quiz - Ch.29 - Sample Questions Multiple Choice Identify...

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Ch.29 - Sample Questions Multiple Choice Identify the choice that best completes the statement or answers the question. ____d 1. The double coincidence of wants a. is required when there is no item in an economy that is widely accepted in exchange for goods and services. b. is required in an economy that relies on barter. c. is a hindrance to the allocation of resources when it is required for trade. d. All of the above are correct. _A_ 2. Which of the following lists ranks types of assets from most liquid to least liquid? a. currency, demand deposits, money market mutual funds b. currency, money market mutual funds, demand deposits c. money market mutual funds, demand deposits, currency d. demand deposits, money market mutual funds, currency Table 29-6. Bank of Springfield Assets Liabilities Reserves $19,200 Deposits $240,000 Loans 228,000 __c__ 3. Refer to Table 29-6. Assume the Fed’s reserve requirement is 6 percent and that the Bank of Springfield makes new loans so as to make its new reserve ratio 6 percent. From then on, no bank holds any excess reserves. Assume also that people hold only deposits and no currency. Then by what amount does the economy’s money supply increase? a. $50,200 b. $72,000 c. $80,000 d. $106,000 __d__ 4. Which of the following is included in M2 but not in M1? a. demand deposits b. corporate bonds c. large time deposits d. money market mutual funds ANSWER b x_d___ 5. Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the a. money supply to fall. To reduce the impact of this the Fed could sell Treasury bonds. b. money supply to fall. To reduce the impact of this the Fed could buy Treasury bonds. c. money supply to rise. To reduce the impact of this the Fed could sell Treasury bonds. d. money supply to rise. To reduce the impact of this the Fed could buy Treasury bonds. Table 29-1. The information in the table pertains to an imaginary economy. Type of Money Amount Large time deposits $80 billion Small time deposits $75 billion Demand deposits $75 billion Other checkable deposits $40 billion Savings deposits $10 billion Travelers' checks $1 billion Money market mutual funds $15 billion Currency $110 billion Credit card balances $10 billion Miscellaneous categories of M2 $25 billion
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___c_ 6. Refer to Table 29-1. What is the M2 money supply? a. $125 billion b. $296 billion c. $351 billion d. $431 billion x B__c__ 7. Monetary policy affects employment a. only in the long run. b. only in the short run. c. in both the long run and the short run. d. in neither the long run nor the short run. __c__ 8. Which of the following does the Federal Reserve not do? a. conduct monetary policy b. act as a lender of last resort c. convert Federal Reserve Notes into gold d. serve as a bank regulator _a___ 9. If people decide to hold more currency relative to deposits, the money supply a. falls. The Fed could lessen the impact of this by buying Treasury bonds. b. falls. The Fed could lessen the impact of this by selling Treasury bonds.
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quiz - Ch.29 - Sample Questions Multiple Choice Identify...

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