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Homework answers / question archive / UNIVERSITY OF SAUTH FLORIDA – ECO 2013 Chapter 11  1)A double coincidence of wants   A

UNIVERSITY OF SAUTH FLORIDA – ECO 2013 Chapter 11  1)A double coincidence of wants   A

Economics

UNIVERSITY OF SAUTH FLORIDA – ECO 2013

Chapter 11

 1)A double coincidence of wants

 

A. is required when there is no item in an economy that is widely accepted in exchange for goods and services.

 

B. is required in an economy that relies on barter.

 

C. is a hindrance to the allocation of resources when it is required for trade.

 

D. All of the above are correct.

 

 

2 Money

 

A. is more efficient than barter.

 

B. makes trades easier.

 

C. allows greater specialization.

 

D. All of the above are correct.

 

 

3 The ease with which an asset can be

 

A. traded for another asset determines whether or not that asset is a unit of account.

 

B. transported from one place to another determines whether or not that asset could serve as fiat money.

 

C. converted into a store of value determines the liquidity of that asset.

 

D. converted into the economy’s medium of exchange determines the liquidity of that asset.

 

 

     

4 M1 includes

 

A. currency.

 

B. demand deposits.

 

C. traveler's checks.

 

D. All of the above are correct.

 

 

5 Which of the following is included in both M1 and M2?

 

A. savings deposits

 

B. demand deposits

 

C. small time deposits

 

D. money market mutual funds

 

 

6 Economists call an institution designed to oversee the banking system and regulate the quantity of money in the economy

 

A. a central bank.

 

B. a charter bank.

 

C. a national bank.

 

D. a state bank.

 

 

7 The agency responsible for regulating the money supply in the United States is

 

A. the Comptroller of the Currency.

 

B. the U.S. Treasury.

 

C. the Federal Reserve.

 

D. the U.S. Bank.

 

 

     

8 An important function of the U.S. Federal Reserve is to

 

A. set the debt ceiling.

 

B. fund Congressional spending.

 

C. control the supply of money.

 

D. mint coins.

 

 

9  The regional Federal Reserve Banks

 

A. are not allowed to make loans to banks in their region.

 

B. regulate banks in their regions.

 

C. have more voting members on the FOMC than does the Board of Governors.

 

D. are each headed by a member of the Board of Governors.

 

 

10 Which group within the Federal Reserve System meets to discuss changes in the economy and determine monetary policy?

 

A. the Board of Governors

 

B. the FOMC

 

C. the regional Federal Reserve Bank presidents

 

D. the Central Bank Policy Commission

 

 

11 If the Federal Open Market Committee decides to decrease the money supply, it will

 

A. sell government bonds.

 

B. purchase corporate bonds.

 

C. purchase government bonds.

 

D. reduce interest rates.

     

12 Under a fractional-reserve banking system, banks

 

A. hold more reserves than deposits.

 

B. generally lend out a majority of the funds deposited.

 

C. cause the money supply to fall by lending out reserves.

 

D. All of the above are correct.

 

 

13 A bank’s reserve ratio is 10 percent and the bank has $5,000 in deposits. Its reserves amount to

 

A. $50. 

 

B. $500.

 

C. $4,500.

 

D. $4,950.

 

 

14 A bank’s reserve ratio is 5 percent and the bank has $2,280 in reserve. Its deposits amount to

 

A. $114. 

 

B. $2,166.

 

C. $2,400. 

 

D. $45,600.

 

 

15 If the central bank in some country raised the reserve requirement, then the money multiplier for that country

 

A. would increase.

 

B. would not change.

 

C. would decrease.

 

D. could do any of the above.

 

 

     

16 If the reserve ratio is 5 percent, then $500 of additional reserves can create up to

 

A. $10,500 of new money.

 

B. $10,000 of new money.

 

C. $9,500 of new money.

 

D. $2,500 of new money.

 

 

17 When the Fed conducts open-market purchases,

 

A. it buys Treasury securities, which increases the money supply.

 

B. it buys Treasury securities, which decreases the money supply.

 

C. it borrows money from member banks, which increases the money supply.

 

D. it lends money to member banks, which decreases the money supply.

 

 

18 When the Fed conducts open-market purchases,

 

A. banks buy Treasury securities from Fed, which increases the money supply.

 

B. banks buy Treasury securities from the Fed, which decreases the money supply.

 

C. it buys Treasury securities, which increases the money supply.

 

D. it buys Treasury securities, which decreases the money supply.

 

 

19 When the Fed conducts open-market sales,

 

A. it sells Treasury securities, which increases the money supply.

 

B. it sells Treasury securities, which decreases the money supply.

 

C. it auctions term loans, which increases the money supply.

 

D. it auctions term loans, which decreases the money supply.

 

20 When the Fed makes open-market purchases bank

 

A. withdrawals and lending increase.

 

B. withdrawals increase and lending decreases.

 

C. deposits and lending increase.

 

D. deposits increase and lending decreases.

 

 

21 When the Fed makes open-market sales bank

 

A. withdrawals and lending increase.

 

B. withdrawals increase and lending decreases.

 

C. deposits and lending increase.

 

D. deposits increase and lending decreases.

 

 

22 Which tool of monetary policy does the Federal Reserve use most often?

 

A. term auctions

 

B. open-market operations

 

C. changes in reserve requirements

 

D. changes in the discount rate

 

 

23 The most common method employed by the Fed to increase the money supply is the

 

A. sale of U.S. government bonds.

 

B. purchase of U.S. government bonds.

 

C. sale of gold.

 

D. increase of the federal debt ceiling.

 

24 The Fed’s primary tool to change the money supply is

 

A. changing the interest rate on reserves.

 

B. changing the reserve requirement.

 

C. conducting open market operations.

 

D. redeeming Federal Reserve notes.

 

 

25 The discount rate is the interest rate that

 

A. banks charge one another for loans.

 

B. banks charge the Fed for loans.

 

C. the Fed charges banks for loans.

 

D. the Fed charges Congress for loans.

 

 

26 Which of the following is not a tool of monetary policy?

 

A. open market operations

 

B. reserve requirements

 

C. changing the discount rate

 

D. increasing the government budget deficit

 

 

27 To increase the money supply, the Fed could

 

A. sell government bonds.

 

B. increase the discount rate.

 

C. decrease the reserve requirement.

 

D. None of the above is correct.

 

28 To increase the money supply, the Fed could

 

A. sell government bonds.

 

B. decrease the discount rate.

 

C. increase the reserve requirement.

 

D. None of the above is correct.

 

 

29 To decrease the money supply, the Fed could

 

A. sell government bonds.

 

B. increase the discount rate.

 

C. increase the reserve requirement.

 

D. All of the above are correct.

 

 

30 Economists use the word "money" to refer to

 

A. income generated by the production of goods and services.

 

B. those assets regularly used to buy goods and services.

 

C. financial assets such as stocks and bonds.

 

D. any type of wealth.

 

 

31 The agency responsible for regulating the U.S. monetary system is the

 

A. U.S. Treasury

 

B. Federal Reserve

 

C. Department of Justice

 

D. Federal Trade Commission

 

32 A bank’s reserve ratio is 8 percent and the bank has $1,000 in deposits. Its reserves amount to

 

A. $8.

 

B. $80.

 

C. $92. 

 

D. $920.

 

 

33 The tool most often used by the Fed to control the money supply is

 

A. changing reserve requirements.

 

B. open market operations.

 

C. buying and selling of equities.

 

D. altering the discount rate.

 

 

34 When the Fed decreases the discount rate, banks will

 

A. borrow more from the Fed and lend more to the public. The money supply increases.

 

B. borrow more from the Fed and lend less to the public. The money supply decreases.

 

C. borrow less from the Fed and lend more to the public. The money supply increases.

 

D. borrow less from the Fed and lend less to the public. The money supply decreases.

 

 

35 Reserve requirements are regulations concerning

 

A. the amount banks are allowed to borrow from the Fed.

 

B. the amount of reserves banks must hold against deposits.

 

C. reserves banks must hold based on the number and type of loans they make.

 

D. the interest rate at which banks can borrow from the Fed.

 

 

     

36 The federal funds rate is the interest rate

 

A. the Federal Reserve charges for loans it makes to the federal government.

 

B. the Federal Reserve charges banks for short-term loans.

 

C. banks charge each other for short-term loans of reserves.

 

D. on newly issued one-year Treasury bonds.

 

 

37 Which of the following groups is largely responsible for carrying out the Fed’s tasks of regulating banks and ensuring the health of the financial system?

 

A. FOMC

 

B. the Board of Governors

 

C. the New York Fed

 

D. the regional Federal Reserve Banks

 

 

38 The Fed has the power to increase or decrease the number of dollars in the economy through the decisions of

 

A. the Board of Governors.

 

B. the FOMC.

 

C. the regional Federal Reserve Bank presidents.

 

D. the U.S. Treasury.

 

 

39 The federal funds rate is the

 

A. percentage of face value that the Federal Reserve is willing to pay for Treasury Securities.

 

B. percentage of deposits that banks must hold as reserves.

 

C. interest rate at which the Federal Reserve makes short-term loans to banks.

 

D. interest rate at which banks lend reserves to each other overnight.

  

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