Question 1

Which of the following best illustrates the concept of a store of value?

Accepted Answer

A)   You are a precious-metals dealer,and you are always aware of how many ounces of platinum trade for an ounce of gold.
B)   You sell items on eBay,and your prices are stated in terms of dollars.
C)   You keep 6 ounces of gold in your safe-deposit box at the bank for emergencies.
D)   None of the above is correct.E) B) and D)
F) All of the above

Question 2

Currency includes

Accepted Answer

A)   paper bills and coins.
B)   demand deposits.
C)   credit cards.
D)   Both (a) and (b) are correct.E) A) and B)
F) A) and D)

Question 3

The Fed increases the reserve requirement and makes open market purchases.Which of these by itself will increase the money supply?

Accepted Answer

A)   neither the increase in the reserve requirement nor the open market purchases
B)   both the increase in the reserve requirement and the open market purchases
C)   only the increase in the reserve requirement
D)   only the open market purchasesE) None of the above
F) B) and C)

Question 4

In recent years the Federal Open Market Committee has focused on a target for

Accepted Answer

A)   M1 growth.
B)   the federal funds rate.
C)   the number of Treasury Securities issued by the federal government.
D)   total reserves of banks.E) None of the above
F) C) and D)

Question 5

Sandra routinely uses currency to purchase her groceries.She is using money as a unit of account.

Accepted Answer

A) True 
 B)False

Question 6

Treasury Bonds are

Accepted Answer

A)   liquid,but not a store of value.
B)   a store of value,but not liquid.
C)   both liquid and a store of value.
D)   neither liquid nor a store of value.E) A) and D)
F) A) and C)

Question 7

The set of items that serve as media of exchange clearly includes

Accepted Answer

A)   demand deposits.
B)   short-term bonds.
C)   credit cards.
D)   All of the above are correct.E) C) and D)
F) None of the above

Question 8

Consider the following traders who meet.

Which,if any,pairs of traders has a double coincidence of wants?

Accepted Answer

A)   Bob with Alice
B)   Ted with Alice
C)   Bob with Mary,Ted with Bob,and Ted with Alice
D)   None of the pairs above has a double coincidence of wants.E) A) and C)
F) A) and B)

Question 9

Demand deposits are balances in bank accounts that depositors can access by writing a check.

Accepted Answer

A) True 
 B)False

Question 10

Credit card limits are included in

Accepted Answer

A)   M1 but not M2.
B)   M2 but not M1.
C)   M1 and M2.
D)   neither M1 nor M2.E) None of the above
F) A) and B)

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

Table 29-2.An economy starts with $10,000 in currency.All of this currency is deposited
into a single bank,and the bank then makes loans totaling $9,250.The
T-account of the bank is shown below.
 
-Refer to Table 29-2.This bank operates in a

Accepted Answer

A)   system of 0-percent-reserve banking.
B)   system of 100-percent-reserve banking.
C)   system of Federal-Reserve banking.
D)   fractional-reserve banking system.E) A) and B)
F) C) and D)

Question 13

A bank's liabilities include

Accepted Answer

A)   both its reserves and the deposits of its customers.
B)   neither its reserves nor the deposits of its customers.
C)   its reserves,but not the deposits of its customers.
D)   the deposits of its customers,but not its reserves.E) A) and D)
F) C) and D)

Question 14

Paper money

Accepted Answer

A)   has a high intrinsic value.
B)   is the primary medium of exchange in a barter economy.
C)   is valuable because it is generally accepted in trade.
D)   is valuable only because of the legal tender requirement.E) All of the above
F) A) and B)

Question 15

When the Fed conducts open-market purchases,

Accepted Answer

A)   it buys Treasury securities,which increases the money supply.
B)   it buys Treasury securities,which decreases the money supply.
C)   it borrows money from member banks,which increases the money supply.
D)   it lends money to member banks,which decreases the money supply.E) B) and D)
F) None of the above

Question 16

U.S.dollars are an example of commodity money and hides used to make trades are an example of fiat money.

Accepted Answer

A) True 
 B)False

Question 17

Other things the same,if banks decide to hold a smaller part of their deposits as excess reserves,the money supply will fall.

Accepted Answer

A) True 
 B)False

Question 18

Credit cards are

Accepted Answer

A)   a medium of exchange.
B)   counted as part of M2 but not as part of M1.
C)   important for analyzing the monetary system.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 19

Who among the following is not always a voting member of the FOMC?

Accepted Answer

A)   the president of the New York Fed
B)   the Chairman of the Board of Governors
C)   a member of the Board of Governors other than the chair
D)   the president of the Philadelphia FedE) All of the above
F) B) and C)

Question 20

Suppose banks decide to hold fewer excess reserves relative to deposits.Other things the same,this action will cause the

Accepted Answer

A)   money supply to fall.To reduce the impact of this the Fed could sell Treasury bonds.
B)   money supply to fall.To reduce the impact of this the Fed could buy Treasury bonds.
C)   money supply to rise.To reduce the impact of this the Fed could sell Treasury bonds.
D)   money supply to rise.To reduce the impact of this the Fed could buy Treasury bonds.E) All of the above
F) B) and C)

Exam 29: The Monetary System

Credit card limits are included in

Correct Answer
verified

Credit cards are

Correct Answer
verified

Suppose banks decide to hold fewer excess reserves relative to deposits.Other things the same,this action will cause the

Correct Answer
verified

Currency includes

Correct Answer
verified

The Fed increases the reserve requirement and makes open market purchases.Which of these by itself will increase the money supply?

Correct Answer
verified

Who among the following is not always a voting member of the FOMC?

Correct Answer
verified

When the Fed conducts open-market purchases,

Correct Answer
verified

Consider the following traders who meet. Which,if any,pairs of traders has a double coincidence of wants?

Correct Answer
verified

Other things the same,if banks decide to hold a smaller part of their deposits as excess reserves,the money supply will fall.

Correct Answer
verified

Correct Answer
verified

A bank's liabilities include

Correct Answer
verified

The set of items that serve as media of exchange clearly includes

Correct Answer
verified

Sandra routinely uses currency to purchase her groceries.She is using money as a unit of account.

Correct Answer
verified

U.S.dollars are an example of commodity money and hides used to make trades are an example of fiat money.

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

Treasury Bonds are

Correct Answer
verified

In recent years the Federal Open Market Committee has focused on a target for

Correct Answer
verified

Which of the following best illustrates the concept of a store of value?

Correct Answer
verified

Demand deposits are balances in bank accounts that depositors can access by writing a check.

Correct Answer
verified

Paper money

Correct Answer
verified

Exam 29: The Monetary System

Credit card limits are included in

Correct AnswerverifiedShow Answer

Credit cards are

Correct AnswerverifiedShow Answer

Suppose banks decide to hold fewer excess reserves relative to deposits.Other things the same,this action will cause the

Correct AnswerverifiedShow Answer

Currency includes

Correct AnswerverifiedShow Answer

The Fed increases the reserve requirement and makes open market purchases.Which of these by itself will increase the money supply?

Correct AnswerverifiedShow Answer

Who among the following is not always a voting member of the FOMC?

Correct AnswerverifiedShow Answer

When the Fed conducts open-market purchases,

Correct AnswerverifiedShow Answer

Consider the following traders who meet. Which,if any,pairs of traders has a double coincidence of wants?

Correct AnswerverifiedShow Answer

Other things the same,if banks decide to hold a smaller part of their deposits as excess reserves,the money supply will fall.

Correct AnswerverifiedShow Answer

Table 29-2.An economy starts with $10,000 in currency.All of this currency is deposited into a single bank,and the bank then makes loans totaling $9,250.The T-account of the bank is shown below. -Refer to Table 29-2.This bank operates in a

Correct AnswerverifiedShow Answer

A bank's liabilities include

Correct AnswerverifiedShow Answer

The set of items that serve as media of exchange clearly includes

Correct AnswerverifiedShow Answer

Sandra routinely uses currency to purchase her groceries.She is using money as a unit of account.

Correct AnswerverifiedShow Answer

U.S.dollars are an example of commodity money and hides used to make trades are an example of fiat money.

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

Treasury Bonds are

Correct AnswerverifiedShow Answer

In recent years the Federal Open Market Committee has focused on a target for

Correct AnswerverifiedShow Answer

Which of the following best illustrates the concept of a store of value?

Correct AnswerverifiedShow Answer

Demand deposits are balances in bank accounts that depositors can access by writing a check.

Correct AnswerverifiedShow Answer

Paper money

Correct AnswerverifiedShow Answer

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

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verified

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Correct Answer
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