Economics 16 quiz
When you list prices for necklaces sold on your website, www.sparklingjewels.com, in dollars, this best illustrates money's function as
a unit of account.
The existence of money leads to
greater specialization and to a higher standard of living
If the Fed raised the reserve requirement, the demand for reserves would
increase, so the federal funds rate would rise.
Which of the following policies can the Fed follow to increase the money supply?
reduce the interest rate on reserves
Which of the following best represents fiat money?
The euro
The leverage ratio is calculated as
assets divided by bank capital.
The set of items that serve as media of exchange includes
demand deposits
Which of the following is included in M2?
money market mutual funds
The discount rate is
the interest rate the Fed charges banks.
When colonists in Virginia used tobacco as money, their money
was commodity money
The Federal Reserve
was created in 1913.
The measure of the money stock called M1 includes
wealth held by people in currency.
Which of the following is not an example of monetary policy?
The Federal Reserve facilitates bank transactions by clearing checks.
Which of the following functions as both a store of value and a medium of exchange?
Cash but not stocks
Which of the following does the Federal Reserve not do?
Conduct fiscal policy
Which list ranks assets from most to least liquid?
Currency, stocks, houses
Which of the following is not included in either M1 or M2?
Large time deposit
You receive money as payment for mowing your neighbor's lawn. Which function of money does this best illustrate?
Medium of exchange
Which of the following increases when the Fed makes open-market sales?
Neither currency nor reserves
Which of the following is not a function of money?
Protection against inflation
In a system of 100-percent-reserve banking,
banks do not influence the supply of money.
Which of the following lists is included in what economists call "money"
cash
The money supply decreases when the Fed
sells Treasury bonds. The smaller the reserve requirement, the larger the decrease will be.
When conducting an open-market sale, the Fed
sells government bonds, and in so doing decreases the money supply.
Cash, fine art, and silver are all
stores of value
Bank capital is
the resources that owners have put into the bank.
Which of the following is an example of barter?
A barber gives a plumber a haircut in exchange for the plumber fixing the barber's leaky faucet.
Which of the following both increase the money supply?
A decrease in the discount rate and a decrease in the interest rate on reserves
Which of the following is included in both M1 and M2?
Currency, demand deposits, and other checkable deposits
Which of the following is not included in M1?
Savings deposits
Which of the following is included in M2 but not in M1?
Small time deposits
Hassan and Kevin buy the same pair of sneakers, but each in the wrong size. Hassan proposes a size swap with Kevin. This is an example of
barter. since the sneakers in the correct size have intrinsic value to both Hassan and Kevin
When the Fed decreases the discount rate, banks will
borrow more from the Fed and lend more to the public. The money supply increases.
If the public decides to hold more currency and fewer deposits in banks, bank reserves
decrease and the money supply eventually decreases
If the federal funds rate were below the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by
selling bonds. This selling would reduce the money supply.
Money is
the most liquid asset but an imperfect store of value
Which of the following statements regarding the Federal Open Market Committee is correct?
All regional Fed presidents attend the meetings, but only five get to vote.
Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the money supply to
fall. To reduce the impact of this the Fed could buy Treasury bonds.
