question
Of the following, the most liquid asset is
A.mutual funds
B.currency
C.time deposits
D.demand deposits
E.savings deposits
A.mutual funds
B.currency
C.time deposits
D.demand deposits
E.savings deposits
answer
B
question
commodity money
answer
objects that have value in themselves and that are also used as money
question
Fiat money
answer
money that has value because the government has ordered that it is an acceptable means to pay debts
question
medium of exchange, unit of account, store of value
answer
3 functions of money
question
In the narrowest definition of money, M1, savings accounts are excluded because they are
A.not a medium of exchange
B.not insured by federal deposit insurance
C.available from financial institutions other than banks
D.a store of purchasing power
E.interest-paying accounts
A.not a medium of exchange
B.not insured by federal deposit insurance
C.available from financial institutions other than banks
D.a store of purchasing power
E.interest-paying accounts
answer
A
question
Which of the following best describes the present value of one dollar received one year from today?
A.It is worth more than a dollar received today.
B.It is worth less than a dollar received today.
C.It has the same value as a dollar received today.
D.It decreases as interest rates decrease.
E.It is not affected by changes in interest rates.
A.It is worth more than a dollar received today.
B.It is worth less than a dollar received today.
C.It has the same value as a dollar received today.
D.It decreases as interest rates decrease.
E.It is not affected by changes in interest rates.
answer
B
question
Changes in price level, Income/GDP and Technology
answer
Shifts Money Market Demand
question
Change in interest rate
answer
Slider of Money Market Demand
question
The transaction demand for money is associated with moneys use as?
A. A store of value
B. Standard Unit of Account
C. Measure of value
D. Medium of exchange
E. Standard of deferred payment
A. A store of value
B. Standard Unit of Account
C. Measure of value
D. Medium of exchange
E. Standard of deferred payment
answer
D
question
The amount of money that the public wants to hold in the form of cash will?
A. Be unaffected by changes in IR or PL
B. Increase if IR increase
C. Decrease if IR increase
D. Increase if PL decreases
E. Decrease if PL remains constant
A. Be unaffected by changes in IR or PL
B. Increase if IR increase
C. Decrease if IR increase
D. Increase if PL decreases
E. Decrease if PL remains constant
answer
C
question
What shifts the Money Market MS?
answer
Actions by the FED
question
A contraction in the money supply will most likely change the nominal interest rate and aggregate demand in which of the following ways in the short run?
A.Nominal Interest Rate: Increase, Aggregate Demand: Decrease
B.Nominal Interest Rate: Increase, Aggregate Demand: Increase
C.Nominal Interest Rate: Increase, Aggregate Demand: No change
D.Nominal Interest Rate: Decrease, Aggregate Demand: Decrease
E.Nominal Interest Rate: Decrease, Aggregate Demand: Increase
A.Nominal Interest Rate: Increase, Aggregate Demand: Decrease
B.Nominal Interest Rate: Increase, Aggregate Demand: Increase
C.Nominal Interest Rate: Increase, Aggregate Demand: No change
D.Nominal Interest Rate: Decrease, Aggregate Demand: Decrease
E.Nominal Interest Rate: Decrease, Aggregate Demand: Increase
answer
A
question
Reserve requirements, Lending to banks (discount rate) and open market operations (buying and selling bonds)
answer
3 tools of Monetary Policy
question
1/reserve requirement
answer
Money multiplier
question
The Federal Funds rate is an?
answer
Indicator
question
interest rate that the Fed charges commercial banks.
answer
Discount Rate
question
When an economy is operating below the full-employment level of output, an appropriate monetary policy would be to increase which of the following?A.The discount rate
B.The required reserve ratio
C.The international value of the dollar
D.Open market purchases of government bonds
E.Government expenditure on goods and services
B.The required reserve ratio
C.The international value of the dollar
D.Open market purchases of government bonds
E.Government expenditure on goods and services
answer
D
question
Which of the following is most likely to occur as the FED engages in open market operations to reduce inflation?
A. decrease the IR
B. A decrease in reserves in the banking system
C. A decrease in the government deficit
D. An increase in the money supply
E. An increase in exports
A. decrease the IR
B. A decrease in reserves in the banking system
C. A decrease in the government deficit
D. An increase in the money supply
E. An increase in exports
answer
B
question
Which of the following will lead to a decrease in a nations money supply?
A. A decrease in income tax rates
B. A decrease in the discount rate
C. An open market purchase of government securities by the central bank
D. An increase in reserve requirements
E. An increase in government expenditures on goods and services
A. A decrease in income tax rates
B. A decrease in the discount rate
C. An open market purchase of government securities by the central bank
D. An increase in reserve requirements
E. An increase in government expenditures on goods and services
answer
D
question
To reduce inflation, the central bank would be most likely to
A.decrease the reserve requirement
B.decrease the income tax rates
C.increase the supply of money
D.buy government securities
E.sell government securities
A.decrease the reserve requirement
B.decrease the income tax rates
C.increase the supply of money
D.buy government securities
E.sell government securities
answer
E
question
Money deposited in a commercial bank in a checking account.
answer
Demand deposits
question
The amount that the bank can loan out.
answer
excess reserves
question
Assume that the reserve requirement is 10 percent. Marwa deposits $1 million in cash into her checking account at First Bank. The deposit will initially increase excess reserves at First Bank by
A.$100,000
B.$900,000
C.$1 million
D.$9 million
E.$10 million
A.$100,000
B.$900,000
C.$1 million
D.$9 million
E.$10 million
answer
B
question
The Interest rate and bond prices are ( ) related
answer
Inversely
question
This shifts the loanable funds supply and demand
answer
Political instability
question
Borrowing by consumers, government and businesses
answer
Shifts Db
question
Changes in private, public savings and foreign investment
answer
Shifts Sl
question
Nominal IR- Inflation
answer
Real IR
question
Crowding-out refers to?
A. National output caused by higher taxes
B. Domestic production caused by increased imports
C. Private investment due to increased borrowing by the government
D. Employment caused by higher inflation
E. Exports caused by an appreciating currency of a country
A. National output caused by higher taxes
B. Domestic production caused by increased imports
C. Private investment due to increased borrowing by the government
D. Employment caused by higher inflation
E. Exports caused by an appreciating currency of a country
answer
C
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