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Exam 14: Money, Banking, and the Federal Reserve System

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Question 111

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Use the following to answer questions : -(Scenario: Assets and Liabilities of the Banking System) Look at the scenario Assets and Liabilities of the Banking System. Suppose that the reserve ratio is 10% and the Federal Reserve sells $66,700 worth of U.S. Treasury bills to the banking system. If the banking system does NOT want to hold any excess reserves, _____ will be _____ the money supply.

A) $667,000; subtracted from
B) $667,000; added to
C) $250,000; subtracted from
D) $250,000; added to

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Question 112

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Money used to buy groceries is a:

A) medium of exchange.
B) reserve of wealth.
C) unit of account.
D) store of value.

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Question 113

Multiple Choice

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The supply of euros is controlled by:

Today U.S. dollars are redeemable for gold or silver.

A dixie was the first gold coin issued by the U.S. Treasury.

When the Fed increases the discount rate, banks are likely to increase their lending, and the money supply increases.

Use the following to answer questions : Scenario: Money Supply Changes II Charlotte withdraws $8,000 from her checkable bank deposit to pay tuition this semester. Assume that the reserve requirement is 20% and that banks do not hold excess reserves. -(Scenario: Money Supply Changes II) Look at the scenario Money Supply Changes II. After the withdrawal, reserves _____, and checkable deposits _____.

A decrease in bank deposits that is matched by an increase in currency in circulation:

Explain how money adds to welfare although it does not directly produce anything.

Which of the following is NOT considered one of the three chief characteristics of money?

Use the following to answer questions: Scenario: First National Bank First National Bank has $80 million in checkable deposits, $15 million in deposits with the Federal Reserve, $5 million cash in the bank vault, and $5 million in government bonds. -(Scenario: First National Bank) Look at the scenario First National Bank. Given the bank's minimum reserve ratio, how much can the bank issue in loans?

The main problem with the national banking system in the United States between 1864 and 1913 was that the money supply was difficult to shift from urban to rural areas.

When you buy a ticket to the rodeo, you are using money as mainly a(n) :

The medium-of-exchange function means that money is used:

Checkable deposits are bank accounts on which people can write checks.

Long-Term Capital Management made rates of return as high as 40% by:

When a bank deposit is withdrawn and kept as currency, bank reserves decrease and the:

To increase the money supply, the central bank could make open-market purchases.

Banks' assets tend to be less liquid than their liabilities.

Money whose value derives entirely from its official status as a means of exchange is known as: