ECO 202 Chapter 16
If the reserve ratio is 5 percent, then $500 of additional reserves would ultimately generate
$10,000 of money
If the reserve ratio is 4 percent, then the money multiplier is
25
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
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 is included in M2?
Money market mutual funds
You saved $500 in currency in your piggy bank to purchase a new laptop. The $500 you kept in your piggy bank illustrates money's function as a _______. The laptop's price is posted as $500. The $500 price illustrates money's function as a _____. You use the $500 to purchase the laptop. This transaction illustrates money's function as a ______.
store of value, unit of account, medium of exchange
Which of the following best represents fiat money?
the euro
The discount rate is
the interest rate the Fed charges banks
Bank capital is
the resources that owners have put into the bank
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
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
Which of the following groups meets to discuss changes in the economy and determine monetary policy?
The Federal Open Market Committee
Which of the following is not an example of monetary policy?
The Federal Reserve facilitates bank transactions by clearing checks
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 federal funds rate is the
interest rate at which banks lend reserves to each other overnight
When colonists in Virginia used tobacco as money, their money
was commodity money
The measure of the money stock called M1 includes
wealth held by people in currency