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Exam 16: Money,Banks,and the Federal Reserve System

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Question 61

Multiple Choice

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You earn $500 a month,currently have $200 in currency,$100 in your checking account,$2,000 in your savings accounts,$3,000 worth of illiquid assets and $1,000 of debt.Using the M1 measure of money,you have

A) money = $2,300, annual income = $6,000, and wealth = $5,000.
B) money = $300, annual income = $6,000, and wealth = $4,300.
C) money = $200, annual income = $500, and wealth = $4,300.
D) money = $300, annual income = $6,000, and wealth = $5,000.

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Question 62

Multiple Choice

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According to the quantity theory of money,if the money supply grows at 6%,real GDP grows at 2%,and the velocity of money is constant,then the inflation rate will be

A) 8%.
B) 6%.
C) 4%.
D) 2%.

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Question 63

Multiple Choice

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The ________ the reserve ratio,the ________ the money multiplier.

If households and firms decide to hold less of their money in checking account deposits and more in currency,then initially,the money supply

According to the quantity theory of money,the inflation rate equals

Which of the following tools of monetary policy is used least often?

The M2 measure of the money supply equals

Which of the following is not a consequence of hyperinflation?

Table 16-2 $\begin{array}{|c|c|}\hline \text { Assets } & \text { Liabilities } \\\hline \text { Reserves }+\$ 8,000 & \text { Deposits }+\$ 8,000 \\\hline\end{array}$ -Refer to Table 16-2.Suppose a transaction changes a bank's balance sheet as indicated in the following T-account,and the required reserve ratio is 10 percent.As a result of the transaction,the bank can make a maximum loan of

Credit card balances are

The statement "This Dell laptop costs $1,200" illustrates which function of money?

According to the quantity theory of money,if the money supply grows at 20 percent and real GDP grows at 5 percent,then the inflation rate will be

In an attempt to bring lenders and borrowers together following the financial crisis of 2008,the Federal Reserve made a large amount of new funds available to financial markets.Any of these new funds that were obtained by banks but were not loaned out would be classified as ________ of the banks.

If a bank receives a $1 million discount loan from the Federal Reserve,then the bank's reserves will

To increase the money supply,the Federal Reserve could

Suppose Warren Buffet withdraws $1 million from his checking account at Chase Bank.If the required reserve ratio is 20 percent,what is the maximum change in deposits in the banking system?

Suppose a bank has $100,000 in checking account deposits with no excess reserves and the required reserve ratio is 5 percent.If the Federal Reserve lowers the required reserve ratio to 3 percent,then the bank will now have excess reserves of

Which of the following is a true statement?

Banks can continue to make loans until their

A cash withdrawal from the banking system