Econ+310+Fall+2011+exam+1+version+2+-+answers

Econ+310+Fall+2011+exam+1+version+2+-+answers - Form...

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Form version number: 2 Name: UMID: Econ 310 Money and Banking First Examination Fall 2011 The exam contains 25 multiple-choice questions. Each correct answer is worth 4 points. Each question left unanswered is worth 1 point. Each incorrect answer is worth 0 points. Please mark your answers with #2 pencil on the scantron provided. Please fill in your name, UMID number and the form version number for your exam on the scantron. You will find the form version number on the top, right- hand corner of this page. Also put your name and UMID number on the front page of the exam. No calculators, cell phones, personal digital media players, laptop computers or other electronic devices are to be used during the exam. Please ensure that all cell phones are switched off, and put away before the exam begins. You will have 90 minutes to complete your exam. Please check to ensure your exam has 25 questions. Do not begin the exam until you are told to do so. Please put pencils down when informed the exam is finished. You will not be allowed to copy answers onto your scantron after this time. When you have finished the exam, please hand your completed scantron and the front page of your exam to the proctor
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1. ___Which of the following statements is FALSE? “The scrip that is issued by the Capital Hill Baby Sitting Co-op is…” (a) like money, in that it provides agents with the liquidity to make baby- sitting purchases even if they have not earned income by providing baby-sitting services; (b) like money, in that excessive growth in the supply of scrip leads to increases in the prices of baby-sitting services; (c) like money, in that the scrip is always exchangeable for baby-sitting services; (d) like money, in that a reduction in supply of scrip simply leads to a reduction in the price of baby-sitting services, and has no real effect on the level of activity in the baby-sitting economy. 2. ___Suppose that the Fed buys $15 million worth of securities from the banking system. If the required reserve ratio is 25%, which of the following effects would we predict using the simple deposit multiplier model? (a) Total bank reserves will rise by $15 million (b) The banks will increase loans by $60 million (c) Checking deposits held by the non-banking public will increase by $60 million (d) All of the above. 3. ___Suppose that banks hold a total of 20% of their deposits as reserves, and the ratio of currency holdings to checkable deposits is 0.2. If the Fed wishes to increase the M1 money supply by $240 million, they should: (a) buy securities worth $80 million; (b) sell securities worth $60 million; (c) buy securities worth $60 million; (d) sell securities worth $40 million. 4.
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This note was uploaded on 10/28/2011 for the course ECON 310 taught by Professor Hogan during the Fall '08 term at University of Michigan.

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Econ+310+Fall+2011+exam+1+version+2+-+answers - Form...

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