1/If the Fed buys U.S. government bonds from the public, it A/increases the volu
ID: 1236443 • Letter: 1
Question
1/If the Fed buys U.S. government bonds from the public, itA/increases the volume of reserves in the banking system and the money supply tends to grow.
B/decreases the volume of reserves in the banking system and the money supply tends to grow.
C/increases the volume of reserves in the banking system and the money supply tends to fall.
D/decreases the volume of reserves in the banking system and the money supply tends to fall.
2/A financial intermediary is an institution that collects funds from lenders and distributes these funds to borrowers.
A/True
B/False
3/Money that some authority has declared legal tender is called
A/fiat money.
B/currency.
C/Convertible paper money.
D/commodity money.
4/The largest component of M1 is
A/checkable deposits.
B/credit card balances.
C/currency.
D/savings deposits.
5/The M1 money supply includes all currency in circulation, checkable deposits, and traveler's checks.
C/True
B/False
6/Freema withdraws $1,000 from her checking account to purchase a $1,000 time-deposit. As a result of her transaction
A/M1 and M2 decrease.
B/M1 decreases and M2 increases.
C/M1 decreases and M2 is unaffected.
D/M1 and M2 are unaffected.
Explanation / Answer
Hello! I'm a graduate student in economics. These are very basic questions, and I assure you that my answers are correct. :)
1/If the Fed buys U.S. government bonds from the public, it
A/increases the volume of reserves in the banking system and the money supply tends to grow.
B/decreases the volume of reserves in the banking system and the money supply tends to grow.
C/increases the volume of reserves in the banking system and the money supply tends to fall.
D/decreases the volume of reserves in the banking system and the money supply tends to fall.
2/A financial intermediary is an institution that collects funds from lenders and distributes these funds to borrowers.
A/True
B/False
3/Money that some authority has declared legal tender is called
A/fiat money.
B/currency.
C/Convertible paper money.
D/commodity money.
4/The largest component of M1 is
A/checkable deposits.
B/credit card balances.
C/currency.
D/savings deposits.
5/The M1 money supply includes all currency in circulation, checkable deposits, and traveler's checks.
C/True
B/False
6/Freema withdraws $1,000 from her checking account to purchase a $1,000 time-deposit. As a result of her transaction
A/M1 and M2 decrease.
B/M1 decreases and M2 increases.
C/M1 decreases and M2 is unaffected. BECAUSE TIME-DEPOSITS ARE IN M3
D/M1 and M2 are unaffected.
I hope that you found this answer useful towards your studies. It took a considerable amount of thought, time, and effort to compose, and and I'd sincerely appreciate a lifesaver rating! It would really make my day! :)
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