Question 4. 4. Which of the following is a store of value? (Points : 5) cash and

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Question 4.4. Which of the following is a store of value? (Points : 5)

       cash and stocks
       cash but not stocks
       stocks but not cash
       neither cash nor stocks

Question 5.5. The reserve requirement is 10%. Lucy deposits $200 into a bank. By how much do excess reserves change? (Points : 5)

       $200
       $180
       $20
       $10

Question 6.6. Which of the following is a store of value? (Points : 5)

       currency
       U.S. government bonds
       fine art
       All of the above are correct.

Question 7.7. Table 16-5.
Bank of Pleasantville

Assets

Liabilities

Reserves

     $2,000

Deposits

$20,000

Loans

     18,000

Refer to Table 16-5. Assume there is a reserve requirement and the Bank of Pleasantville is exactly in compliance with that requirement. Assume the same is true for all other banks. Lastly, assume people hold only deposits and no currency. What is the money multiplier? (Points : 5)

       5
       10
       15
       20

Question 8.8. If the reserve ratio is 10 percent, the money multiplier is (Points : 5)

       100.
       10.
       9/10.
       1/10.

Question 9.9. If the discount rate is raised then banks borrow (Points : 5)

       more from the Fed so reserves increase.
       more from the Fed so reserves decrease.
       less from the Fed so reserves increase.
       less from the Fed so reserves decrease.

Question 10.10. On a bank's T-account, which are part of the banks liabilities? (Points : 5)

       both deposits made by its customers and reserves
       deposits made by its customers but not reserves
       reserves but not deposits made by its customers
       neither deposits made by its customers nor reserves

Question 11.11. Currently, U.S. currency is (Points : 5)

       fiat money with intrinsic value.
       fiat money with no intrinsic value.
       commodity money with intrinsic value.
       commodity money with no intrinsic value.

Question 12.12. Table 16-6.
Bank of Springfield

Assets

Liabilities

Reserves

     $19,200

Deposits

$240,000

Loans

     228,000

Refer to Table 16-6. Assuming the Bank of Springfield and all other banks have the same reserve ratio, then what is the value of the money multiplier? (Points : 5)

       5.0
       7.5
       10.00
       12.5

Question 13.13. The Fed can increase the money supply by conducting open-market (Points : 5)

       sales or by raising the discount rate.
       sales or by lowering the discount rate.
       purchases or by raising the discount rate.
       purchases or by lowering the discount rate.

Question 14.14. Consider the following traders who meet.

Bob

has an apple

wants an orange

Ted

has an orange

wants a peach

Mary

has a pear

wants an apple

Alice

has a peach

wants an orange

Which, if any, pairs of traders has a double coincidence of wants? (Points : 5)

       Bob with Alice
       Ted with Alice
       Bob with Mary, Ted with Bob, and Ted with Alice
       None of the pairs above has a double coincidence of wants.

Question 15.15. The manager of the bank where you work tells you that your bank has $10 million in excess reserves. She also tells you that the bank has $400 million in deposits and $355 million dollars in loans. Given this information you find that the reserve requirement must be (Points : 5)

       35/355.
       45/355.
       35/400.
       45/400.

Question 16.16. When the Fed decreases the discount rate, banks will (Points : 5)

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

Question 17.17. Which of the following does the U.S. president appoint and the U.S. Senate confirm? (Points : 5)

       members of the Board of Governors and regional Federal Reserve Bank Presidents.
       members of the Board of Governors but not the regional Federal Reserve Bank Presidents.
       the regional Federal Reserve Bank Presidents, but not members of the Board of Governors.
       neither members of the Board of Governors nor regional Federal Reserve Bank Presidents.

Question 18.18. M1 equals currency plus demand deposits plus (Points : 5)

       nothing else.
       other checkable deposits.
       traveler's checks plus other checkable deposits.
       traveler's checks plus other checkable deposits plus savings deposits.

Question 19.19. At any meeting of the Federal Open Market Committee, that committee

Question 4.4. Which of the following is a store of value? (Points : 5)

       cash and stocks
       cash but not stocks
       stocks but not cash
       neither cash nor stocks

Explanation / Answer

4] cash and stocks
5] $20
6] All of the above are correct.
7] 10
8] 10
9] less from the Fed so reserves increase..
10] deposits made by its customers but not reserves
11] fiat money with intrinsic value
12] 12.5
13] purchases or by lowering the discount rate
14] Ted with Alice
15] 35/400
16] borrow more from the Fed and lend more to the public. The money supply increases.
17] members of the Board of Governors but not the regional Federal Reserve Bank Presidents.
18] traveler's checks plus other checkable deposits.
19] 5 Federal Reserve Regional Bank Presidents and all the members of the Board of Governors.
20] U.S. Treasury bills
21] Betty will buy from Calvin
22] sells government bonds, and in so doing decreases the money supply.
23] 12.5 percent.
24] Ben Bernanke
25] currency, stocks, fine art

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