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- 1. Multiple ChoiceWhen the government spends more money than they take in each year is called a _________?DebtDeficitSurplusExpansionary
- 2. Multiple Choice"The Fed" refers to the....Federal Bureau of InvestigationFederal GovernmentFederal Reserve SystemFederal Income Tax
- 3. Multiple Choice
what is the purpose of Monetary Policy?
contribute to economic growth and stability
keep rich people from getting too rich
Functions like Fiscal Policy
give Congress and the political parties more control of the economy
- 4. Multiple Choice
These are IOUs from the U.S. government to people that finance a little piece of the government's debt in exchange for a very small amount of interest
Government Bonds, or Securities
Government Credit
Government Cash
Government Holdings
- 5. Multiple ChoiceThe primary role of the Federal Reserve Bank is to steer the economy bycontrolling the budgetsetting spending levels.controlling the money supply.loaning out money.
- 6. Multiple ChoiceCash that banks must keep in the vault.excess reservesfiscal policyrequired reservescrowding out effect
- 7. Multiple ChoiceThe exchange of goods and services without using money is known as...near money.bartering.double coincidence of wants.fiat money.
- 8. Multiple ChoiceWhich of the following would the FED us to increase the money supply?raise the discount rateraise the required reservesbuy bonds/securitiesprint more money
- 9. Multiple Choice
Fiat money is
money is checking accounts.
money that has intrinsic value on its own.
specially created from the Federal Reserve.
money that is only valuable because the government says it is.
- 10. Multiple ChoiceIf the Federal Reserve wanted to stimulate the economy (make it grow), they mightSell Treasury bondsBuy Treasury bondsSpend more moneySpend less money
- 11. Multiple ChoiceWhich of the following scenarios would cause the nation’s money supply to increase?Decreasing government spendingLowering interest ratesRaising interest ratesSelling bonds to investors
- 12. Multiple ChoiceThis is a paper component of the money supply, today consisting of Federal Reserve notes.coinscurrencyboth coins and currencydebit cards
- 13. Multiple Choice
Money loses its value when it
becomes too plentiful
becomes too portabale
is divisible
is durable
- 14. Multiple Choice
____________ is the price paid for the use of money.
Gold
Monetary policy
Fiscal policy
The interest rate
- 15. Multiple ChoiceWhich of these is NOT a monetary policy tool?Discount rateBalance AccountsOpen Market OperationReserved Requirements
- 16. Multiple ChoiceHigh reserve requirementslower the money supplyincrease the money supply
- 17. Multiple ChoiceWhat is an action of monetary policy?reduce taxeschanging reserve requirementsincrease spendingborrow money for deficit
- 18. Multiple ChoiceDuring an expansion what would you do to prevent inflation?Lower the RRR, Lower the DR, Buy BondsRaise the RRR, Raise the DR, Sell Bonds
- 19. Multiple Choice
Based on the Required Reserves that Reserve Ratio must be
5%
10%
20%
19%
none of the above
- 20. Multiple Choice
If the reserve requirement is 10%, this bank could create _______ in loans.
$1900
$8100
$900
$9000
not enough information.
- 21. Multiple Choice
If this bank were to purchase securities from the Fed, it could currently purchase _______ in securities.
$810
$1710
$1900
$190
$90
- 22. Multiple Choice
If the reserve requirement is 10%, this bank has _______ in excess reserves
$52
$100
$47
$48
$32
- 23. Multiple Choice
If the reserve requirement is 20%, this bank has _______ in excess reserves
$12
$100
$10
$40
$32
- 24. Multiple Choice
If the reserve requirement is 10%, this bank can increase the money supply by increasing
securities by $20.
loans by $100
loans by $320
securities by $100
loans by $32
- 25. Multiple Choice
This bank has a reserve requirement of
9%
4.5%
10%
20%
7%
- 26. Multiple Choice
The reserve ratio here is....
10%
20%
5%
27%
25%
- 27. Multiple Choice
The reserve requirement at this bank is
10%
80%
20%
5%
15%
- 28. Multiple Choice
This bank can lend
$100
$20
$80
$300
$400
- 29. Multiple Choice
This bank can create up to _______ in the money supply
$100
$20
$80
$300
$400
- 30. Multiple Choice
If $100 is is deposited into this bank the excess reserves will grow to
$100
$20
$80
$120
$40
- 31. Multiple Choice
If $200 is is deposited into this bank the excess reserves will grow to
$100
$260
$180
$120
$160
- 32. Multiple Choice
If the reserve ratio at this bank was lowered to 10%, the required reserves would be
$80
$20
$100
$40
$160
- 33. Multiple Choice
If the reserve ratio at this bank was lowered to 10%, this bank could create up to _____ in the money supply.
$800
$200
$600
$400
$1600
- 34. Multiple Choice
If this bank sold $100 in Securities it's ________ would rise to _____ and its Demand Deposits would ______.
Securities; $200; remain the same
Reserves; 140; remain the same
Loans; $180; increase by $100
Securities; $200; increase by $100
Reserves; $140; increase by $100
- 35. Multiple Choice
This shift could occur with
an increase in bank lending.
the purchase of securities in the open market by the Fed.
a decrease in the discount rate.
an increase in the Federal Funds rate.
a decrease in the reserve ratio.
- 36. Multiple Choice
This shift could be caused by
an increase in government spending.
a decrease in deficit spending.
an increase in the discount rate.
the net export effect.
a decrease in the discount rate.
- 37. Multiple Choice
A shift from MD1 to MD2 could be caused by
customers wishing to hold more cash and use credit cards less.
a decrease in the discount rate.
an open market operation sale of bonds to the Fed.
the GDP falling.
an open market operation purchase of bonds by the Fed.
- 38. Multiple Choice
To decrease the equilibrium interest rate to 8% the Fed could
sell bonds.
raise the discount rate.
raise the Federal Funds rate.
lower the reserve requirement.
decrease the GDP.
- 39. Multiple Choice
To raise the interest rate to 12% the Fed could
buy bonds.
increase the discount rate.
decrease the reserve ratio.
decrease the nominal interest rate.
decrease the Federal Funds rate.
- 40. Multiple Choice
The shift in the graph could be caused by
a recession.
government deficit spending.
an increase in savings.
positive feelings about the future of the economy.
the Fed selling securities in an open market operation.
- 41. Multiple Choice
A movement from D3 to D2 could be caused by
an increase in personal wealth.
an increase in the money supply.
a negative view of the future of the economy.
a decrease in household savings.
a government budget surplus.
- 42. Multiple Choice
The shift on the graph could be caused by
a lowering of default risk on loans.
an increase in the desire of companies to invest.
positive expectations about the future of the economy.
a government budget deficit.
a decrease in household savings.
- 43. Multiple Choice
The shift in the graph could be caused by
the crowding out effect.
positive expectations about the future of the economy.
an increase in government budget deficit spending.
a decrease in consumer wealth.
a decrease in household savings.
- 44. Multiple Choice
The shift in the graph could be caused by
an decrease in the federal funds rate.
a lowering of the discount rate.
a government budget surplus.
a decrease in household savings.
an increase in positive opinions on the economic future.
- 45. Multiple Choice
The shift in the graph could be caused by
the Federal Reserve increases the discount rate.
the Federal Reserve makes an open market sale of securities (bonds).
the government increases spending without a corresponding increase in taxes.
the Federal Reserve makes an open market purchase of securities (bonds).
- 46. Multiple ChoiceAn increase in government spending only leads to an increase in the Demand for Loanable Funds whenthe spending is on infrastructure.the spending is on education.the spending is deficit spending.the spending leads to a surplus.
- 47. Multiple ChoiceThe shift in the graph could be caused byan increase in consumer wealth.expectations of a recession.a government surplus.the balanced budget multiplier.
- 48. Multiple ChoiceIf investors expect the economy is headed for expansion the ______ of loanable funds will _______.demand; decreasedemand; increasesupply; decreasesupply; increase
- 49. Multiple ChoiceThe crowding out effect can only occur if thegovernment deficit spends.government runs a surplus.personal savings rate increases.economy begins to boom.
- 50. Multiple ChoiceThe crowding out effect manifests itself in the GDP formula by causingan increase in G and a decrease in Xn.a decrease in G and an increase in C.an increase in I and a decrease in G.an increase in G but a decrease in I.
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