Question 1

If the reserve ratio is 4 percent, then $81,250 of new money can be generated by

Accepted Answer

A)   $325 of new reserves.
B)   $3,250 of new reserves.
C)   $20,312.50 of new reserves.
D)   $2,031,250 of new reserves.E) A) and B)
F) B) and D)

Question 2

Bank capital is

Accepted Answer

A)   the machinery, structures, and equipment of the bank.
B)   the resources that owners have put into the bank.
C)   the reserves of the bank.
D)   the bank's total assets.E) C) and D)
F) A) and B)

Question 3

Why is the Chairman of the Federal Reserve often referred to as the "second most powerful person in the United States?"

Accepted Answer

The Fed's policy decisions influence the...

Question 4

Commodity money is

Accepted Answer

A)   backed by gold.
B)   the principal type of money in use today.
C)   money with intrinsic value.
D)   receipts created in international trade that are used as a medium of exchange.E) A) and B)
F) A) and C)

Question 5

Consider five individuals with different occupations.  In a barter system which of the following pairs has a double coincidence of wants?

Accepted Answer

A)   Allen and Eric
B)   Diedre and Calvin
C)   Both A and B are correct.
D)   None of the above are correct.E) B) and C)
F) C) and D)

Question 6

What does the "double coincidence of wants" refer to?

Accepted Answer

"Double coincidence of wants" refers to ...

Question 7

Suppose that in a country people gain more confidence in the banking system and so hold relatively less currency and more deposits. As a result, bank reserves will

Accepted Answer

A)   decrease and the money supply will eventually decrease.
B)   decrease and the money supply will eventually increase.
C)   increase and the money supply will eventually decrease.
D)   increase and the money supply will eventually increase.E) All of the above
F) B) and D)

Question 8

If the reserve requirement is 10 percent, a bank desires to hold no excess reserves, and it receives a new deposit of $500, it

Accepted Answer

A)   must increase required reserves by $50.
B)   will initially see reserves increase by $500.
C)   will be able to use this deposit to make new loans amounting to $450.
D)   All of the above are correct.E) C) and D)
F) B) and C)

Question 9

The Federal Reserve is a privately operated commercial bank.

Accepted Answer

A) True 
 B)False

Question 10

Scenario 29-1.
The monetary policy of Namdian is determined by the Namdian Central Bank. The local currency is the dia. Namdian banks collectively hold 100 million dias of required reserves, 25 million dias of excess reserves, 250 million dias of Namdian Treasury Bonds, and their customers hold 1,000 million dias of deposits. Namdians prefer to use only demand deposits and so the money supply consists of demand deposits.
-Refer to Scenario 29-1. Assuming the only other item Namdian banks have on their balance sheets is loans, what is the value of existing loans made by Namdian banks?

Accepted Answer

A)   625 million dias
B)   875 million dias
C)   1,125 million dias
D)   None of the above is correct.E) B) and C)
F) C) and D)

Question 11

If the reserve ratio is 5 percent, then $500 of additional reserves can create up to

Accepted Answer

A)   $10,500 of new money.
B)   $10,000 of new money.
C)   $9,500 of new money.
D)   $2,500 of new money.E) A) and B)
F) B) and C)

Question 12

The Soviet government in the 1980's never abandoned the ruble as the official currency. However, the people of Moscow preferred to accept

Accepted Answer

A)   cigarettes in exchange for goods and services, because they were convinced that cigarettes were going to soon become hard to come by.
B)   American dollars in exchange for goods and services, because rubles were extremely hard to come by.
C)   goods such as cigarettes or American dollars in exchange for goods and services, reminding us of the fact that government decree by itself is not sufficient for the success of a commodity money.
D)   All of the above are correct.E) C) and D)
F) A) and D)

Question 13

If people decide to hold less 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 this by selling Treasury bonds.E) A) and D)
F) C) and D)

Question 14

The manager of the bank where you work tells you that your bank has $6 million in excess reserves. She also tells you that the bank has $400 million in deposits and $362 million dollars in loans. Given this information you find that the reserve requirement must be

Accepted Answer

A)   44/400.
B)   6/362.
C)   38/400.
D)   32/400.E) C) and D)
F) B) and D)

Question 15

Credit cards

Accepted Answer

A)   represent the largest component of M1.
B)   are not included in M1 but are included in M2.
C)   are a form of money unique to the U.S.
D)   are not considered money.E) C) and D)
F) B) and D)

Question 16

Consider five high school students working on homework in study hall.  Which of the following pairs of students has a double coincidence of wants?

Accepted Answer

A)   Rosie and Piper
B)   Piper and Molly
C)   Dewey and Molly
D)   Bob and DeweyE) A) and B)
F) B) and D)

Question 17

At any given time, the voting members of the Federal Open Market Committee include

Accepted Answer

A)   five of the presidents of the regional Federal Reserve banks.
B)   the president of the Federal Reserve Bank of New York.
C)   the seven members of the Board of Governors.
D)   All of the above are correct.E) C) and D)
F) All of the above

Question 18

An important function of the U.S. Federal Reserve is to

Accepted Answer

A)   set the debt ceiling.
B)   fund Congressional spending.
C)   control the supply of money.
D)   mint coins.E) B) and C)
F) None of the above

Question 19

Which of the following individuals serve a four-year term?

Accepted Answer

A)   the members of the Board of Governors
B)   the Chair of the Board of Governors
C)   the members of the FOMC
D)   All of the above are correct.E) All of the above
F) A) and B)

Question 20

Which of the following defer payments?

Accepted Answer

A)   credit cards and debit cards
B)   neither credit cards nor debit cards
C)   credit cards but not debit cards
D)   debit cards but not credit cardsE) A) and D)
F) A) and C)

Exam 16: The Monetary System

If the reserve ratio is 5 percent, then $500 of additional reserves can create up to

Correct Answer
verified

What does the "double coincidence of wants" refer to?

Correct Answer
verified
"Double coincidence of wants" refers to ...
View Answer

Correct Answer
verified

An important function of the U.S. Federal Reserve is to

Correct Answer
verified

Which of the following defer payments?

Correct Answer
verified

The Federal Reserve is a privately operated commercial bank.

Correct Answer
verified

Which of the following individuals serve a four-year term?

Correct Answer
verified

Consider five high school students working on homework in study hall. Which of the following pairs of students has a double coincidence of wants?

Correct Answer
verified

If the reserve ratio is 4 percent, then $81,250 of new money can be generated by

Correct Answer
verified

At any given time, the voting members of the Federal Open Market Committee include

Correct Answer
verified

If the reserve requirement is 10 percent, a bank desires to hold no excess reserves, and it receives a new deposit of $500, it

Correct Answer
verified

Credit cards

Correct Answer
verified

The Soviet government in the 1980's never abandoned the ruble as the official currency. However, the people of Moscow preferred to accept

Correct Answer
verified

Why is the Chairman of the Federal Reserve often referred to as the "second most powerful person in the United States?"

Correct Answer
verified
The Fed's policy decisions influence the...
View Answer

Commodity money is

Correct Answer
verified

The manager of the bank where you work tells you that your bank has $6 million in excess reserves. She also tells you that the bank has $400 million in deposits and $362 million dollars in loans. Given this information you find that the reserve requirement must be

Correct Answer
verified

Consider five individuals with different occupations. In a barter system which of the following pairs has a double coincidence of wants?

Correct Answer
verified

Suppose that in a country people gain more confidence in the banking system and so hold relatively less currency and more deposits. As a result, bank reserves will

Correct Answer
verified

Bank capital is

Correct Answer
verified

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

Correct Answer
verified

Exam 16: The Monetary System

If the reserve ratio is 5 percent, then $500 of additional reserves can create up to

Correct AnswerverifiedShow Answer

What does the "double coincidence of wants" refer to?

Correct Answerverified"Double coincidence of wants" refers to ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

An important function of the U.S. Federal Reserve is to

Correct AnswerverifiedShow Answer

Which of the following defer payments?

Correct AnswerverifiedShow Answer

The Federal Reserve is a privately operated commercial bank.

Correct AnswerverifiedShow Answer

Which of the following individuals serve a four-year term?

Correct AnswerverifiedShow Answer

Consider five high school students working on homework in study hall. Which of the following pairs of students has a double coincidence of wants?

Correct AnswerverifiedShow Answer

If the reserve ratio is 4 percent, then $81,250 of new money can be generated by

Correct AnswerverifiedShow Answer

At any given time, the voting members of the Federal Open Market Committee include

Correct AnswerverifiedShow Answer

If the reserve requirement is 10 percent, a bank desires to hold no excess reserves, and it receives a new deposit of $500, it

Correct AnswerverifiedShow Answer

Credit cards

Correct AnswerverifiedShow Answer

The Soviet government in the 1980's never abandoned the ruble as the official currency. However, the people of Moscow preferred to accept

Correct AnswerverifiedShow Answer

Why is the Chairman of the Federal Reserve often referred to as the "second most powerful person in the United States?"

Correct AnswerverifiedThe Fed's policy decisions influence the...View AnswerShow Answer

Commodity money is

Correct AnswerverifiedShow Answer

The manager of the bank where you work tells you that your bank has $6 million in excess reserves. She also tells you that the bank has $400 million in deposits and $362 million dollars in loans. Given this information you find that the reserve requirement must be

Correct AnswerverifiedShow Answer

Consider five individuals with different occupations. In a barter system which of the following pairs has a double coincidence of wants?

Correct AnswerverifiedShow Answer

Suppose that in a country people gain more confidence in the banking system and so hold relatively less currency and more deposits. As a result, bank reserves will

Correct AnswerverifiedShow Answer

Bank capital is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
"Double coincidence of wants" refers to ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The Fed's policy decisions influence the...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified