Macro final
if you write a check on a bank to purchase a used honda civic, you are using money primarily as
a medium of ecxhange
when economists say that money serves as a medium of echange, they mean that it is
a monetary unit for measuring and comparing the relative values of goods
Money functions as
a store of value, a unit of account, and a medium of exchange
if you are estimating your total expenses for school next semester, you are using money primarily as
a unit of account
suppose a commercial bank has checkable deposits of $100,000 and the legal reserve ratio is 10 percent. if the bank's required and excess reserves are equal than its actial reserves
are 20,000
the money supply is backed
by the government's ability to control the supply of money and therefore to keep its value relatively stable.
suppose the reserve requirement is 10 percent. if a bank has $5 million of checkanle deposits and actual reserves of $5000000 the bank
cannot safely lend out more money
the unites states, the money supply (M1) includes
coins, paper money, and checkable deposits
which of the following is the basic economic policy function of the federal reserve banks
controlling the supply of moeny
the assest demand for money varies inversely with the nominal gdp
dalse
A newspaper headline reads: "Fed Cuts Federal Funds Rate for Fifth Time This Year." This headline indicates that the Federal Reserve is most likely trying to:
ease monetary policy
the amount that a commercial bank can lend is determined by its
excess reserves
The 12 federal reserve banks are governmentally owned but privately controlled
false
a restrictive monetary policy may be frustrated if the investment demand courve shifts to the left
false
currency and coins held by banks are part of the M1 definiation of money supply
false
the federal funds rate target is the most frequently used monetary policy tool
false
overnight loans from one bank to another for reserve purposes entail an interest rate called the
federal funds rate
in the u.s.economy the money supply is controlled by the
federal reserve system
if you deposit a $50 bill in a commercial bank that has a 10 percent legal reserve requirement, the bank will
have $45 of additional excess reserves
coins in people's pockets and purses are
included in both M1 and M2
the purchasing power of money and the price level vary
inversely with the price level
the federal reserve system
is basically an independent agency
which of the following does not explain what backs the money supply in the united states
it is backed by gold
lowering the discount rate has the effect of
making it less expensive for commercial banks to borrow from central banks
if the monetary authorities want to reduce the monetary mutiplier, they should
raise the required reserve ratio
A television report states: "The Federal Reserve will lower the discount rate for the fourth time this year." This report indicates that the Federal Reserve is most likely trying to:
stimulate the economy
If severe demand-pull inflation was occurring in the economy, proper government policies would involve a government:
surplus, the sale of securities in the open market, a higher discount rate, and higher reserve requirements.
the mutiple by ehuxh the commercial banking system can expand the supply of momey is equal to the reciprocal of
the reserve ratio
other things equal if the required reserce ratio was lowered
the size of the monetary mutiplier would increase
checkable deposits are classified as money because
they can be readily used in purchasing goods and paying debts
gold backs the US money supply
true
the M2 money supply is larger than the M1 money supply
true
the assest demand for money
varies inversely with the rate of interest
Refer to the graph above. If the equilibrium interest rate is 4 percent, the supply of money must be:
$100 billion
suppose that a bank's reserves are 5 million its checkabe deposits are 5 million and its excess reserves are 3 million the reserve requirement must be
40 percent
a reserve requirement of 20 percent means a bank must have at least 1000 of reserves if its checkable deposits are
5000
Monetary policy is expected to have its greatest impact on:
Ig.
