Question 1

If Harold were to deposit cash into his savings account, which of the following changes would take place?

Accepted Answer

A)   M1 would remain the same.
B)   M2 would remain the same.
C)   M2 would decrease.
D)   M1 would increase.
E)   M2 would increase.

Question 2

Using a credit card is most like

Accepted Answer

A)   the money supply increasing.
B)   the value of fiat money being reduced.
C)   the value of fiat money being increased.
D)   a short-term loan from a bank.
E)   a short-term deposit at a bank.

Question 3

________ is defined as "deposits in bank accounts from which depositors may make withdrawals by writing checks."

Accepted Answer

A)   Checkable deposits
B)   Cashable deposits
C)   Checking accounts
D)   Checkable accounts
E)   Liquid deposits

Question 4

A major advantage of money over barter is that it is

Accepted Answer

A)   a medium of exchange.
B)   fiat money.
C)   a unit of account.
D)   a store of value.
E)   currency.

Question 5

If a bank that faces a 10 percent reserve ratio received a deposit of $50,000 and makes a loan to a customer for $5,000, what is the consequence if the bank then deposits the rest of the funds at the Federal Reserve?

Accepted Answer

A)   Excess reserves increase by $50,000.
B)   Excess reserves increase by $45,000 and required reserves increase by $5,000.
C)   Excess reserves increase by $5,000 and required reserves increase by $45,000.
D)   Excess reserves increase by $40,000 and required reserves increase by $5,000.
E)   Reserves are not affected.

Question 6

A "double coincidence of wants" occurs when

Accepted Answer

A)   both parties in an exchange transaction have a sufficient quantity of the medium of exchange.
B)   each party in an exchange transaction happens to have what the other party desires.
C)   the negotiation between parties arrives at a mutually accepted medium of exchange.
D)   each party in an exchange transaction fails to have what the other party desires.
E)   a third party to an exchange transaction has what both other parties desire.

Question 7

The M1 money supply, by definition, is the money supply

Accepted Answer

A)   that consists of currency.
B)   that consists of currency, checkable deposits, and traveler's checks.
C)   that consists of currency, checkable deposits, and savings accounts.
D)   measure that consists of currency and checkable deposits.
E)   measure that consists of currency, checkable deposits, and money market mutual funds.

Question 8

Which of the following is NOT a component of M2?

Accepted Answer

A)   currency
B)   traveler's checks
C)   checking accounts
D)   savings accounts
E)   gold

Question 9

In reality, individuals do not deposit all of their cash into the banking system. Consequently,

Accepted Answer

A)   the simple money deposit multiplier is smaller.
B)   banks will be able to lend out more cash than they would if all cash were deposited.
C)   the simple money deposit multiplier is larger.
D)   banks will be able to increase their deposits at the Federal Reserve.
E)   banks must ensure that their loans only go to customers who are good credit risks.

Question 10

What limits the moral hazard problem in the fractional reserve banking system in England as compared to the moral hazard problem that exists in the United States?

Accepted Answer

The moral hazard problem emerges with de...

Question 11

How is owner's equity calculated?

Accepted Answer

A)   assets - liabilities - cash held by individuals
B)   liabilities - assets
C)   assets - liabilities
D)   assets - liabilities - U.S. Treasury securities
E)   Owner's equity cannot be calculated from the information on a bank's balance sheet.

Question 12

Use the following example to answer the next  questions:
Imagine that Stella deposits $25,000 in currency which she had been storing in her closet)  into her checking account at the bank. Assume that this institution has a required reserve ratio of 25 percent.
-As a result of this deposit, by how much will the bank's excess reserves increase?

Accepted Answer

A)   $0
B)   $18,750
C)   $25,000
D)   $31,250
E)   $100,000

Question 13

If Brian were to give cash to his mother for her birthday and she kept the cash under her mattress, which of the following changes would take place?

Accepted Answer

A)   M1 and M2 would remain unchanged.
B)   M1 and M2 would increase.
C)   M1 and M2 would decrease.
D)   M1 would increase; M2 would decrease.
E)   M1 would decrease; M2 would increase.

Question 14

What function of money is highlighted when the price of one product is compared to another?

Accepted Answer

A)   fiat money
B)   store of value
C)   medium of exchange
D)   unit of account
E)   commodity money

Question 15

Refer to the following table to answer the next  questions:   Checkable deposits $800,500,000 Currency $340,000,000 Traveler’s checks $10,000,000 Money market mutual funds $78,000,000 Small time deposits $15,000,000 Savings deposits $252,000,000\begin{array} { l l } 	ext { Checkable deposits } & \$ 800,500,000 \	ext { Currency } & \$ 340,000,000 \	ext { Traveler&#x27;s checks } & \$ 10,000,000 \	ext { Money market mutual funds } & \$ 78,000,000 \	ext { Small time deposits } & \$ 15,000,000 \	ext { Savings deposits } & \$ 252,000,000\end{array} Checkable deposits  Currency  Traveler’s checks  Money market mutual funds  Small time deposits  Savings deposits ​$800,500,000$340,000,000$10,000,000$78,000,000$15,000,000$252,000,000​ 
-What is the value of M1?

Accepted Answer

A)   $1,150,500,000
B)   $1,495,500,000
C)   $93,000,000
D)   $345,000,000
E)   $78,000,000

Question 16

One way to increase a bank's amount of required reserves is to

Accepted Answer

A)   decrease deposits.
B)   increase loans.
C)   increase deposits.
D)   decrease loans.
E)   decrease owner's equity.

Question 17

Which of the following statements is true?

Accepted Answer

A)   Only a few objects are eligible to be considered a commodity.
B)   A commodity money comes into existence through private, not government, decisions.
C)   A fiat money represents an object that has intrinsic value.
D)   A commodity-backed money and fiat money have the same inherent or intrinsic value.
E)   A commodity money is often determined by government bureaucrats.

Question 18

Which of the following events could cause inflation in the United States-a country that uses fiat money?

Accepted Answer

A)   There is a discovery of a new silver mine.
B)   There has been a decision made to switch from a currency based on the amount of gold a scarce metal)  to a currency based on the amount of silver a plentiful metal) .
C)   Individuals are frustrated by the infrequent occurrence of the double coincidence of wants.
D)   The government decides to print more money.
E)   The government decides to transition to a commodity-backed money.

Question 19

If Bank of Mateer has a required reserve ratio of 40 percent and there is $100,000 in deposits, what is the amount of required reserves?

Accepted Answer

A)   $100,000
B)   $15,000
C)   $40,000
D)   $60,000
E)   $0

Question 20

If Carlos decides to deposit $100 in cash into his savings account at the bank, how would this be reflected on the bank's balance sheet?

Accepted Answer

A)   Reserves and deposits would increase by the same amount as the deposit.
B)   Reserves and deposits would decrease by the same amount as the deposit.
C)   This activity would not be recorded on a bank's balance sheet.
D)   Reserves would increase and deposits would decrease by the same amount as the deposit.
E)   Reserves would decrease and deposits would increase by the same amount as the deposit.

Exam 17: Money and the Federal Reserve

If a bank that faces a 10 percent reserve ratio received a deposit of $50,000 and makes a loan to a customer for $5,000, what is the consequence if the bank then deposits the rest of the funds at the Federal Reserve?

Correct Answer
verified

Correct Answer
verified

What limits the moral hazard problem in the fractional reserve banking system in England as compared to the moral hazard problem that exists in the United States?

Correct Answer
verified
The moral hazard problem emerges with de...
View Answer

Correct Answer
verified

A major advantage of money over barter is that it is

Correct Answer
verified

If Harold were to deposit cash into his savings account, which of the following changes would take place?

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

A "double coincidence of wants" occurs when

Correct Answer
verified

What function of money is highlighted when the price of one product is compared to another?

Correct Answer
verified

One way to increase a bank's amount of required reserves is to

Correct Answer
verified

How is owner's equity calculated?

Correct Answer
verified

If Carlos decides to deposit $100 in cash into his savings account at the bank, how would this be reflected on the bank's balance sheet?

Correct Answer
verified

Using a credit card is most like

Correct Answer
verified

________ is defined as "deposits in bank accounts from which depositors may make withdrawals by writing checks."

Correct Answer
verified

In reality, individuals do not deposit all of their cash into the banking system. Consequently,

Correct Answer
verified

Which of the following is NOT a component of M2?

Correct Answer
verified

If Brian were to give cash to his mother for her birthday and she kept the cash under her mattress, which of the following changes would take place?

Correct Answer
verified

If Bank of Mateer has a required reserve ratio of 40 percent and there is $100,000 in deposits, what is the amount of required reserves?

Correct Answer
verified

The M1 money supply, by definition, is the money supply

Correct Answer
verified

Which of the following events could cause inflation in the United States-a country that uses fiat money?

Correct Answer
verified

Exam 17: Money and the Federal Reserve

If a bank that faces a 10 percent reserve ratio received a deposit of $50,000 and makes a loan to a customer for $5,000, what is the consequence if the bank then deposits the rest of the funds at the Federal Reserve?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What limits the moral hazard problem in the fractional reserve banking system in England as compared to the moral hazard problem that exists in the United States?

Correct AnswerverifiedThe moral hazard problem emerges with de...View AnswerShow Answer

Correct AnswerverifiedShow Answer

A major advantage of money over barter is that it is

Correct AnswerverifiedShow Answer

If Harold were to deposit cash into his savings account, which of the following changes would take place?

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

A "double coincidence of wants" occurs when

Correct AnswerverifiedShow Answer

What function of money is highlighted when the price of one product is compared to another?

Correct AnswerverifiedShow Answer

One way to increase a bank's amount of required reserves is to

Correct AnswerverifiedShow Answer

How is owner's equity calculated?

Correct AnswerverifiedShow Answer

If Carlos decides to deposit $100 in cash into his savings account at the bank, how would this be reflected on the bank's balance sheet?

Correct AnswerverifiedShow Answer

Using a credit card is most like

Correct AnswerverifiedShow Answer

________ is defined as "deposits in bank accounts from which depositors may make withdrawals by writing checks."

Correct AnswerverifiedShow Answer

In reality, individuals do not deposit all of their cash into the banking system. Consequently,

Correct AnswerverifiedShow Answer

Which of the following is NOT a component of M2?

Correct AnswerverifiedShow Answer

If Brian were to give cash to his mother for her birthday and she kept the cash under her mattress, which of the following changes would take place?

Correct AnswerverifiedShow Answer

If Bank of Mateer has a required reserve ratio of 40 percent and there is $100,000 in deposits, what is the amount of required reserves?

Correct AnswerverifiedShow Answer

The M1 money supply, by definition, is the money supply

Correct AnswerverifiedShow Answer

Which of the following events could cause inflation in the United States-a country that uses fiat money?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The moral hazard problem emerges with de...
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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified