Macroeconomics Ch 11
At any meeting the Federal Open Market Committee, that committee's voting members consist of
5 Federal Reserve Regional Bank Presidents and all the members of the Board of Governors
Treasury bonds are
A store of value, but not a medium of exchange
When in France you notice that process are posted in euros, this best illustrates money's function as
A unit of account
The members of the Federal Reserve's Board of Governors
Are appointed by the president of the U.S. and confirmed by the U.S. Senate
Which of the following is an example of a barter?
Barber gives plumber a haircut in exchange for the plumber fixing the barber's leaky faucet
To insulate Fed. Res. from political pressure:
Board of Govs appointed to 14 year terms
The primary difference between commodity money and fiat money is that
Commodity money has intrinsic value but fiat money does not
An important function of the U.S. Federal Reserve is to
Control the supply of money
To increase the money supply, the Fed could
Decrease the reserve requirement
Credit cards
Defer payments
The existence of money leads to
Greater specialization and to a higher standard of living
The federal funds rate is the
Interest rate at which banks lend reserves to each other overnight
Money is the most liquid asset available because
It is a medium of exchange
Traveler's checks are included in
M1 and M2
You receive money as payment for babysitting your neighbor's children. This best illustrates which function of money?
Medium of exchange
A central bank's setting (or altering) of the money supply is known as
Monetary policy
Which of the following items is included in M2?
Money market mutual funds
Which list ranks assets from most to least liquid?
Money, bonds, cars, houses
To decrease the money supply, the Fed can
Sell government bonds or increase the discount rate
When conducting an open-market sale, the Fed
Sells government bonds, and in so doing decreases the money supply
Mia puts money into a piggy bank so she can spend it later. What function of money does this illustrate?
Store of value
Which of the following functions of money is also a common function of most other financial assets?
Store of value
Which group within the Federal Reserve System meets to discuss changes in the economy and determine monetary policy?
The FOMC
Economists use the term "money" to refer to
Those types of wealth that are regularly accepted by sellers in exchange for goods and services
All U.S. paper dollars read "This note is legal tender for all debts, public and private." This statement represents which characteristic of U.S. currency?
U.S. paper money is fiat money
The measure of the money stock called M1 includes
Wealth held by people in their checking accounts
Consistently increase money supply:
buy govt bonds, decrease reserve requirements, decrease discount rate
The M1 money supply is composed of:
currency, demand deposits, traveler's checks, other checkable accounts
Commodity money has:
intrinsic value
The Fed's tools of monetary control are:
open market operations, lending to banks, reserve requirements, and paying interest on reserves
An example of fiat money is:
paper dollars
Which of the following is NOT a function of money:
protection against inflation
Which policy action by the Fed is likely to increase money supply:
reducing reserve requirements
Board of Governors of Fed. Res. System:
seven members appointed by president
The discount rate:
the interest rate the Fed charges on loans to banks
When the Fed sells government bonds:
the money supply decreases
If the Fed engages in open market purchase and raises reserve requirements at the same time:
we cannot be certain what will happen to money supply
