Question 1

Which of the following is a thrift institution?

Accepted Answer

A)   a savings and loan association
B)   a money market fund
C)   a commercial bank
D)   a loan institution
E)   the Federal ReserveF) B) and E)
G) B) and D)

Question 2

Actual reserves are equal to

Accepted Answer

A)   minimum balances plus desired reserves.
B)   required reserves plus fractional deposits.
C)   excess reserves plus liabilities.
D)   desired reserves plus excess reserves.
E)   government securities plus cash in the bank's vault.F) A) and B)
G) A) and C)

Question 3

"Even though we can convert them into money, deposits at banks are not money." Is the previous statement correct or not?

Accepted Answer

The statement is incorrect.Som...

Question 4

A commercial bank's reserves are

Accepted Answer

A)   bonds issued by the U.S.government that are very safe.
B)   the provision of funds to businesses and individuals.
C)   currency in its vault plus the balance on its reserve account at a Federal Reserve Bank.
D)   savings and time deposits.
E)   its loans.F) A) and E)
G) D) and E)

Question 5

M1 is composed of

Accepted Answer

A)   currency held by individuals and businesses, traveler's checks, and checkable deposits owned by individuals and businesses.
B)   checkable deposits owned by individuals and businesses, saving deposits, and certificates of deposit.
C)   currency inside of banks, traveler's checks, and government-issued checks.
D)   traveler's checks, credit cards, and e-cash.
E)   currency held by individuals and businesses, traveler's checks, and the credit line on credit cards.F) A) and B)
G) All of the above

Question 6

"If the currency drain increases, the monetary base decreases." Explain whether the previous statement is correct or incorrect.

Accepted Answer

The statement is false.If the ...

Question 7

The Fed purchases $1 million of U.S.government securities from First Bank.The desired reserve ratio is 10 percent, the currency drain is zero, and banks loan all excess reserves.The money multiplier is equal to

Accepted Answer

A)   0.10.
B)   1.0.
C)   10.0.
D)   100.0.
E)   $1 million.F) None of the above
G) A) and C)

Question 8

If we look at the components of M2, we find that

Accepted Answer

A)   money market funds are the largest component.
B)   savings deposits are the largest component.
C)   currency is the largest component.
D)   banks' reserves is the largest component.
E)   loans are the largest component.F) A) and E)
G) A) and B)

Question 9

A credit card is

Accepted Answer

A)   money.
B)   barter money.
C)   not money.
D)   fiat money.
E)   not money but the card's credit line is money.F) D) and E)
G) A) and C)

Question 10

Which of the following accept deposits from or sell shares to the general public?
i. money market funds
ii. thrift institutions
iii. commercial banks

Accepted Answer

A)   i only
B)   ii only
C)   iii only
D)   Both ii and iii
E)   i, ii, and iiiF) A) and E)
G) A) and B)

Question 11

The monetary base does NOT include which of the following items?
i. Federal Reserve notes
ii. banks' reserves at the Federal Reserve
iii. U.S.government securities owned by the Federal Reserve

Accepted Answer

A)   i only
B)   ii only
C)   iii only
D)   Both i and ii
E)   Both ii and iiiF) A) and E)
G) A) and D)

Question 12

When part of a bank loan does not return to the banking system but rather remains outside the banking system as currency, then the money multiplier ________ in size and the amount of money created by an open market operation ________.

Accepted Answer

A)   increases; decreases
B)   does not change; increases
C)   decreases; decreases
D)   increases; increases
E)   decreases; does not changeF) All of the above
G) A) and B)

Question 13

A debit card is

Accepted Answer

A)   money because it is a means of payment.
B)   not money but is used to transfer bank deposits which are money.
C)   money because it is generally accepted as a means of payment.
D)   not money because it is not officially issued by the government.
E)   part of the M2 money supply but not part of the M1 money supply.F) B) and E)
G) None of the above

Question 14

The FUN Bank has no excess reserves when a new deposit of $20,000 is made.The desired reserve ratio is 5 percent.After the deposit, but before making any loans, how much does The FUN Bank have in excess reserves?

Accepted Answer

A)   $1,000
B)   $20,000
C)   $9,000
D)   $19,000
E)   $21,000F) A) and B)
G) C) and D)

Question 15

What is fiat money?

Accepted Answer

Fiat money is objects that are money bec...

Question 16

Suppose the desired reserve ratio is 10 percent.If the Commerce Bank has total deposits of $20,000, total assets of $10,000, and actual reserves of $8000, the amount of excess reserves is

Accepted Answer

A)   $2,000.
B)   $6,000.
C)   $800.
D)   $100.
E)   $0.F) A) and D)
G) A) and C)

Question 17

What is barter?
 What is a double coincidence of wants?
 How does the existence of money affect barter?

Accepted Answer

Barter is the direct exchange of one goo...

Question 18

Suppose the Fed buys $1 million of government securities from Bank One, a large commercial bank.Bank One's reserves ________ and its deposits ________.

Accepted Answer

A)   increase by $1 million; do not change
B)   increase by $1 million; increase by $1 million
C)   do not change; increase by $1 million
D)   do not change; do not change
E)   decrease by $1 million; do not changeF) A) and E)
G) D) and E)

Question 19

Which of the following is money?

Accepted Answer

A)   debit cards
B)   e-checks
C)   checks
D)   bank deposits
E)   credit cardsF) A) and B)
G) B) and E)

Question 20

"Because monetary policy must be approved by the president of the United States, the president is chair of the Federal Open Market Committee." Analyze the previous statement.is it correct or incorrect?

Accepted Answer

The statement is incorrect on several di...

Exam 11: The Monetary System

"Even though we can convert them into money, deposits at banks are not money." Is the previous statement correct or not?

Correct AnswerverifiedThe statement is incorrect.Som...View AnswerShow Answer

The Fed purchases $1 million of U.S.government securities from First Bank.The desired reserve ratio is 10 percent, the currency drain is zero, and banks loan all excess reserves.The money multiplier is equal to

Correct AnswerverifiedShow Answer

What is barter? What is a double coincidence of wants? How does the existence of money affect barter?

Correct AnswerverifiedBarter is the direct exchange of one goo...View AnswerShow Answer

"Because monetary policy must be approved by the president of the United States, the president is chair of the Federal Open Market Committee." Analyze the previous statement.is it correct or incorrect?

Correct AnswerverifiedThe statement is incorrect on several di...View AnswerShow Answer

The monetary base does NOT include which of the following items? i. Federal Reserve notes ii. banks' reserves at the Federal Reserve iii. U.S.government securities owned by the Federal Reserve

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A commercial bank's reserves are

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Suppose the Fed buys $1 million of government securities from Bank One, a large commercial bank.Bank One's reserves ________ and its deposits ________.

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A credit card is

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"If the currency drain increases, the monetary base decreases." Explain whether the previous statement is correct or incorrect.

Correct AnswerverifiedThe statement is false.If the ...View AnswerShow Answer

The FUN Bank has no excess reserves when a new deposit of $20,000 is made.The desired reserve ratio is 5 percent.After the deposit, but before making any loans, how much does The FUN Bank have in excess reserves?

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Suppose the desired reserve ratio is 10 percent.If the Commerce Bank has total deposits of $20,000, total assets of $10,000, and actual reserves of $8000, the amount of excess reserves is

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If we look at the components of M2, we find that

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When part of a bank loan does not return to the banking system but rather remains outside the banking system as currency, then the money multiplier ________ in size and the amount of money created by an open market operation ________.

Correct AnswerverifiedShow Answer

M1 is composed of

Correct AnswerverifiedShow Answer

What is fiat money?

Correct AnswerverifiedFiat money is objects that are money bec...View AnswerShow Answer

A debit card is

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Which of the following is a thrift institution?

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Which of the following accept deposits from or sell shares to the general public? i. money market funds ii. thrift institutions iii. commercial banks

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Which of the following is money?

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Actual reserves are equal to

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The statement is incorrect.Som...
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Correct Answer
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Barter is the direct exchange of one goo...
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The statement is incorrect on several di...
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Correct Answer
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Correct Answer
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Suppose the Fed buys $1 million of government securities from Bank One, a large commercial bank.Bank One's reserves and its deposits .

Correct Answer
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Correct Answer
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Correct Answer
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The statement is false.If the ...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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When part of a bank loan does not return to the banking system but rather remains outside the banking system as currency, then the money multiplier in size and the amount of money created by an open market operation .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Fiat money is objects that are money bec...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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