G 18. Which of the following is the best definition of money? Anything generally

Question

G 18. Which of the following is the best definition of money? Anything generally accepted as a payment for goods or repayment of debt b. Anything that is a liability of the federal government c. Anything that is a liability of a commercial bank Coins and currency in the hands of the public d. o 19. An individual depos its $100 in cash into a checking account. Which of the following will be the likely result? a. b. The money supply will decline by the amount of the deposit The money supply will increase by the amount of the deposit c. There will be no change in the composition of the money supply only the amount M1 will fall d. M1 will remain the same, only the composition of M1 will change 1120, A bank has $100,000 in deposits and holds $25,000 in reserve. If the reserve requirement is 10 percent, what is the quantity of excess reserves it currently a. $15,000 b. $35,000 c $75,000 d. $90,000 re 21, when a bank makes a loan, the quantity of money in the economy Will decrease only as long as the funds are kept in the form of checka b. a. Will increase c. Will decrease d. Will remain the same regardless of whether the funds are kept in the form of checkable deposits or not 1322. The rate at which commercial banks can borrow from the Federal Reserve is known as the a. Federal funds rate b. prime rate c. discount rate d. market rate a. Through the printing of money b. Through the printing of U.S. Savings bonds 23. The principal method by which the Fed influences the money supply is c. Through taxation d. through open market operations 624, when an individual buys a bond sold by the Fed, a. The money supply increases b. The money supply decreases c. The money supply stays the same d. The money supply could either rise or fall; i depends on whether she spends the money or not 25. An open market purchase by the Fed from a bank a. Increases bank reserves b. Decreases bank reserves c. Increases the bank's demand deposits immediately d. Reduces the bank's lending power 7 26. A change in the discount rate tends to cause The reserve requirement to change in the same direction The reserve requirement to change in the opposite direction The money supply to change in the opposite direction The money supply to change in the same direction a. b. c. d. 27. A decrease in required reserves would a. b. c. d. Increase the money multiplier and spur monetary growth Decrease the money multiplier and spur monetary growth Increase the money multiplier and reduce monetary growth Decrease the money multiplier and reduce monetary growth

Explanation / Answer

18- money is something that basically serves as a medium of exchange , per se for goods and for the repayments of the debts.

so answer is A

19- now in this both the elements cash and checking deposits are the part of M1, thus the conversion of one into other just changes the composition of the M1,

so answer is D

20- now as per the required reserve ratio the bank should hold 100000*0.1 = 10000 in reserves but it holds 25000, means 25000-10000 = 15000 are excess reserves

21- when a bank makes aloan the quantity of money in the economy increases as with loans made the multiplioer effect will come intoplace and thus will increase the money supply.

so answer is increase.

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