Macroeconomics: Money can be many things, but it is not, economics homework help

1. Money can be many things, but it is not:

   	A.	A financial asset
   	B.	A financial liability
   	C.	Liquid
   	D.	Illiquid

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QUESTION 2

1. A financial asset is liquid:

   	A.	If is is held by the public and earning interest
   	B.	Only if it takes the form of cash
   	C.	If it can be readily exchanged for another asset or good
   	D.	If it can be carried easily from one place to another

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QUESTION 3

1. The U.S. central bank is a financial institution that:

   	A.	Has the sole right to accept deposits and make loans
   	B.	Sets borrowing and lennding in a country
   	C.	Has the sole right to issue currency
   	D.	Determines what assets will back a currency

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QUESTION 4

1. The value and functionality of money are determined by the:

   	A.	Regulations defined by the Fed
   	B.	Credibility in other financial assets
   	C.	Lack of credibility in other financial assets
   	D.	General acceptability to other people

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QUESTION 5

1. Which of the following is not one of the functions of money?

   	A.	Unit of account
   	B.	Store of wealth
   	C.	Medium of exchange
   	D.	Standard of economic well-being

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QUESTION 6

1. During periods of high inflation, money becomes:

   	A.	More useful as a store of value
   	B.	Less useful as a unit of account
   	C.	More useful as a medium of exchange
   	D.	More useful as a unit of account

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QUESTION 7

1. When you deposit $200 in your savings account with the objective to buy in the near future a video game that is about to be offered in thh market, then the $200 is serving which function?

   	A.	Medium of exchange
   	B.	Unit of account
   	C.	Store of real assets
   	D.	Store of wealth

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QUESTION 8

1. M₁ includes which of the following?

   	A.	Time deposits
   	B.	Checking account deposits
   	C.	Money market mutual funds
   	D.	Gold certificates

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QUESTION 9

1. Bank reserves are:

   	A.	Checks held by depositors
   	B.	Real assets deposited at banks
   	C.	Loans issued by banks deposited into checking accounts
   	D.	Cash and deposits a bank keeps on hand or at the central bank

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QUESTION 10

1. When a bank makes a loan, the money supply:

   	A.	Increases
   	B.	Decreases
   	C.	May increase or decrease depending on how the loan is used
   	D.	Does not increase

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QUESTION 11

1. As the reserve ratio goes up, less money will be created because:

   	A.	Banks will extend fewer loans
   	B.	Banks will extend more loans
   	C.	People will hold less cash
   	D.	People will hold more cash

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QUESTION 12

1. If the reserve ratio is 0.25, the money multiplier is:

   	A.	20.0
   	B.	5.0
   	C.	25.0
   	D.	4.0

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QUESTION 13

1. Who determines U.S. monetary policy?

   	A.	The Federal Reserve
   	B.	Congress
   	C.	The Internal Revenue Service
   	D.	The president

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QUESTION 14

1. Monetary policy affects:

   	A.	Only output
   	B.	Neither inflation nor output
   	C.	Only inflation
   	D.	Both inflation and output

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QUESTION 15

1. In the short run if the Fed undertakes expansionary monetary policy, the effect will be to shift the:

   	A.	SAS curve up
   	B.	SAS curve down
   	C.	AD curve out to the right
   	D.	AD curve in to the left

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QUESTION 16

1. Monetary policy is one of the two main macroeconomic tools governments use to control the aggregate economy, the other being:

   	A.	Trade policy
   	B.	Foreign policy
   	C.	Immigration policy
   	D.	Fiscal policy

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QUESTION 17

1. If prices are inflexible, monetary policy:

   	A.	Affects both inflation and output
   	B.	Affects output but not inflation
   	C.	Affects inflation but not output
   	D.	Doesn’t affect output or inflation

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QUESTION 18

1. If nominal income increases by 3 percent and real income increases by 4 percent, the price level must:

   	A.	Increase by 7 percent
   	B.	Increase by 1 percent
   	C.	Decrease by 1 percent
   	D.	Decrease by 7 percent

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QUESTION 19

1. Refer to the graph shown. Suppose the economy is initially at O but then the Fed adopts an expansionary monetary policy. The immediate effect of this policy will be to move the economy to:

   	A.	D
   	B.	C
   	C.	B
   	D.	A

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QUESTION 20

1. An effect of an expansionary monetary policy is to:

   	A.	Raise interest rates
   	B.	Reduce investment spending
   	C.	Shift the aggregate demand curve to the left
   	D.	Lower interest rates

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QUESTION 21

1. How many regional banks are in the Federal Reserve System?

   	A.	6
   	B.	15
   	C.	12
   	D.	8

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QUESTION 22

1. The group that is comprised of five presidents of Fed regional banks and seven Fed governors that gathers around a table to discuss whether to increase interest rates is the:

   	A.	Federal Advisory Council
   	B.	Federal Open Market Committee
   	C.	National Federal Reserve Bank
   	D.	Federal Depository Insurance Corporation

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QUESTION 23

1. The reserve requirement for large banks on customer deposits in checking accounts is around:

   	A.	2 percent
   	B.	5 percent
   	C.	10 percent
   	D.	15 percent

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QUESTION 24

1. When the Fed increases the reserve requirement, it:

   	A.	Contracts the money supply because banks have less to lend
   	B.	Expands the money supply because banks have more to lend
   	C.	Contracts the money supply because banks have more to lend
   	D.	Expands the money supply because banks have less to lend

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QUESTION 25

1. The discount rate is the interest rate:

   	A.	The interest rate commercial banks charge one another for overnight loans
   	B.	The Fed charges on loans to individuals
   	C.	Commercial banks charge their largest customers
   	D.	The Fed charges on loans to commercial banks

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QUESTION 26

1. To increase the nation’s money supply, the Fed can:

   	A.	Increase the required reserve ratio
   	B.	Sell bonds
   	C.	Decrease the discount rate
   	D.	Increase the discount rate

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QUESTION 27

1. Why are financial-sector crises scarier than collapses in other sectors of the economy?

   	A.	The financial sector is the biggest sector
   	B.	If the financial sector fails, it can bring the whole economy down with it
   	C.	Most people work in the financial sector
   	D.	Financial-sector crises happen more often than collapses in other sectors

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QUESTION 28

1. In which two markets did a bubble form that led to a financial crisis in 2008?

   	A.	Mortgage-backed securities and tulips
   	B.	Housing and automobiles
   	C.	South Sea Company and tulips
   	D.	Housing and mortgage-backed securities

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QUESTION 29

1. When a central bank is acting as a lender of last resort it is:

   	A.	Buying Treasury bills directly from the public
   	B.	Buying long-term Treasury bonds and selling short-term Treasury notes
   	C.	Providing banks liquidity to meet their obligations
   	D.	Providing banks with Treasury bills for free

QUESTION 30

1. When the Fed loaned to banks using bank’s long-run assets such as mortgages as collateral, it was:

   	A.	Providing banks with liquidity
   	B.	Conducting standard monetary policy
   	C.	Loosening its regulations of bank
   	D.	Giving banks assets

Multiple choice…