chapter_09_-_supply_of_money2

chapter_09_-_supply_of_money2 - Page 1 of 27 Test Bank...

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Unformatted text preview: Page 1 of 27 Test Bank Macroeconomics: Theory and Policy Chapter 09: Supply of Money B. Modjtahedi Part 1 Question 1 If Judy transferred $5,000 from her checking account to her saving account, A. M1 would decrease but M2 would increase. B. M1 would decrease but M2 would not change. C. Both M1 and M2 would decrease. D. M1 would increase but M2 would decrease. E. None of the above. Question 2 Which of the following is an example of fiat money? A. Gold. B. Dried fish. C. Cigarettes in POW camps. D. U.S. paper money. E. None of the above. Question 3 Prices of goods and services are expressed in the form of money. This function of money is called: A. Means of payments. B. Medium of exchange. C. Unit of account. D. Store of value E. None of the above. Question 4 By definition the supply of money is A. The amount of money lenders supply to borrowers. B. The amount of money the Fed pays when it buys bonds. C. The amount of money people actually hold. D. The amount of coins and paper money in circulation. E. None of the above. Question 5 Which of the following is not a part of the money supply? A. Savings accounts. B. Time deposits. C. Institutional money market mutual fund deposits D. Wages and salaries. E. None of the above. Page 2 of 27 Question 6 Which of the following is not a part of the money supply? A. Travelers checks. B. U.S. Treasury bonds. C. Individual money market mutual fund deposits D. Large denomination time deposits. E. None of the above. Question 7 Which of the following is a part of the money supply? A. Corporate profits. B. After-tax incomes. C. Discount bonds. D. Small denomination time deposits. E. None of the above. Question 8 Which of the following aggregate monetary aggregates is closest to the medium-of-exchange function of money? A. M1 B. M2 C. M3 D. Both M2 and M3 E. None of the above. Question 9 Ranking the aggregate monetary aggregates from the most liquid to the least liquid, we get (most liquid first): A. M1, M2, M3 B. M2, M1, M3 C. M3, M1, M2 D. M3, M2, M1 E. None of the above. Question 10 Consider the following balance sheet for the entire banking system. Assume that the system is fully loaned out. Assets ($) Liabilities + Net Worth ($) Reserves 2,500 Loans 12,500 Deposits 10,000 Net Worth 5,000 The Fed makes a discount loan of $1,000. As a result the money supply will potentially increase by (if banks dont hold any excess reserves and the public dont hold any currency): A. $4,000. B. $5,000. C. $10,000. D. $12,500. E. None of the above. Page 3 of 27 Question 11 The banking system has deposits of $100 million and there are no excess reserves. The Fed reduces the required reserve ratio from 25% to 20%. If there are no leakages from the banking system, the money supply will increase by A. $5 million....
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chapter_09_-_supply_of_money2 - Page 1 of 27 Test Bank...

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