quiz12 - Econ 210 Spring 2010 Quiz 12 TA Questions 1....

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Econ 210 Spring 2010 Quiz 12 TA Questions 1. According to lecture, which of the following is NOT a characteristic of money? a. It is a store of value b. It is a medium of exchange c. It can be redeemed for gold from the government d. It is a unit of account 2. The supply of money in the United States is determined by: a. The Federal Reserve b. Congress c. The President d. Separately by each regional federal reserve bank 3. Which of the following is NOT counted as part of M1? a. Traveler’s checks b. Cash c. “Demand deposits” d. M2 4. If the monetary base is increased by $20 and the required reserve ratio is 20% (and banks hold no excess reserves), then the money supply will eventually increase by what amount? a. $4 b. $20 c. $100 d. $400 5. If the money supply increased by $500 and the required reserve ratio is 25% (and banks hold no excess reserves), then the monetary base must have increased by which amount? a. $25 b. $125 c. $500 d. $2,000
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6. According to lecture, which of the following is NOT a tool of monetary policy? a. The required reserve ratio b. The Federal Government’s budget c. The discount rate d. Open market operations 7. One divided by the required reserve ratio is referred to as: a. The money multiplier b. Demand deposits c. Excess reserves d. The discount rate 8. Based on the equation of exchange, if the money supply doubles and the velocity of money and real GDP stay the same, what will happen to prices? a. They will decrease by 50% b. They will increase by 2% c. They will increase by 50% d. They will double 9. If the Federal Reserve Bank adds $1 billion to the reserves in the banking system, and the required reserve ratio is 10%, which of the following is a possible value for the change in the money supply and why? a. Increase by more than $10 billion because banks hold some of the additional money as excess reserves b. Increase by less than $10 billion because banks hold some of the additional money as excess reserves c. Increase by more than $10 billion because some of the money will be spent by consumers d. Increase by less than $10 billion because some of the money will be spent by consumers 10. If banks hold $200 billion in their vaults and $300 billion as deposits at the Fed and the non bank public holds $400 billion in currency, what is the monetary base? a. $500 billion b. $600 billion c. $900 billion d. $9 trillion
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11. M1 is considered to be the most ________________ of monetary assets. a. Slippery b. Liquid c. Wet d. Dry 12. “Liquid” assets are assets that are a. Related to natural resource markets b. Easily converted into gold bullion c. Of a short-term nature (maturities of less than 6 months) d. Easily converted into cash 13. Which of the following monetary policies could the Federal Reserve take, if they wanted to “lower interest rates”?
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This note was uploaded on 02/26/2012 for the course ECON 210 taught by Professor Staff during the Fall '08 term at Purdue University-West Lafayette.

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quiz12 - Econ 210 Spring 2010 Quiz 12 TA Questions 1....

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