Econ 204
By the government's ability to control the supply of money and therefore to keep its value relatively stable
The money supply is backed:
$9 billion
Refer to the above table. The commercial banking system has excess reserves of . . .
$30 billion
Refer to the above table. The maximum amount by which the commercial banking system can expand the money supply by lending is . . .
Bond issuers fail to make promised payemts
"Deafult" occurs when . . .
Unit of account
A $70 price tag on a sweater in a department store window is an example of money functioning as . . .
A bond
A document that promises to pay specified sums of money on specified dates and is debt to the issuer is called . . .
Loans
An asset category that carries the highest interest rate for a commercial bank is . . .
$6,000
Assuming a legal reserve ratio of 20%, how much in excess reserves would this bank have after a check for $10,000 was drawn and cleared against it?
Making loans at a higher interest rate than the rates that they offer on their deposits
Banks earn a profit by . . .
5600
Based on the data table, at equilibrium, the level of investment in the economy is . . .
80 billion, sell 10 billion of bonds
Based on the data table, congress and the president have decided to decrease government spending by 240 billion dollars. The Federal Open Market Committee has studied this action and knows that additional cuts in spending will be needed to bring the economy back to full employment. If G decreases by 240 billion, then the Federal Reserve will need to cut investment spending by . . . and . . . so that the economy can achieve full employment.
-320
Based on the data table, in order to fix the economy and bring RGDP to the full employment level, investment must change by . . .
Sell $40 billion worth of government securities
Based on the data table, in order to fix the economy and bring RGDP to the full employment level, the Federal Reserve must . . .
A budget surplus
Based on the data table, it is clear that the federal government is running . . .
Inflationary gap
Based on the data table, the economy is currently experiencing a . . .
12.5
Based on the data table, the investment multiplier is . . .
20
Based on the data table, the money multiplier is . . .
Create checkable deposits in exchange for IOUs
Commercial banks create money when they . . .
More than $1,000
Consider a bond with a coupon of $90, and a face value of $1,000, due to mature in one year's time. The current interest is 5%. The current price of the bond is . . .
Both M1 and M2
Currency in circulation is part of . . .
Lower interest rates, an expanded GDP, and a higher rate of inflation
If the Fed were to reduce the legal reserve ratio, we would expect . . .
$250
Facebook issued a bond with a face value of $10,000 and a coupon rate of 2.5%. Each year the owner of the bond is entitled to a coupon payment of . . . dollars
Commercial bank reserves will decrease and the money supply will decrease
If the Fed sells government securities, . . .
M1 increases and M2 stays the same
Michelle transfers $4,000 from her savings account to her checking account. What effect is this change likely to have on M1 and M2?
Delaying consumption only
Rates of return on short-term U.S. government bonds are compensation for . . .
Banks; other banks
The Federal Funds rate is the interest rate that . . . charge(s) . . .
I and II
The Federal Reserve is responsible for . . . I. Regulating Banks II. Conducting Monetary Policy III. Regulating Government Spending
Lower is the monetary multiplier
The greater the required reserve ratio, the . . .
Federal Open Market Committee
The main policy making body of the Federal Reserve system is the . . .
Deposits at the Federal Reserve Bank and vault cash
The reserves of a commercial bank consist of:
Commercial banks
Wells Fargo, J.P. Morgan Chase, and Citibank are all primarily:
The money supply increases, interest rates fall and investment rises
When the Federal Reserve uses expansionary Monetary Policy . . .
4
When the legal reserve ratio is 25%, the monetary multiplier is . . .
A savings account
Which of the following assets is most liquid? (an Italian Ferrari, an art painting by Claude Monet, a savings account, or a 5 year certificate of deposit)
Short-term U.S. government bonds
Which of the following financial assets is essentially risk-free?
The United States treasury
Who issues T-Bills, T-Notes, and T-Bonds?