Question 1

Table 29-5
 
-Refer to Table 29-5.If the Bank of Springfield has lent out all the money it can given its deposits,then what is its reserve ratio?

Accepted Answer

A)  1%
B)  5%
C)  10%
D)  20%E) B) and D)
F) A) and D)

Question 2

The money supply increases when the Fed

Accepted Answer

A)  buys bonds.The increase will be larger the smaller the reserve ratio is.
B)  buys bonds.The increase will be larger the larger the reserve ratio is.
C)  sells bonds.The increase will be larger the smaller the reserve ratio is.
D)  sells bonds.The increase will be larger the larger the reserve ratio is.E) A) and B)
F) A) and C)

Question 3

In the nineteenth century when there were often bank runs caused by crop failures,banks would make relatively fewer loans and hold relatively more excess reserves.By itself,these actions by the banks should have

Accepted Answer

A)  increased the money multiplier and the money supply.
B)  decreased the money multiplier and increased the money supply.
C)  increased the money multiplier and decreased the money supply.
D)  decreased both the money multiplier and the money supply.E) A) and D)
F) None of the above

Question 4

Credit cards

Accepted Answer

A)  defer payments.
B)  are a store of value.
C)  have led to wider use of currency.
D)  are part of the money supply.E) B) and C)
F) All of the above

Question 5

In a 100-percent reserve banking system,if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits

Accepted Answer

A)  M1 would increase.
B)  M1 would decrease.
C)  M1 would not change.
D)  M1 might rise or fall.E) A) and D)
F) A) and C)

Question 6

Imagine that the Federal Funds rate was above the level the Federal Reserve had targeted.To move the rate back towards it's target the Federal Reserve could

Accepted Answer

A)  buy bonds.This buying would reduce reserves.
B)  buy bonds.This buying would increase reserves.
C)  sell bonds.This selling would reduce reserves.
D)  sell bonds.This selling would increase reserves.E) B) and C)
F) A) and D)

Question 7

Draw a simple T-account for First National Bank which has $5,000 of deposits,a required reserve ratio of 10 percent,and excess reserves of $300.Make sure you balance sheet balances.

Accepted Answer

The answer of Draw a simple T-account for First National...

Question 8

If people decide to hold more currency relative to deposits,the money supply

Accepted Answer

A)  falls.The Fed could lessen the impact of this by buying Treasury bonds.
B)  falls.The Fed could lessen the impact of this by selling Treasury bonds.
C)  rises.The Fed could lessen the impact of this by buying Treasury bonds.
D)  rises.The Fed could lessen the impact of the by selling Treasury bonds.E) None of the above
F) B) and C)

Question 9

The banking system currently has $50 billion of reserves,none of which are excess.People hold only deposits and no currency,and the reserve requirement is 10%.If the Fed raises the reserve requirement to 12.5% and at the same time sells $10 billion dollars of bonds,then by how much does the money supply change?

Accepted Answer

A)  It falls by $20 billion.
B)  It falls by $110 billion.
C)  It falls by $180 billion.
D)  None of the above is correct.E) All of the above
F) A) and D)

Question 10

Which of the following is not a tool of monetary policy?

Accepted Answer

A)  open market operations
B)  reserve requirements
C)  changing the discount rate
D)  increasing the deficitE) B) and C)
F) A) and D)

Question 11

Explain how each of the following changes the money supply.
a.the Fed buys bonds
b.the Fed raises the discount rate
c.the Fed raises the reserve requirement

Accepted Answer

a. If the Fed buys bonds,it pays for the...

Question 12

In the United States,per person

Accepted Answer

A)  average currency holdings are about $800.One explanation for this relatively small average is that money people use credit and debit cards to make transactions.
B)  average currency holdings are about $800.One explanation for this relatively small average is that U.S.citizens hold a lot of foreign currency.
C)  average holdings of currency are about $3,100.One explanation for this relatively large amount is that criminals may prefer currency as a medium of exchange.
D)  average holdings are about $3,100.One explanation for this relatively large average is that U.S.citizens hold a lot of foreign currency.E) A) and B)
F) B) and D)

Question 13

Economists argue that the move from barter to money increased trade and production.How is this possible?

Accepted Answer

The use of money allows people...

Question 14

If the reserve ratio is 10 percent,the money multiplier is

Accepted Answer

A)  100.
B)  10.
C)  9/10.
D)  1/10.E) C) and D)
F) B) and C)

Question 15

Which of the following is included in M2 but not in M1?

Accepted Answer

A)  currency
B)  demand deposits
C)  savings deposits
D)  All of the above are included in both M1 and M2E) None of the above
F) A) and B)

Question 16

Suppose the Fed requires banks to hold 10% of their deposits as reserves.A bank has $20,000 of excess reserves and then sells the Fed a Treasury bill for $9,000.How much does this bank now have to lend out if it decides to hold only required reserves?

Accepted Answer

A)  $29,000
B)  $28,100
C)  $19,100
D)  $11,000E) All of the above
F) B) and C)

Question 17

In a fractional reserve banking system,a decrease in reserve requirements

Accepted Answer

A)  increases both the money multiplier and the money supply.
B)  decreases both the money multiplier and the money supply.
C)  increases the money multiplier, but decreases the money supply.
D)  decreases the money multiplier, but increases the money supply.E) B) and C)
F) A) and D)

Question 18

To increase the money supply,the Fed could

Accepted Answer

A)  sell government bonds.
B)  decrease the discount rate.
C)  increase the reserve requirement.
D)  None of the above is correct.E) B) and C)
F) All of the above

Question 19

Which of the three functions of money are commonly met by each of the following assets in the U.S.economy?
a.paper dollar
b.precious metals
c.collectibles such as baseball cards, stamps, and antiques

Accepted Answer

a. medium of exchang...

Question 20

Table 29-4
 
-Refer to Table 29-4.If the Bank of Tampa has loaned out all the money it wants given its deposits,then its reserve ratio is

Accepted Answer

A)  1%
B)  5%
C)  10%
D)  20%E) A) and D)
F) B) and C)

Exam 29: The Monetary System

In a 100-percent reserve banking system,if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits

Correct Answer
verified

Which of the following is not a tool of monetary policy?

Correct Answer
verified

Suppose the Fed requires banks to hold 10% of their deposits as reserves.A bank has $20,000 of excess reserves and then sells the Fed a Treasury bill for $9,000.How much does this bank now have to lend out if it decides to hold only required reserves?

Correct Answer
verified

If the reserve ratio is 10 percent,the money multiplier is

Correct Answer
verified

In the nineteenth century when there were often bank runs caused by crop failures,banks would make relatively fewer loans and hold relatively more excess reserves.By itself,these actions by the banks should have

Correct Answer
verified

In the United States,per person

Correct Answer
verified

Economists argue that the move from barter to money increased trade and production.How is this possible?

Correct Answer
verified
The use of money allows people...
View Answer

Table 29-4 -Refer to Table 29-4.If the Bank of Tampa has loaned out all the money it wants given its deposits,then its reserve ratio is

Correct Answer
verified

Which of the three functions of money are commonly met by each of the following assets in the U.S.economy? a.paper dollar b.precious metals c.collectibles such as baseball cards, stamps, and antiques

Correct Answer
verified
a. medium of exchang...
View Answer

Table 29-5 -Refer to Table 29-5.If the Bank of Springfield has lent out all the money it can given its deposits,then what is its reserve ratio?

Correct Answer
verified

To increase the money supply,the Fed could

Correct Answer
verified

Credit cards

Correct Answer
verified

Draw a simple T-account for First National Bank which has $5,000 of deposits,a required reserve ratio of 10 percent,and excess reserves of $300.Make sure you balance sheet balances.

Correct Answer
verified

In a fractional reserve banking system,a decrease in reserve requirements

Correct Answer
verified

If people decide to hold more currency relative to deposits,the money supply

Correct Answer
verified

The money supply increases when the Fed

Correct Answer
verified

Correct Answer
verified

Imagine that the Federal Funds rate was above the level the Federal Reserve had targeted.To move the rate back towards it's target the Federal Reserve could

Correct Answer
verified

Explain how each of the following changes the money supply. a.the Fed buys bonds b.the Fed raises the discount rate c.the Fed raises the reserve requirement

Correct Answer
verified
a. If the Fed buys bonds,it pays for the...
View Answer

Which of the following is included in M2 but not in M1?

Correct Answer
verified

Exam 29: The Monetary System

In a 100-percent reserve banking system,if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits

Correct AnswerverifiedShow Answer

Which of the following is not a tool of monetary policy?

Correct AnswerverifiedShow Answer

Suppose the Fed requires banks to hold 10% of their deposits as reserves.A bank has $20,000 of excess reserves and then sells the Fed a Treasury bill for $9,000.How much does this bank now have to lend out if it decides to hold only required reserves?

Correct AnswerverifiedShow Answer

If the reserve ratio is 10 percent,the money multiplier is

Correct AnswerverifiedShow Answer

In the nineteenth century when there were often bank runs caused by crop failures,banks would make relatively fewer loans and hold relatively more excess reserves.By itself,these actions by the banks should have

Correct AnswerverifiedShow Answer

In the United States,per person

Correct AnswerverifiedShow Answer

Economists argue that the move from barter to money increased trade and production.How is this possible?

Correct AnswerverifiedThe use of money allows people...View AnswerShow Answer

Table 29-4 -Refer to Table 29-4.If the Bank of Tampa has loaned out all the money it wants given its deposits,then its reserve ratio is

Correct AnswerverifiedShow Answer

Which of the three functions of money are commonly met by each of the following assets in the U.S.economy? a.paper dollar b.precious metals c.collectibles such as baseball cards, stamps, and antiques

Correct Answerverifieda. medium of exchang...View AnswerShow Answer

Table 29-5 -Refer to Table 29-5.If the Bank of Springfield has lent out all the money it can given its deposits,then what is its reserve ratio?

Correct AnswerverifiedShow Answer

To increase the money supply,the Fed could

Correct AnswerverifiedShow Answer

Credit cards

Correct AnswerverifiedShow Answer

Draw a simple T-account for First National Bank which has $5,000 of deposits,a required reserve ratio of 10 percent,and excess reserves of $300.Make sure you balance sheet balances.

Correct AnswerverifiedShow Answer

In a fractional reserve banking system,a decrease in reserve requirements

Correct AnswerverifiedShow Answer

If people decide to hold more currency relative to deposits,the money supply

Correct AnswerverifiedShow Answer

The money supply increases when the Fed

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Imagine that the Federal Funds rate was above the level the Federal Reserve had targeted.To move the rate back towards it's target the Federal Reserve could

Correct AnswerverifiedShow Answer

Explain how each of the following changes the money supply. a.the Fed buys bonds b.the Fed raises the discount rate c.the Fed raises the reserve requirement

Correct Answerverifieda. If the Fed buys bonds,it pays for the...View AnswerShow Answer

Which of the following is included in M2 but not in M1?

Correct AnswerverifiedShow Answer

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The use of money allows people...
View Answer

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a. medium of exchang...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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a. If the Fed buys bonds,it pays for the...
View Answer

Correct Answer
verified