Multiple Choice Questions

banks do not make loans.
  • In a system of 100-percent-reserve banking,
  • Under a fractional-reserve banking system, banks
  • In a fractional-reserve banking system, a bank
  • The members of the Federal Reserve's Board of Governors
those assets regularly used to buy goods and services.
  • Banks are able to create money only when
  • Economists use the word "money" to refer to
  • To increase the money supply, the Fed could
  • When conducting an open-market sale, the Fed
the FOMC
  • Which group within the Federal Reserve System meets to discuss changes in the economy and determine monetary policy?
  • In a system of 100-percent-reserve banking, the purpose of a bank is to
  • In a fractional-reserve banking system, a bank
  • The members of the Federal Reserve's Board of Governors
inflation and employment.
  • According to the article "Why Gold?', silver may be used as money. One problem with using silver as money is that
  • During the Great Depression in the early 1930s,
  • Over one time horizon or another, Fed policy decisions influence
  • Which of the following is NOT required for paper dollars to work as a medium of exchange?
has no intrinsic value.
  • Over one time horizon or another, Fed policy decisions influence
  • Many societies used gold as money, because
  • An important function of the U.S. Federal Reserve is to
  • Fiat money
only a fraction of deposits are held in reserve.
  • Which of the following does the Federal Reserve not do?
  • Banks are able to create money only when
  • To increase the money supply, the Fed could
  • Economists use the word "money" to refer to
$80.
  • A bank's reserve ratio is 8 percent and the bank has $1,000 in deposits. Its reserves amount to
  • The Fed has the power to increase or decrease the number of dollars in the economy through the decisions of
  • A bank which must hold 100 percent reserves opens in an economy that had no banks and a currency of $150. If customers deposit $50 into the bank, what is the value of the money supply?
  • Which of the following lists is included in what economists call "money"?
All of the above are correct.
  • The discount rate is the interest rate that
  • Many societies used gold as money, because
  • Banks are able to create money only when
  • If the discount rate is lowered, banks borrow
fiat money with no intrinsic value.
  • Currently, U.S. currency is
  • During the Great Depression in the early 1930s,
  • Many societies used gold as money, because
  • If the discount rate is lowered, banks borrow
bank runs closed many banks.
  • An important function of the U.S. Federal Reserve is to
  • During the Great Depression in the early 1930s,
  • The discount rate is the interest rate that
  • To increase the money supply, the Fed could
Intrinsic value backed by gold
  • Which of the following is an example of barter?
  • Which list ranks assets from most to least liquid?
  • Over one time horizon or another, Fed policy decisions influence
  • Which of the following is NOT required for paper dollars to work as a medium of exchange?
currency, stocks, fine art
  • During the Great Depression in the early 1930s,
  • Which of the following does the Federal Reserve not do?
  • Which list ranks assets from most to least liquid?
  • Which of the following is NOT required for paper dollars to work as a medium of exchange?
decreased both the money multiplier and the money supply.
  • To increase the money supply, the Fed could
  • In the 19th century, when crop failures often led to bank runs, banks would make relatively fewer loans and hold relatively more excess reserves. By itself, these actions by the banks should have
  • When the Fed decreases the discount rate, banks will
  • If the discount rate is lowered, banks borrow
are appointed by the president of the U.S. and confirmed by the U.S. Senate.
  • The members of the Federal Reserve's Board of Governors
  • In a system of 100-percent-reserve banking, the purpose of a bank is to
  • Economists call an institution designed to oversee the banking system and regulate the quantity of money in the economy
  • Which group within the Federal Reserve System meets to discuss changes in the economy and determine monetary policy?
is responsible for conducting the nation's monetary policy, and it plays a role in regulating banks.
  • Reserves are
  • Which of the following is an example of barter?
  • The Federal Reserve
  • When the Fed decreases the discount rate, banks will
silver tarnishes over time.
  • According to the article "Why Gold?', silver may be used as money. One problem with using silver as money is that
  • Which of the following is NOT required for paper dollars to work as a medium of exchange?
  • During the Great Depression in the early 1930s,
  • Over one time horizon or another, Fed policy decisions influence
U.S. paper money is fiat money.
  • Many societies used gold as money, because
  • Which of the following is NOT required for paper dollars to work as a medium of exchange?
  • The discount rate is the interest rate that
  • All U.S. paper dollars read "This note is legal tender for all debts, public and private." This statement represents which characteristic of US currency?
give depositors a safe place to keep their money.
  • In a system of 100-percent-reserve banking, the purpose of a bank is to
  • In a fractional-reserve banking system, a bank
  • In a system of 100-percent-reserve banking,
  • The set of items that serve as media of exchange clearly includes
generally lend out a majority of the funds deposited.
  • In a system of 100-percent-reserve banking,
  • Under a fractional-reserve banking system, banks
  • In a fractional-reserve banking system, a bank
  • Economists call an institution designed to oversee the banking system and regulate the quantity of money in the economy
would decrease.
  • The Fed has the power to increase or decrease the number of dollars in the economy through the decisions of
  • If the central bank in some country raised the reserve requirement, then the money multiplier for that country
  • The set of items that serve as media of exchange clearly includes
  • If the reserve ratio is 8 percent, then an additional $800 of reserves can increase the money supply by as much as
buys government bonds, and in so doing increases the money supply.
  • When a bank loans out $1,000, the money supply
  • When conducting an open-market purchase, the Fed
  • If the discount rate is lowered, banks borrow
  • Which of the following is an example of barter?
control the supply of money.
  • Which of the following does the Federal Reserve not do?
  • The discount rate is the interest rate that
  • To increase the money supply, the Fed could
  • An important function of the U.S. Federal Reserve is to
A barber gives a plumber a haircut in exchange for the plumber fixing the barber's leaky faucet.
  • Which of the following is NOT required for paper dollars to work as a medium of exchange?
  • Which of the following lists is included in what economists call "money"?
  • When the Fed decreases the discount rate, banks will
  • Which of the following is an example of barter?
the federal government now guarantees the safety of deposits at most banks.
  • Today, bank runs are not a major problem for the U.S. banking system because
  • The discount rate is the interest rate that
  • When conducting an open-market purchase, the Fed
  • Which of the following does the Federal Reserve not do?
decrease the reserve requirement.
  • If the discount rate is lowered, banks borrow
  • To increase the money supply, the Fed could
  • During the Great Depression in the early 1930s,
  • Economists use the word "money" to refer to
deposits that banks have received but have not yet loaned out.
  • Reserves are
  • Liquidity refers to
  • The Federal Reserve
  • To increase the money supply, the Fed could
the ease with which an asset is converted to the medium of exchange.
  • Economists use the word "money" to refer to
  • Liquidity refers to
  • In the 19th century, when crop failures often led to bank runs, banks would make relatively fewer loans and hold relatively more excess reserves. By itself, these actions by the banks should have
  • Reserves are
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Multiple Choice Questions
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