Macro final

if you write a check on a bank to purchase a used honda civic, you are using money primarily as

a medium of ecxhange

when economists say that money serves as a medium of echange, they mean that it is

a monetary unit for measuring and comparing the relative values of goods

Money functions as

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

if you are estimating your total expenses for school next semester, you are using money primarily as

a unit of account

suppose a commercial bank has checkable deposits of $100,000 and the legal reserve ratio is 10 percent. if the bank's required and excess reserves are equal than its actial reserves

are 20,000

the money supply is backed

by the government's ability to control the supply of money and therefore to keep its value relatively stable.

suppose the reserve requirement is 10 percent. if a bank has $5 million of checkanle deposits and actual reserves of $5000000 the bank

cannot safely lend out more money

the unites states, the money supply (M1) includes

coins, paper money, and checkable deposits

which of the following is the basic economic policy function of the federal reserve banks

controlling the supply of moeny

the assest demand for money varies inversely with the nominal gdp

dalse

A newspaper headline reads: "Fed Cuts Federal Funds Rate for Fifth Time This Year." This headline indicates that the Federal Reserve is most likely trying to:

ease monetary policy

the amount that a commercial bank can lend is determined by its

excess reserves

The 12 federal reserve banks are governmentally owned but privately controlled

false

a restrictive monetary policy may be frustrated if the investment demand courve shifts to the left

false

currency and coins held by banks are part of the M1 definiation of money supply

false

the federal funds rate target is the most frequently used monetary policy tool

false

overnight loans from one bank to another for reserve purposes entail an interest rate called the

federal funds rate

in the u.s.economy the money supply is controlled by the

federal reserve system

if you deposit a $50 bill in a commercial bank that has a 10 percent legal reserve requirement, the bank will

have $45 of additional excess reserves

coins in people's pockets and purses are

included in both M1 and M2

the purchasing power of money and the price level vary

inversely with the price level

the federal reserve system

is basically an independent agency

which of the following does not explain what backs the money supply in the united states

it is backed by gold

lowering the discount rate has the effect of

making it less expensive for commercial banks to borrow from central banks

if the monetary authorities want to reduce the monetary mutiplier, they should

raise the required reserve ratio

A television report states: "The Federal Reserve will lower the discount rate for the fourth time this year." This report indicates that the Federal Reserve is most likely trying to:

stimulate the economy

If severe demand-pull inflation was occurring in the economy, proper government policies would involve a government:

surplus, the sale of securities in the open market, a higher discount rate, and higher reserve requirements.

the mutiple by ehuxh the commercial banking system can expand the supply of momey is equal to the reciprocal of

the reserve ratio

other things equal if the required reserce ratio was lowered

the size of the monetary mutiplier would increase

checkable deposits are classified as money because

they can be readily used in purchasing goods and paying debts

gold backs the US money supply

true

the M2 money supply is larger than the M1 money supply

true

the assest demand for money

varies inversely with the rate of interest

Refer to the graph above. If the equilibrium interest rate is 4 percent, the supply of money must be:

$100 billion

suppose that a bank's reserves are 5 million its checkabe deposits are 5 million and its excess reserves are 3 million the reserve requirement must be

40 percent

a reserve requirement of 20 percent means a bank must have at least 1000 of reserves if its checkable deposits are

5000

Monetary policy is expected to have its greatest impact on:

Ig.