The demand for money is based primarily on money's Rolfe as a______

Medium of exchange

To maximize profit, a bank will_______

Minimize excess reserves

Token money is____.

Money whose face value exceeds its production cost

If a bank has $6,000 in checkable deposits and the required reserve ratio is 0.2, the. The bank can lend:

No more than $4,800

The buying or selling of US government bonds in the open market is called______

Open-market operations

The primary tool the Fed uses to control the money supply today is______

Open-market operations

Which of the following statements is true of open-market operations?

Open-market operations involve the Fed's purchase and sale of government securities

Barter is the direct exchange of goods and services for_______

Other goods and services

Which of the following is not a depository institution?

Pension fund

The demand for money in an economy is high when the ________

Price level is high

The least liquid of the assets listed below is_______

Real estate

If the required reserve ratio is 20% and a bank has $100,000 in checkable deposits, then it's_____

Required reserves are $20,000

Suppose the first national bank acquires $500,000 in new deposit in the required reserve ratio is 12 percent. Which of the following is true?

Required reserves on the new deposits are $60,000

Each member of the board of governors of the Fed______

Serves one nonrenewable term

The three important functions of money are_____

Serving as a medium of exchange, a unit of account, and a store of value

The board of governors of the fed consists of______

Seven members appointed by the president

Commodity money is something________

That has an intrinsic value

The velocity of money is defined as______

The average number of times per year each dollar is used to purchase final goods and services

If the quantity of money supplied exceeds the quantity of money demanded at a given point in time,_________

The equilibrium interest rate will fall

The discount rate is the interest rate that______

The fed charges on loans to depository institutions

A bank finds itself short of required reserves and therefore borrows from another commercial bank. The interest rate on this loan is_______

The federal funds rate

The reserve requirement refers to_______

The fraction of deposits that banks are required by the fed to hold as reserves

Thanks earn a profit on the difference between_____

The interest charged on loans and the interest paid on deposits

The demand for money is a relationship between_______

The interest rate and how much money people choose to hold

The equation of exchange states that the quantity of money multiplied by the velocity of money equals_______

The nominal gross domestic product

How does money function as a unit of account?

The prices of all goods and services are measured in terms of money.

The equation of exchange states that the nominal gross domestic product equals_______

The quantity of money multiplied by the velocity of money

Exhibit 15.3 shows the equilibrium in a money market. The vertical supply curve Sm implies that______

The quantity of money supplied is independent of the interest rate

Suppose the reserve requirement is 15 percent. Which of the following is true?

The simple money multiplier is 1/0.15

Which of the following is not true of the federal reserve notes?

They are redeemable for gold.

Which of the following is true of credit cards?

They are used to postpone the payment of money

Which of the following best illustrates the double coincidence of wants?

Tom has somethings he's willing to trade with jerry, who wants it; Jerry has something he's willing to trade with Tom, who wants it.

Which of the following is true of a price level increase in an economy?

When the price level increases, the purchasing power of money decreases

If the required reserve ratio and the Fed buys a $10,000 security from a depository institution that currently has not excess reserves, the money supply_____

increases by $50,000

Exhibit 15.2 shows equilibrium in a money market. If S is the supply curve, the equilibrium interest rate and quantity of money will be _________

r and m, respectively


Ensembles d'études connexes

Chapter 13 - Health Insurance Providers

View Set

Med Surge Exam 1 (CH 1-5: PP & Vsim)

View Set

Life Insurance Policy Provisions

View Set

Histoire Mondiale/World History LONG ANSWERS

View Set