DEVRY ECO312 WEEK 6 WEEKLY ASSIGNMENT

(TCO 7) If you write a check on a bank to purchase a used
Honda Civic, you are using money primarily as

a medium of exchange.
a store of value.
a unit of account.
an economic investment.

Question 2. Question
:
(TCO 7) Currency held in the vault of First National Bank is

counted as part of M1.
counted as part of M2, but not M1.
only counted as part of M1 if it was deposited
into a checking account.
not counted as part of the money supply.
Instructor Explanation: Chapter 31
Points Received: 1 of 1
Comments:

Question 3. Question
:
(TCO 7) Answer the question on the basis of the following
list of assets:

1. Large-denominated ($100,000 and more) time deposits
2. Noncheckable savings deposits
3. Currency (coins and paper money) in circulation
4. Small-denominated (less than $100,000) time deposits
5. Stock certificates
6. Checkable deposits
7. Money market deposit accounts
8. Money market mutual fund balances held by individuals
9. Money market mutual fund balances held by businesses
10. Currency held in bank vaults
Refer to the above
list. The M1 definition of money
comprises item(s)

6 only.
3, 4, and 6.
3 and 6.
3, 6, and 10.

Question 4. Question
:
(TCO 7) Assume the Standard Internet Company negotiates a
loan for $5,000 from the Metro National Bank and receives a checkable deposit
for that amount in exchange for its promissory note (IOU). As a result of this transaction

the supply of money is increased by $5,000.
the supply of money declines by the amount of
the loan.
a claim has been “demonetized.”
the Metro Bank acquires reserves from other
banks.

Question 5. Question
:
(TCO 7) A bank temporarily short of required reserves may be
able to remedy this situation by

borrowing funds in the federal funds market.
granting new loans.
shifting some of its vault cash to its reserve
account at the Federal Reserve.
buying bonds from the public.

Question 6. Question
:
(TCO 7) Money is destroyed when

loans are made.
checks written on one bank are deposited in
another bank.
loans are repaid.
the net worth of the banking system declines.

Question 7. Question
:
(TCO 7) The asset demand for money

is unrelated to both the interest rate and the
level of GDP.
varies inversely with the rate of interest.
varies inversely with the level of real GDP.
varies directly with the level of nominal GDP.

Question 8. Question
:
(TCO 7) If the quantity of money demanded exceeds the
quantity supplied

the supply-of-money curve will shift to the
left.
the demand-for-money curve will shift to the
right.
the interest rate will rise.
the interest rate will fall.

Question 9. Question
:
(TCO 7) In the United States, monetary policy is the
responsibility of the

U.S. Treasury.
Department of Commerce.
Board of Governors of the Federal Reserve
System.
U.S. Congress.

Question 10. Question
:
(TCO 7) In the latter end of 2001 the Fed cut the federal
funds rate several times. The Fed’s
purpose was to

prevent rising inflation.
stop a banking crisis.
stimulate economic growth.
strengthen the international value of the
dollar.

Question 11. Question
:
(TCO 7) What are the two significant characteristics of the
fractional reserve banking system?

Question 12. Question
:
(TCO 7) Describe what changes in the Fed’s major policy
tools lead to [a] expansionary and [b] restrictive or contractionary monetary
policies.