Devry Eco312 quiz 6

Quiz

Question 1.1.(TCO 7) If you write a
check on a bank to purchase a used Honda Civic, you are using money
primarily as (Points : 1)

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

Question 2.2.(TCO 7) Currency held in
the vault of First National Bank is (Points
: 1)

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.

Question 3.3.(TCO 7) Answer the question on the basis of
the following list of assets:
1. Large-denominated
($100,000 and more) time deposits2. Noncheckable
savings deposits3. Currency (coins and
paper money) in circulation4. Small-denominated
(less than $100,000) time deposits5. Stock certificates6. Checkable deposits7. Money market
deposit accounts8. Money market mutual
fund balances held by individuals9. Money market mutual
fund balances held by businesses10. Currency held in
bank vaults
Refer
to the above list. The M1 definition of
money comprises item(s)
(Points : 1)

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

Question 4.4.(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 (Points : 1)

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 5.5.(TCO 7) A bank temporarily
short of required reserves may be able to remedy this situation by (Points : 1)

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 6.6.(TCO 7) Money is destroyed
when (Points : 1)

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 7.7.(TCO 7) The asset demand
for money (Points : 1)

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 8.8.(TCO 7) If the quantity of
money demanded exceeds the quantity supplied (Points : 1)

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 9.9.(TCO 7) In the United
States, monetary policy is the responsibility of the (Points : 1)

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

Question 10.10.(TCO 7) In the latter end
of 2001 the Fed cut the federal funds rate several times. The Fed’s
purpose was to (Points : 1)

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

Question 11.11.(TCO 7) What are the two significant
characteristics of the fractional reserve banking system? (Points : 5)

Question 12.12.(TCO 7) Describe what changes in the Fed’s
major policy tools lead to [a] expansionary and [b] restrictive or
contractionary monetary policies. (Points
: 5)