Econ 202 Exam 3

27. When you use money to purchase a new car, money serves as a: A) medium of exchange B) unit of account C) store of value D) double coincidence of wants

A

28. If a bank has $20,000 reserves and the reserves are just enough to meet the 20% required reserve ratio, then the bank must have checkable bank deposits of _________: A) $100.000 B) $80,000 C) $4,000 D) $1,000

A

A major problem with bank runs is that they: A) spread to other banks. B) cause inflation, because the money moves so fast in the economy. C) cause interest rates to fall. D) cause both inflation and interest rates to rise.

A

Fiat money has value because the government has declared that it can be exchanged for gold or silver. True or False

False

Suppose the required reserve ratio is 10 percent. When a bank receives a new deposit of $5,000 from the public, what might be the minimum change in money supply? $0 an increase of $500 a decrease of $5,000 an increase of $5,000

$0

You just deposited $4,000 in cash into a checking account at the local bank. Assume that banks lend out all excess reserves and there are no leaks in the banking system. That is, all money lent by banks gets deposited back into the banking system. If the reserve requirement is 25%, how much will your deposit increase the total value of checkable bank deposits? _____ If the reserve requirement is 10%, how much will your deposit increase the total value of checkable bank deposits? _____ Decreasin

$16,000 $40,000 increases

Suppose the required reserve ratio is 20 percent and the two assumptions on the simple money multiplier are true. When a bank receives a new deposit of $20,000 from the public, what is the amount that the bank will keep as reserves based on this deposit? $2,000 $100,000 $4,000 $20,000

$4,000

Suppose that a bank does NOT hold excess reserves and that the required reserve ratio is 20%. If Shannon deposits $2,000 in cash in her checking account, and the bank lends $1,000 to Freda, the bank can lend an additional: $200 $400 $600 $1,000

$600

Suppose that your grandma sends you $100 for your birthday and you deposit that $100 in your checking account. The required reserve ratio is 10%. Based upon this deposit, the bank's excess reserves have increased by _____, and if the bank lends these new excess reserves, the money supply could eventually grow by as much as an additional _____.

$90; $900

When the Fed buys $_____ billion of Treasury bills from commercial banks, the monetary base increases by _____ billion. 100; less than $100 100; $100 100; more than $100 50; $75

100; $100

The Federal Reserve System was established in: 1913. 1971. 1857. 1873.

1913.

Suppose that the required reserve ratio is 5%. Compute the simple money multiplier: ______ Under a 100% reserve banking system, the simple money multiplier equals _____

20 1

Suppose the Federal Reserve (Fed) decides the current money supply of $2.1 trillion is too low, and that an increase of $300 billion is necessary. Assume currently the required reserve ratio is 0.05 and the two assumptions regarding the money multiplier are true. The money multiplier equals _____ . The change in reserves must be $ ____ billion to achieve the $300 billion increase in money supply.

20 15

If rr=10%, the amount of excess reserves is $___. Given the following data: Bank deposits held at the Fed=$200 Checkable bank deposits = $500 Currency held by public = $150 Currency in bank vaults = $100

250

21. In a system of fractional-reserve banking, even without any action by the central bank, the money supply declines if households choose to hold ____ currency or if banks choose to hold____ excess reserves. A) more, more B) more, less C) less, more D) less, less

A

15. A bond is considered: A) an asset for the owner of the bond that is not part of the money supply. B) M1. C) M2. D) a liability for the owner of the bond that is not part of the money supply.

A

23. When workers deposit cash tips in their savings accounts: A) M1 decreases. B) M1 increases. C) M2 increases. D) M2 decreases.

A

Scenario: Money CreationThe required reserve ratio is 20%, and Lewis deposits $500 cash he received as a graduation gift in his checking account. The bank does NOT want to hold excess reserves. 4. (Scenario: Money Creation) Which of the following is an accurate description of the bank's balance sheet immediately after the deposit? A) Reserves increase by $500, and checking deposits increase by $500. B) Reserves increase by $100, and checking deposits increase by $500. C) Reserves decrease by $50

A

Which of the following scenarios will result in the greatest amount of money being created? $1,000 in coins that is converted into $1,000 in bills. A $1,000 bond that matures which is used to buy another $1,000 bond. A $1,000 transfer from a checking account to a savings account. A $1,000 cash deposit into a checking account and then 90% of the deposit is loaned out

A $1,000 cash deposit into a checking account and then 90% of the deposit is loaned out

Suppose the required reserve ratio is 20 percent and the two assumptions on the simple money multiplier are true. When a bank receives a new deposit of $20,000 from the public, what might be the maximum change in the amount of deposits? An increase of $100,000. A increase of $1,000. An increase of $4,000. A decrease of $100,000.

A decrease of $100,000.

Which of the following is considered money in macroeconomics? A house with an ocean view A quarter left on the sidewalk A million shares of Apple Inc. Biggest diamond ring in the world All of the above

A quarter left on the sidewalk (can directly use to pay)

16. Banks are inherently susceptible to bank runs because: A) their deposits are less liquid than their loans. B) their loans are less liquid than their deposits. C) their assets are greater than their liabilities. D) their liabilities are greater than their assets

B

17. If a bank has deposits of $100,000 from the public, vault cash of $10,000 and $15,000 of deposit at the Federal Reserve, and the required reserve ratio is 20%, then the bank: A) has no excess reserves. B) has excess reserves of $5,000. C) has insufficient reserves to meet requirements. D) has an insufficient deposit to loan ratio.

B

25. An economy that lacks a medium of exchange must use a(n) _____ system. A) anarchist B) barter C) communist D) metric

B

29. If a bank has $20,000 reserves and the reserves are just enough to meet the 20% required reserve ratio, then the bank must have a total amount of loans equal to _________: A) $100.000 B) $80,000 C) $20,000 D) $4,000

B

Tina paid $8,000 to attend Montana State University this year." Which function of money does this statement best illustrate? A) as a store of value B) as a medium of exchange C) as a unit of account D) as a means of deferred payment

B

What would be the immediate effect on bank reserves if an individual withdraws $20,000 cash from a bank? Bank reserves would not be affected. Bank reserves would fall by $20,000, regardless of whether the bank has excess reserves or not. Bank reserves would rise by $20,000. Bank reserves would fall by less than $20,000 if the bank holds excess reserves. None of the above is correct.

Bank reserves would fall by $20,000, regardless of whether the bank has excess reserves or not.

Which of the statements is not true about a bank run? Deposit insurance is designed to reduce the risk of bank runs for depository banks. Bank runs are bad for the bank affected and usually good for the bank's competitors. Fears leading to bank runs can be self-fulfilling. Since the Great Depression the government has set up regulation that has eliminated most bank runs. There was a wave of bank runs during the Great Depression.

Bank runs are bad for the bank affected and usually good for the bank's competitors.

Which of the following statements regarding bank runs is correct? Bank runs would always require a government bailout. For example, the panic of 1907 was not stopped until the government of New York City intervened. Bank runs might spread to other banks and cause even financially healthy banks to go under. Bank runs are due to the fact that banks' assets are more liquid than their liabilities. Bank runs cause inflation because the money moves so fast.

Bank runs might spread to other banks and cause even financially healthy banks to go under.

12. The money supply includes all of the following EXCEPT A) metal coins. B) paper currency. C) lines of credit accessible with credit cards. D) bank balances accessible with debit cards.

C

13. Suppose a group of people decided to create their own economic system with cartons of milk serving as money. If we decided to use this "liquid asset" as our medium of exchange and all prices were measured in cartons of milk, milk would still not be a good form of money because it would not be a good: A) medium of exchange. B) unit of account. C) store of value. D) near-money.

C

14. When countries replaced gold and silver coins with paper money exchangeable for certain amounts of precious metals, the monetary system evolved from: A) using commodity money to using fiat money. B) using commodity-backed money to using fiat money. C) using commodity money to using commodity-backed money. D) using fiat money to using commodity-backed money.

C

26. The narrowest measure of money supply, M1 does NOT include ______. A) currency in circulation B) checkable bank deposits C) currency in bank vaults D) coins in your piggy bank

C

30. When the Fed buys $_____ billion of Treasury bills from commercial banks, the monetary base increases by _____ billion. A) 50; $75 B) 100; more than $100 C) 100; $100 D) 100; less than $100

C

7. If banks decide to hold some excess reserves in addition to their required reserves, then: A) the money multiplier becomes 1 divided by the excess reserve ratio. B) a loan of $1 will lead to a change in the money supply by a multiple amount equal to 1divided by the required reserve ratio. C) the money multiplier will be less than 1 divided by the required reserve ratio. D) depositors will have to borrow more in order to increase the money supply.

C

Scenario: Money CreationThe required reserve ratio is 20%, and Lewis deposits $500 cash he received as a graduation gift in his checking account. The bank does NOT want to hold excess reserves. (Scenario: Money Creation) How much money can the bank lend based on the $500 deposit? A) $500 B) $100 C) $400 D) $2006.

C

If rr = 5%, the simple money multiplier equals A. 5 and $1 reserve supports a maximum of $5 deposits B. 5 and $1 reserve supports a minimum of $5 deposits C. 20 and $1 reserve supports a maximum of $20 deposits D. 20 and $1 reserve supports a minimum of $20 deposits

C. 20 and $1 reserve supports a maximum of $20 deposits

Which of the following is both a store of value and a medium of exchange? Cash Stocks Bonds All of the above

Cash

10. Suppose the Federal Reserve sells $10 million in Treasury bills to commercial banks. If the required reserve ratio is 25%, the money supply might _____ by a maximum of _____. A) increase; $10 million B) increase; $40 million C) decrease; $2.5 million D) decrease; $40 million

D

19. Which of the following is a component of BOTH the monetary base and the money supply? A) bank reserves at the Fed B) currency in bank vaults C) demand deposits D) currency in circulation

D

2. Suppose you find a $50 bill that you put in a coat pocket last winter. If you deposit it in your checking account: A) M1 increases by $50. B) M2 increases by $50. C) M1 and M2 both increase by $50. D) there is no change in M1 or M2.

D

20. If the required reserve ratio is 25% and the central bank provides an additional $120 reserves in the banking system through an open market purchase, the money supply might A) decrease by a maximum of $360. B) decrease by a maximum of $480. C) increase by a maximum of $360. D) increase by a maximum of $480.

D

3. If a bank has deposits of $100,000 from the public, loans of $75,000, $10,000 of cash in its vault, and $15,000 of deposit at the Federal Reserve, then its reserve ratio is: A) 5%. B) 10%. C) 15%. D) 25%

D

8. If the Federal Reserve wants to increase the money supply, it will: A) sell U.S. Treasury bills. B) cut taxes across the board. C) increase the discount rate. D) lower the reserve requirement.

D

9. When the Federal Reserve conducts an open-market sale of Treasury bonds, A) bank reserves decrease, currency in circulation increases, and the monetary base remains the same. B) the monetary base increases, the Fed's holding of Treasury bonds decreases, and the money supply increases. C) bank reserves decrease, the monetary base decreases, and the short-term interest rate decreases. D) the monetary base decreases, loans decrease, and the money supply decreases.

D

Scenario: Money CreationThe required reserve ratio is 20%, and Lewis deposits $500 cash he received as a graduation gift in his checking account. The bank does NOT want to hold excess reserves. (Scenario: Money Creation) The banking system could potentially support a maximum of_________ in checking deposits with the $500 cash deposited by Lewis. A) $400 B) $500 C) $10,000 D) $2,500

D

Which financial asset belongs to M2 but not M1?: A) A $5 bill in your wallet. B) A quarter in a parking meter uptown. C) A checking deposit. D) A time deposit.

D

Which of the following statements is true? Individuals and small businesses can open up checking accounts at their regional federal reserve banks. Deposit-taking banks hold the majority of their reserves as balances on the accounts they have at the Fed. The twelve regional federal reserve banks are for-profit businesses, just like any other commercial banks. The Fed will loan out part of the deposits made by commercial banks to the general public.

Deposit-taking banks hold the majority of their reserves as balances on the accounts they have at the Fed.

Which of the following is part of M1? Deposits made by individuals into US Bank Deposits made by the US Bank into the Fed → Bank reserves Cash held by US Bank in its vault A and B A,B, and C

Deposits made by individuals into US Bank

Which of the following statements is correct? 100% reserve banking means money supply will grow by 100% whenever a bank receives a new deposit. If the required reserve ratio is 20%, this means banks are required to keep exactly 20 cents in reserves for every dollar of deposit. Fractional reserve banking means the amount of bank reserves is a fraction of the total deposits a bank owes to depositors. A bank's total assets are allowed to fall below its total liabilities because of its ability to cr

Fractional reserve banking means the amount of bank reserves is a fraction of the total deposits a bank owes to depositors.

Currency in circulation is cash: I held by the general public. II in the vaults of commercial banks. III in the vault of the Federal Reserve.

I only

Which function or functions pertain to the Federal Reserve System? I. collecting corporate income tax II. setting personal income tax rates III. holding bank reserves I only II only III only I and III

III only

Suppose the central bank sets a required reserve ratio of 10 percent. First Municipal Bank (FMB) currently has deposits of $1,000 from the public and an actual reserve ratio of 20 percent. If FMB receives an additional cash deposit of $100, which of the following is correct regarding the bank's reserve position? Note that the $100 deposit has not been loaned out yet. It has a total of $300 reserves and holds excess reserves of $190. It has required reserves of $210 and holds excess reserves of $

It has a total of $300 reserves and holds excess reserves of $190.

What would be the immediate effect on money supply if an individual withdraws $20,000 cash from a bank? It would not be affected. It would fall by $20,000. It would rise by $20,000. It would fall but by less than the $20,000 deposit.

It would not be affected.

US Bank lends $,1000 to a boba shop. The loan is deposited into the shop's checking account at the US Bank. As a result, M1 increases by $1,000 and M2 decreases by $1,000 M1 and M2 both remain unchanged M1 increases by $1,000 and M2 remains unchanged M1 and M2 both increase by $1,000

M1 and M2 both increase by $1,000

You get $500 cash for your birthday. You put the money in your checking account. As a result, M1 and M2 both decrease M1 and M2 both increase M1 and M2 both remain unchanged M1 increases but M2 remains unchanged

M1 and M2 both remain unchanged

The primary difference between M1 and M2 is that: the dollar amount of M1 is much larger than the dollar amount of M2. M1 includes checkable deposits, but M2 does not. M2 includes checkable deposits, but M1 does not. M2 includes savings deposits and time deposits, but M1 does not.

M2 includes savings deposits and time deposits, but M1 does not.

The banking system has $1 million currency in their vaults and $10 million deposits at the Fed. The general public has $100 million deposits in the banking system. The required reserve ratio is 10%. Given the information, which of the following statements is correct? Monetary base is equal to $11 million. The banking system does not have enough reserves to meet the 10% required reserve ratio. M1 is equal to $110 million. Monetary base cannot be determined unless we also know the amount of curre

Monetary base cannot be determined unless we also know the amount of currency in circulation. M1 is checkable bank deposit (general public's deposits in the banking system) plus currency in circulation.

Which of the following is part of money supply? $95 on your campus meal card $1,5000 balance on your visa gift card $100 target gift card None of the above

None of the above

You are Chair of the Federal Reserve Board. In your meeting with the Federal Open Market Committee, the committee unanimously votes to increase the money supply using open market operations (OMOs). During the press conference after the meeting, a reporter asks you to explain what OMOs are and how you will use them to increase the money supply. You reply that OMOs are the selling and buying of government securities. The money supply increases when selling occurs and contracts when buying occurs.

OMOs are the purchase and sale of government securities. To increase the money supply, we will buy government securities, which increases the amount of reserves in the banking system and fuels deposit expansion.

Who is a permanent voting member of the FOMC but not part of the Fed's Board of Governors? Director of the Open Market Desk. President of New York Fed. President of St. Louis Fed. President of the United States.

President of New York Fed.

Salt is a better candidate for money than gape tomatoes because it is a better____. Medium of exchange Unit of account Store of value

Store of value (grape tomatoes can spoil and go bad)

The institution most effective at preventing bank runs is: The Federal Reserve System. The Reconstruction Finance Corporation. The Federal Deposit Insurance. Fannie Mae and Freddie Mac.

The Federal Deposit Insurance.

Suppose the required reserve ratio is 10 percent. When a bank receives a new deposit of $5,000 from the public, how will this deposit be recorded in the bank's balance sheet? Assuming the deposit is not loaned out yet. The bank's assets and liabilities will both increase by $5,000. The bank's reserves increase by $500 while the bank's liabilities increase by $5,000. The bank's reserves increase by $5,000 while the bank's liabilities increase by $500. The bank's assets decrease by $5,000 while th

The bank's assets and liabilities will both increase by $5,000.

Suppose you find a $50 bill that you put in a coat pocket last winter. You then spend the money at Kroger. How does this affect money supply? M1 increases by $50. M2 increases by $50. M1 and M2 both increase by $50. There is no change in M1 or M2.

There is no change in M1 or M2.

If the Fed sells $250 million worth of _____ to commercial banks, the banks pay with _____. Treasury Bills; their reserves stocks; their reserves Treasury Bills; stocks stocks; Treasury Bills all of the above are correct

Treasury Bills; their reserves

For the Federal Reserve, what are assets? What are liabilities? The monetary base is an asset and reserves are liabilities. The monetary base is an asset and Treasury bills are liabilities. Reserves are assets and Treasury bills are liabilities. Treasury bills are assets and the monetary base is a liabilitiy.

Treasury bills are assets and the monetary base is a liabilitiy.

The Fed's primary liabilities are the monetary base, that is, currency in circulation plus bank reserves. True or False

True

Which asset is money? a $20 bill a work of art a baseball signed by a famous player shares of stock in a profitable company All of the above are correct.

a $20 bill

An example of a double coincidence of wants is: a car dealer who wants a new employee finding a car mechanic who wants money. an electronics store owner who wants car repairs finding a car mechanic who wants money. a car dealer who wants a TV finding an electronics store owner who wants money. a car mechanic who wants a TV finding an owner of an electronics store who wants a car repaired.

a car mechanic who wants a TV finding an owner of an electronics store who wants a car repaired.

A bond is considered: part of M1 only. part of M1 and M2. an asset for the owner and it is not part of the money supply. a liability for the owner and it is part of the money supply.

an asset for the owner and it is not part of the money supply.

A bank run can break a bank because: borrowers default on their loans, and the bank's assets become worthless. depositors' panic spreads to borrowers, who want to take additional loans from the bank. banks cannot quickly convert illiquid loans to liquid assets without facing a large financial loss. the bank's reserves kept with the Federal Reserve are in the form of illiquid U.S. Treasury bonds.

banks cannot quickly convert illiquid loans to liquid assets without facing a large financial loss.

Financial intermediaries involved in shadow banking typically: accept short-term deposits and make short-term loans. borrow money short term and lend or invest long term. accept long-term deposits and make long-term loans. borrow money long term and lend or invest short term.

borrow money short term and lend or invest long term.

Bank reserves consist of: gold kept in the bank's vault. the deposits lent to finance illiquid investments. the fraction of deposits kept in gold at a central bank (e.g., the Federal Reserve in the U.S.) cash held in bank vaults plus the money banks have deposited into a central bank (e.g., the Federal Reserve in the U.S.)

cash held in bank vaults plus the money banks have deposited into a central bank (e.g., the Federal Reserve in the U.S.)

The Glass-Steagall Act of 1933 created federal deposit insurance as an important measure for the prevention of bank runs. limited interest rates that banks could charge on mortgages. created the Federal Reserve System as the central bank of the U.S. separated banks to two categories, savings and trusts.

created federal deposit insurance as an important measure for the prevention of bank runs.

You find a 20 dollar bill in your winter jacket when you clean up your closet. You then spend the money at Kroger for some groceries. As a result, currency in circulation increases by $40 because you first discover $20 and then now Kroger has the $20. currency in circulation stays unchanged because the $20 is already out in circulation and counted. currency in circulation increases by $20 because the $20 is no longer hiding in your pocket but enters circulation. currency in circulation decreases

currency in circulation stays unchanged because the $20 is already out in circulation and counted.

If the Federal Reserve conducts a $10 million open-market sale and the reserve requirement is 20%, the monetary base will: decrease by $50 million. decrease by $10 million. increase by $8 million. increase by $10 million.

decrease by $10 million. Remember monetary base is the same as the Fed's liabilities. How does the open market sale affect the Fed's liabilities? Refer to the previous question and think about the Fed's balance sheet. Also remember monetary base is different from money supply.

Under the Glass-Steagall Act of 1933, commercial banks, which accept deposits and are covered by _____ insurance, were not allowed to trade in _____. withdrawal; financial assets such as stocks and derivatives. withdrawal; government-issued bonds. deposit; government-issued bonds. deposit; financial assets such as stocks and derivatives.

deposit; financial assets such as stocks and derivatives.

There are several ways that central banks can increase or decrease the money supply. Match the descriptions below with the corresponding policy tool. It is possible that a description does not apply to any of the terms. an increase in the interest rate that a central bank charges commercial banks for loans. a government printing more currency a central bank selling existing bonds an increase in government spending an increase in the percentage of deposits that banks must keep on hand

discount rate not a central bank tool open market operations not a central bank tool reserve requirement

In 2008, when the U.S. financial system collapsed, it led to: the Federal Reserve increasing the interest rate, which further destabilized the economy. great difficulty in obtaining financing for firms and individuals alike. the Federal Reserve lowering the interest rate, and the economy recovering quickly as businesses and individuals secured low-interest loans. very high inflation, and the Federal Reserve followed a strict contractionary monetary policy to bring prices down.

great difficulty in obtaining financing for firms and individuals alike.

Please visit this website and read about the Fed's response to the pandemic. According to the website, the Fed has taken a significant step in lending directly to major non-financial corporations and the goal is to "allow companies access to credit so that they are better able to maintain business operations and capacity during the period of dislocations related to the pandemic". This is most relevant to the Fed's role as lender of last resort. monetary policymaker. supervisor of the banking sys

lender of last resort.

U.S. Treasury securities are a(n): asset of the U.S. government but a liability to the Federal Reserve. part of the net worth of the U.S. government. liability to both the U.S. government and the Federal Reserve. liability of the U.S. government but an asset to the Federal Reserve.

liability of the U.S. government but an asset to the Federal Reserve.

You own some bitcoins. But you cannot go to One Stop at Miami and pay your tuition with your bitcoins. This illustrates that bitcoins cannot fulfill the _______ function. liquidity medium of exchange store of value unit of account

medium of exchange

If the Federal Reserve conducts a $10 million open-market sale and the required reserve ratio is 20%, money supply could decrease by a minimum of $50 million. money supply could increase by a maximum of $50 million. money supply could decrease by a maximum of $50 million. money supply could decrease by a maximum of $2 million.

money supply could decrease by a maximum of $50 million. What is the simple money multiplier if rr = 20%? Will open market sale increase or decrease money supply? Also remember the multiplier shows you the maximum impact.

When the Fed decreases the reserve requirement, banks can lend _____ of their deposits, which leads to a(n) _____ in the money supply. less; decrease less; increase more; decrease more; increase

more; increase

Please indicate whether each individual or group of individuals is part of the Federal Open Market Committee (FOMC). The seven members of the Board of Governors: The president of the International Monetary Policy Harmonization Council: A group of four district bank presidents: The Secretary of the Treasury: The chairman of the Securities and Exchange Commission (SEC): The president of the New York Federal Reserve Bank:

part of FOMC not part of FOMC part of FOMC not part of FOMC not part of FOMC part of FOMC

When it was established in 1913, the Federal Reserve was NOT granted the authority to: inspect all deposit-taking institutions. issue currency. require all depository institutions to hold reserves. prepare the federal budget.

prepare the federal budget.

When the Federal Reserve buys government bonds, this is referred to as an open market ["purchase", "sale", "auction"] . As a result, monetary base [ Select ] ["stays unchanged", "increases", "decreases"] and money supply increases . When the Federal Reserve sells government bonds, this is referred to as an open market ["purchase", "sale", "auction"] . As a result, monetary base ["stays unchanged", "increases", "decreases"] and money supply decreases .

purchase, increases sale, decreases

Suppose the Fed sells $2 million worth of Treasury bills to Wells Fargo. Wells Fargo pays for the Treasury bills using money held in its reserve account at the Fed. This will increase the Fed's assets by $2 million. reduce Wells Fargo's liabilities by $2 million. increase Wells Fargo's assets by $2 million. reduce the Fed's liabilities by $2 million.

reduce the Fed's liabilities by $2 million.

Bank-like activities undertaken by nonbank financial firms but without regulatory oversight or protection are known as _____. securitization shadow banking margin calls. fractional reserve banking

shadow banking

The bank runs in 1930, 1931, and 1933 were caused primarily by: excessive speculation in real estate. high energy prices. sharp decreases in farm commodity prices. the failure of the Knickerbocker Trust.

sharp decreases in farm commodity prices.

Last year, bitcoins were traded at $1000 a piece. The year before, they were traded at $20 a piece. Next year, it may be traded at $100,000 a piece. This illustrates that bitcoins cannot fulfill the _______ function very well. unit of account liquidity medium of exchange store of value

store of value

The Financial Crisis of 2008 and the Savings and Loan Crisis of the 1980s both involved risky investment in _____. the stock market the housing market the crude oil market the foreign exchange market

the housing market

When the Federal Reserve decreases bank's reserves through an open-market operation: deposits increase, currency in circulation increases, and the monetary base remains the same. the monetary base decreases, the money multiplier decreases, and the money supply increases. the monetary base decreases, loans decrease, and the money supply decreases. loans increase, the federal funds rate rises, and the discount rate rises.

the monetary base decreases, loans decrease, and the money supply decreases.

If the Federal Reserve increases the discount rate: the money supply is likely to decrease. the money supply is likely to increase. the money supply is not likely to change. the federal funds rate must decrease.

the money supply is likely to decrease.

The main problem with the banking system from 1864 to 1913 was that: the Federal Reserve's monetary policy was too restrictive. the money supply was unable to respond adequately to local economic conditions. the currency was not uniform because each bank issued its own notes. government budget deficits destabilized the system.

the money supply was unable to respond adequately to local economic conditions.

When banks extend loans: they do so with their required reserves. they increase money supply. they take on more debt. they do not affect money supply, since no new money is printed.

they increase money supply.

The Panic of 1907 was caused by: trusts' losses due to unsuccessful stock market speculation. trusts' memberships in the New York Clearinghouse. national banks issuing too much currency. excessive investment in collateralized debt obligations.

trusts' losses due to unsuccessful stock market speculation.

When you walk into a store, you see the price tags marking "$.99", "$100", or "$14.99". You don't see the price tags with "1 bitcoin", "3 bitcoins", or "100 bitcoins", etc. This illustrates that bitcoins cannot fulfill the _______ function. unit of account liquidity medium of exchange store of value

unit of account

Complete the sentences with the correct function of money. Norah walks into her favorite department store, Bullseye, to pick out a new dress. She checks out the price tag and is excited to see that the dress is on sale and is now relatively cheaper than another dress she was considering. Here, money is serving as a _____ . She is especially excited because she has been saving money each week in her piggy bank at home so that she can afford a trip to Florida next summer. The money in the piggy ba

unit of account store of value medium of exchange