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Econ 212-Spring 2006 Exam 3

# Econ 212-Spring 2006 Exam 3 - SPRING 2006 ECONOMICS 212...

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SPRING, 2006 ECONOMICS 212 D. K. BENJAMIN THIRD EXAM Print and encode your name student number and TA number on the scoring sheet. If you fail to do these actions correctly, you will be penalized five points . Mark on the scoring sheet the correct answer to each question. There are thirty (30) questions, each with only ONE correct answer. If you mark more than one answer to a question, you will receive zero credit. Engage brain before putting pencil in gear. Go Tigers . Questions 1 through 3 are based on the following: Currency = 500 Reserves = 800 Deposits = 2100 1. The value of the monetary base is a. 500 b. 800 c. 1300 d. 2100 e. 2600 2. The money supply is 3. The value of the money multiplier is 4. An open market purchase of bonds by the Fed will 5. An open market purchase of bonds by the Fed can a. help prevent the money supply from rising if other forces are tending to increase the money multiplier b. help prevent the money supply from falling if the reserve-deposit ratio is rising for other reasons c. help prevent the money supply from falling if the C/D ratio is rising for other reasons d. partly or completely offset a simultaneous decrease in reserve requirements e. both (b) and (c) are correct

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6. Suppose banks decide to hold a lower ratio of reserves to deposits. Which of the following will result?
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