Practice Midterm

Practice Midterm - Name_ Recitation day & hr._ Second...

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Name______________________ Signature___________________ Econ 520 Fall 2009a Second Midterm 1 hour, 18 minutes . Closed book, notes, cell phones, Twitter links, etc . Graphing calculators, PDAs etc. may not be used . A non-graphing calculator may be used if desired. Please cover your answers. (100 points – 40 @ 2.5 points each) Answer the following on your computer answer sheet, using a soft (#2) pencil. Bubble in your name on your answer sheet. Social Security # is not required. Make sure you have all 40 questions. When done, please place your answer sheet inside this question sheet and hand in both, presenting your photo ID card to the proctor. 0. Under Special Code K, please bubble in the number 1. 00. Under Special Code L, please bubble in, according to your recitation, 1 for W 11:30 2 for W 1:30 3 for F 11:30 4 for F 1:30 1 Official M1 includes a) NOW accounts b) Certificates of deposit c) Money market mutual funds d) Money market deposit accounts e) Nonbank repos 2. Which of the following is not typically a commercial bank liability? a) demand deposits b) certificates of deposit c) federal funds purchased d) money market deposit accounts e) commercial loans 3. The Federal Funds rate is a) the rate at which the Fed lends directly to banks b) the rate banks charge their best customers c) the implicit yield on Federal Treasury bonds d) the rate the Fed charges on repurchase agreements e) the rate banks charge each other for overnight use of reserves 4. The Prime rate is (same key as previous question)
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5. The Discount Rate is (same key as previous question) 6. When the public deposits currency in banks, the immediate effect is a) the monetary base increases b) the monetary base decreases c) the money supply increases d) the money supply decreases e) neither the base nor the money supply changes 7. When banks make new loans out of surplus reserves, the immediate effect is (Same key as above) 8. If the monetary base B is $1.00 trillion and the bank expansion multiplier k is 2.5, the money stock M will be a) $400 billion b) $1.00 trillion c) $1.25 trillion d) $2.50 trillion e) can’t tell without knowing the required reserve ratio 9. What is the bank expansion multiplier if the public’s desired ratio of currency to checkable deposits is 0.30, while the banks’ desired ratio of reserves to checkable deposits is 0.20? a) 1.50 b) 2.40 c) 2.60 d) 3.33 e) 5.00 10. If c , the public’s desired ratio of currency to checkable deposits increases , while f , the banks’ desired ratio of reserves to deposits remains constant , the bank expansion multiplier will a) decrease under fractional reserve banking. b) decrease under 100% reserve banking. c) remain constant under fractional reserve banking.
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Practice Midterm - Name_ Recitation day & hr._ Second...

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