252 Exam II - Pink

252 Exam II - Pink - 1. The monetary base equals: a)...

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1. The monetary base equals: a) currency held by the public plus vault cash plus deposits of commercial banks with the FED. b) currency held by the public plus bank reserves. c) the liabilities of the FED. d) All of the above. Consider the balance sheet below for Piggy Bank: ASSETS (Millions of Dollars) LIABILITIES (Millions of Dollars) Vault Cash……………………………. .. 200 Deposits…………………….10,000 Deposit with the FED………………. . 700 Loans……………………… 1,000 Securities……………………………. . 1,400 Loans ………………………………… 9,200 Physical Capital………………………1,000 Equity………………………. 1,500 2. Piggy Bank currently has _______ million dollars in reserves. a) 200 b) 700 c) 900 d) 1,500 3. If the required reserve ratio set by the FED equals 8.2 percent, Piggy Bank currently has _______ million dollars in excess reserves. a) -80 b) 120 c) 0 d) 80 4. Just before the close of this banking day, depositors withdraw 80 million dollars from their deposits. We would expect Piggy Bank to be __________ in the overnight federal funds market. a) a lender c) a borrower b) neither a lender nor a borrower d) More information is needed to answer this question. 5. Money cannot serve as a unit of account unless it also serves as a: a) medium of exchange c) medium of exchange and store of value b) store of value d) None of the above are correct. 6. Money cannot serve as a medium of exchange unless it also serves as a: a) store of value c) store of value and unit of account b) unit of account d) None of the above are correct. 7. The equation of exchange, upon which the quantity theory of money is based, is a) MV=PY b) MY=PV c) MP=VY d) S + T-G = I 8. Initially, as the economy begins recovery from a prolonged recession, the unemployment rate ______ and the labor force participation rate ______. a)
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252 Exam II - Pink - 1. The monetary base equals: a)...

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