FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 29: The Monetary System

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

True/False

Review LaterAdd Note

Review Later

According to economists, "money" means the same thing as "wealth".

A) True
B) False

Correct Answer

verified

Show Answer

Question 22

Essay

Review LaterAdd Note

Review Later

The existence of money makes trade easier. How is it that money can also increase the standard of living?

Correct Answer

verified

The existence of money means the economy...

View Answer

Show Answer

Question 23

Short Answer

Review LaterAdd Note

If you withdraw $500 from your savings account and deposit it in your checking account, then M1 will change by _____ and M2 will change by _____.

Assume that when $100 of new reserves enter the banking system, the money supply ultimately increases by $625. Assume also that no banks hold excess reserves and that the entire money supply consists of bank deposits. If, at a point in time, reserves for all banks amount to $500, then at that same point in time, loans for all banks amount to $2,625.

Table 29-4 ​ -Refer to Table 29-4. The Bank of Cheerton's reserve ratio is

Which of the following is not a function of money?

Money, such as gold, with some intrinsic value is called _____. Money with no intrinsic value is called _____.

How does the Fed Open Market Committee increase the money supply?

If the reserve ratio is 5 percent, then $500 of additional reserves would ultimately generate

Just after the terrorist attack on September 11, 2001, the Fed stood ready to lend financial institutions funds. When the Fed did this, it was acting in its role of lender of last resort.

You believe the dollars you have today will be accepted in the future in exchange for goods and services. Which function of money does this illustrate?

The _____ is the interest rate at which banks make overnight loans to other banks.

If traveler's checks were $1000 higher and saving deposits were $500 higher, M1 would be

Table 29-2 The information in the following table pertains to the hypothetical economy of Florencial. ​ $\begin{array} { | c | c | } \hline \text { Type of Money } & \begin{array} { c } \text { Amount } \\\text { (Billions of dollars) }\end{array} \\\hline \text { Large time deposits } & 120 \\\hline \text { Small time deposits } & 80 \\\hline \text { Demand deposits } & 300 \\\hline \text { Other checkable deposits } & 50 \\\hline \text { Savings deposits } & 65 \\\hline \text { Traveler's checks } & 5 \\\hline \text { Money market mutual funds } & 200 \\\hline \text { Currency } & 150 \\\hline \text { Credit card balances } & 300 \\\hline \text { Miscellaneous categories of M2 } & 30 \\\hline\end{array}$ -Refer to Table 29-2. What is the M2 money supply in Florencial?

Why do Federal Reserve Board of Governors have long (14 year) terms?

Currently, bank runs are a major problem for the U.S. banking system and the Fed.

The use of money allows trade to be roundabout.

Banks can hold deposits at the Federal Reserve. Balances in these accounts can be used by banks to meet their reserve requirements, but the Fed pays no interest on these deposits.

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?

If banks hold any amount of their deposits in reserve, then they do not have the ability to influence the money supply.