Macroeconomics (CH 34,35,36)

6 percent

Answer the question on the basis of the table, in which columns (1) and (2) indicate the transactions demand (Dt) for money and columns (1) and (3) show the asset demand (Da) for money.

a unit of account

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

3 and 6

Refer to the given list of assets. 1. Large-denominated ($100,000 and over) time deposits 2. Noncheckable savings deposits 3. Currency (coins and paper money) in circulation 4. Small-denominated (under $100,000) time deposits 5. Stock certificates 6. Checkable deposits 7. Money market deposit accounts 8. Money market mutual fund balances held by individuals 9. Money market mutual fund balances held by businesses 10. Currency held in bank vaults The M1 definition of money includes item

Board of Governors of the Federal Reserve.

The central authority of the U.S. banking system is the

An increase in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand and GDP.

Which of the following best describes the cause-effect chain of an expansionary monetary policy?

increase the interest paid on excess reserves held at the Fed.

If the Fed wants to discourage commercial bank lending, it will

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

Money functions as

the seven members of the Board of Governors of the Federal Reserve System along with the president of the New York Federal Reserve Bank and four other Federal Reserve Bank presidents on a rotating basis.

The Federal Open Market Committee (FOMC) is made up of

reducing the discount rate.

The Federal Reserve can increase aggregate demand by

individual shares in money market mutual funds.

The M2 money supply includes

buying government securities, doing repos, and lowering the discount rate

The major problem facing the economy is high unemployment and weak economic growth. The inflation rate is low and stable. Therefore, the Federal Reserve decides to pursue a policy to increase the rate of economic growth. Which policy changes by the Fed would reinforce each other to achieve that objective?

Federal Reserve notes.

The paper money used in the United States is

a restrictive monetary policy can force a contraction of the money supply, but an expansionary monetary policy may not achieve an increase in the money supply.

The problem of cyclical asymmetry refers to the idea that

raise interest rates and restrict the availability of bank credit.

The purpose of a restrictive monetary policy is to

commercial banks and thrifts

Which of these pairs of financial institutions are most alike in terms of their main lines of business?

included both in M1 and in M2.

Coins in people's pockets and purses are

Correct insured holders of loan-backed securities in case the underlying loans were not repaid.

Collateralized default swaps

not counted as part of the money supply.

Currency held in the vault of First National Bank is

Bond prices

Disequilibrium in the money market is mainly corrected via a change in

whatever performs the functions of money extremely well is considered to be money.

To say money is socially defined means that

their face value is greater than their intrinsic value.

To say that coins are "token money" means that

There is a decrease in the size of commercial banks' excess reserves, the money supply decreases, and interest rates rise, thereby causing a decrease in investment spending and real GDP.

Which of the following best describes what occurs when monetary authorities sell government securities?

expands and commercial bank reserves increase.

Which of the following is correct? When the Federal Reserve buys government securities from the public, the money supply

They are privately owned and publicly controlled central banks whose basic goal is to control the money supply and interest rates in promoting the general economic welfare.

Which of the following statements best describes the 12 Federal Reserve Banks?

a medium exchange

If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as

coins, paper currency, and checkable deposits.

In the United States, the money supply (M1) includes

items 2, 3, 4, 6, 7, and 8.

Refer to the given list of assets. 1. Large-denominated ($100,000 and over) time deposits 2. Noncheckable savings deposits 3. Currency (coins and paper money) in circulation 4. Small-denominated (under $100,000) time deposits 5. Stock certificates 6. Checkable deposits 7. Money market deposit accounts 8. Money market mutual fund balances held by individuals 9. Money market mutual fund balances held by businesses 10. Currency held in bank vaults The M2 definition of money includes