Question 1

Which of the following can the Fed do to change the money supply?

Accepted Answer

A)   change reserves or change the reserve ratio
B)   change reserves but not change the reserve ratio
C)   change the reserve ratio but not change the reserve ratio
D)   neither change reserves nor change the reserve ratioE) A) and D)
F) C) and D)

Question 2

In the months of November and December, people in the United States hold a larger part of their money in the form of currency because they intend to shop and travel for the holidays. As a result, other things the same, the money supply increases.

Accepted Answer

A) True 
 B)False

Question 3

When banks decide to increase their reserves, the money supply will holding all else constant).

Accepted Answer

The answer of When banks decide to increase their reserves,...

Question 4

Members of the Board of Governors are appointed by the president of the U.S. and confirmed by the U.S. Senate.

Accepted Answer

A) True 
 B)False

Question 5

The New York Federal Reserve Bank

Accepted Answer

A)   president always gets to vote at the FOMC meetings.
B)   conducts open market transactions.
C)   is one of 12 regional Federal Reserve Banks.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 6

Roundabout trade decreases production.

Accepted Answer

A) True 
 B)False

Question 7

A decrease in the money supply might indicate that the Fed had

Accepted Answer

A)   purchased bonds to increase banks reserves.
B)   purchased bonds to decrease banks reserves.
C)   sold bonds to increase banks reserves.
D)   sold bonds to decrease banks reserves.E) A) and D)
F) B) and C)

Question 8

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) All of the above
F) B) and D)

Question 9

In an economy that relies on barter, trade requires a double-coincidence of wants.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is included in M1 and M2?

Accepted Answer

A)   traveler's checks
B)   savings deposits
C)   money market mutual funds
D)   small time depositsE) B) and D)
F) B) and C)

Question 11

Are credit cards and debit cards money? What's the difference between credit and debit cards?

Accepted Answer

Neither credit cards nor debit cards are...

Question 12

Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 8 percent, and excess reserves amount to $5 billion. What is the level of deposits?

Accepted Answer

A)   $5,000 billion
B)   $4,937.5 billion
C)   $5,062.5 billion
D)   $4,995 billionE) A) and C)
F) B) and C)

Question 13

Credit cards are a medium of exchange.

Accepted Answer

A) True 
 B)False

Question 14

What does the text mean by the question, "Where Is All the Currency?" How does it answer the question?

Accepted Answer

The amount of currency per person is nea...

Question 15

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 government budget deficitE) A) and B)
F) All of the above

Question 16

Money is

Accepted Answer

A)   the most liquid asset and a perfect store of value.
B)   the most liquid asset but an imperfect store of value.
C)   not the most liquid asset but a perfect store of value.
D)   neither the most liquid asset and nor a perfect store of value.E) A) and C)
F) None of the above

Question 17

An open-market sale

Accepted Answer

A)   increases the number of dollars and the number of bonds in the hands of the public.
B)   increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public.
C)   decreases the number of dollars and the number of bonds in the hands of the public.
D)   decreases the number of dollars in the hands of the public and increases the number of bonds in the hands of the public.E) B) and C)
F) None of the above

Question 18

Monetary policy is determined by a committee whose voting members include all the presidents of the regional Federal Reserve Banks.

Accepted Answer

A) True 
 B)False

Question 19

In a system of 100-percent-reserve banking, the purpose of a bank is to

Accepted Answer

A)   make loans to households.
B)   influence the money supply.
C)   give depositors a safe place to keep their money.
D)   buy and sell gold.E) A) and B)
F) A) and C)

Question 20

Which of the following is both a store of value and regularly used as a medium of exchange?

Accepted Answer

A)   cash and stocks
B)   cash but not stocks
C)   stocks but not cash
D)   neither cash nor stocksE) B) and D)
F) B) and C)

Exam 11: The Monetary System

In the months of November and December, people in the United States hold a larger part of their money in the form of currency because they intend to shop and travel for the holidays. As a result, other things the same, the money supply increases.

Correct AnswerverifiedShow Answer

To increase the money supply, the Fed could

Correct AnswerverifiedShow Answer

Members of the Board of Governors are appointed by the president of the U.S. and confirmed by the U.S. Senate.

Correct AnswerverifiedShow Answer

Which of the following can the Fed do to change the money supply?

Correct AnswerverifiedShow Answer

Money is

Correct AnswerverifiedShow Answer

Monetary policy is determined by a committee whose voting members include all the presidents of the regional Federal Reserve Banks.

Correct AnswerverifiedShow Answer

In a system of 100-percent-reserve banking, the purpose of a bank is to

Correct AnswerverifiedShow Answer

When banks decide to increase their reserves, the money supply will holding all else constant).

Correct AnswerverifiedShow Answer

Which of the following is included in M1 and M2?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A decrease in the money supply might indicate that the Fed had

Correct AnswerverifiedShow Answer

Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 8 percent, and excess reserves amount to $5 billion. What is the level of deposits?

Correct AnswerverifiedShow Answer

What does the text mean by the question, "Where Is All the Currency?" How does it answer the question?

Correct AnswerverifiedThe amount of currency per person is nea...View AnswerShow Answer

Roundabout trade decreases production.

Correct AnswerverifiedShow Answer

An open-market sale

Correct AnswerverifiedShow Answer

Are credit cards and debit cards money? What's the difference between credit and debit cards?

Correct AnswerverifiedNeither credit cards nor debit cards are...View AnswerShow Answer

Which of the following is both a store of value and regularly used as a medium of exchange?

Correct AnswerverifiedShow Answer

In an economy that relies on barter, trade requires a double-coincidence of wants.

Correct AnswerverifiedShow Answer

The New York Federal Reserve Bank

Correct AnswerverifiedShow Answer

Credit cards are a medium of exchange.

Correct AnswerverifiedShow Answer

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The amount of currency per person is nea...
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Neither credit cards nor debit cards are...
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