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Sample Quiz 3 PLEASE NOTEI MADE NO EFFORT TO SORT THIS TO MATCH WHAT WEVE COVERED IN CLASS. IF WE DIDNT COVER IT, IT WONT SHOW UP ON MONDAYS QUIZ. I JUST PULLED STRAIGHT FROM THE TEST BANK. Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. Money a. is more efficient than barter. b. makes trades easier. c. allows greater specialization. d. All of the above are correct. ____ 2. Which of the following best illustrates the unit of account function of money? a. You list prices for candy sold on your Web site, www.sweettooth.com, in dollars. b. You pay for your WNBA tickets with dollars. c. You keep $10 in your backpack for emergencies. d. None of the above is correct. ____ 3. Mia puts money into a piggy bank so she can spend it later. What function of money does this illustrate? a. store of value b. medium of exchange c. unit of account d. None of the above is correct. ____ 4. Which of the following functions of money is also a common function of most other financial assets? a. a unit of account b. a store of value c. medium of exchange d. None of the above is correct. ____ 5. Which of the following defer payments? a. credit cards and debit cards b. neither credit cards or debit cards c. credit cards but not debit cards d. debit cards but not credit cards ____ 6. When the Fed conducts open-market purchases, a. it buys Treasury securities, which increases the money supply. b. it buys Treasury securities, which decreases the money supply. c. banks buy Treasury securities from Fed, which increases the money supply. d. banks buy Treasury securities from the Fed, which decreases the money supply. ____ 7. There is a a. short-run tradeoff between inflation and unemployment. b. short-run tradeoff between an increase in the money supply and inflation. c. long-run tradeoff between inflation and unemployment. d. long-run tradeoff between an increase in the money supply and inflation. ____ 8. Suppose that the reserve ratio is 10 percent and that a bank has $2,000 in deposits. Its reserves are a. $20. b. $200. c. $1,880. d. $1,800. ____ 9. Suppose a bank has a 10 percent reserve requirement, $5,000 in deposits, and has loaned out all it can given the reserve requirement. a. It has $50 in reserves and $4,950 in loans. b. It has $500 in reserves and $4,500 in loans. c. It has $555 in reserves and $4,445 in loans. d. None of the above is correct. ____ 10. Suppose a bank has $200,000 in deposits and $190,000 in loans. It has loaned out all it can. It has a reserve ratio of a. 2.5 percent. b. 5 percent. c. 9.5 percent. d. 10 percent. Use the balance sheet for the following questions. Table 29-3 Last Bank of Cedar Bend Assets Liabilities Reserves $25,000 Deposits $150,000 Loans $125,000 ____ 11. Refer to Table 29-3 . If the reserve requirement is 10 percent, then this bank a. is in a position to make a new loan of $15,000.... View Full Document

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