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DeVry ECON 312 Week 6 Quiz with 100% Correct Answers




Question;ECON 312 Week 6 QuizWeek 6 Quiz 1. Question: (TCO 7) If you place a part of your summer earnings in a savings account, you are using money primarily as a Student Answer: medium of exchange. store of value. unit of account. standard of value. Question 2. Question: (TCO 7) The amount of money reported as M2 Student Answer: is smaller than the amount reported as M1. is larger than the amount reported as M1. excludes coins and currency. includes large ($100,000 or more) certificates of deposit.Question 3. Question: (TCO 7) Answer the question on the basis of the following list of assets:? 1. Large-denominated ($100,000 and more) time deposits? 2. Noncheckable savings deposits? 3. Currency (coins and paper money) in circulation? 4. Small-denominated (less than $100,000) time deposits? 5. Stock certificates? 6. Checkable deposits? 7. Money market deposit accounts? 8. Money market mutual fund balances held by individuals? 9. Money market mutual fund balances held by businesses? 10. Currency held in bank vaults Refer to the above list. The M1 definition of money comprises item(s) Student Answer: 6 only. 3, 4, and 6. 3 and 6. 3, 6, and 10.Question 4. Question: (TCO 7) Assume Company X deposits $100,000 in cash in Commercial Bank A. If no excess reserves exist at the time this deposit is made and the reserve ratio is 20 percent, Bank A, by itself, can initially increase the money supply by a maximum of Student Answer: $50,000. $180,000. $80,000. $500,000.Question 5. Question: (TCO 7) A bank temporarily short of required reserves may be able to remedy this situation by Student Answer: borrowing funds in the federal funds market. granting new loans. shifting some of its vault cash to its reserve account at the Federal Reserve. buying bonds from the public.Question 6. Question: (TCO 7) Money is destroyed when Student Answer: loans are made. checks written on one bank are deposited in another bank. loans are repaid. the net worth of the banking system declines.Question 7. Question: (TCO 7) The transactions demand for money is most closely related to money functioning as a Student Answer: unit of account. medium of exchange. store of value. measure of value.Question 8. Question: (TCO 7) If the quantity of money demanded exceeds the quantity supplied Student Answer: the supply-of-money curve will shift to the left. the demand-for-money curve will shift to the right. the interest rate will rise. the interest rate will fall.Question 9. Question: (TCO 7) In the United States, monetary policy is the responsibility of the Student Answer: U.S. Treasury. Department of Commerce. Board of Governors of the Federal Reserve System. U.S. Congress.Question 10. Question: (TCO 7) In the latter end of 2001 the Fed cut the federal funds rate several times. The Fed's purpose was to Student Answer: prevent rising inflation. stop a banking crisis. stimulate economic growth. strengthen the international value of the dollar.Question 11. Question: (TCO 7) What are the two significant characteristics of the fractional reserve banking system? Student Answer: The two characteristics of federal reserves banking are as follows: - Banks can create money through lending - Banks operating on the basis of fractional reserves are vulnerable to "panics" or "runs"Question 12. Question: (TCO 7) Identify the four major instruments of monetary policy. Student Answer: The four main tools of monetary policy are the discount rate, the reserve ratio, the term auction facility, and open-market operations. The four major instruments of monetary policy are open-market operations, changing the reserve ratio, changing the discount rate on loans that the Federal Reserve makes to financial institutions, and the Term Auction Facility.


Paper#55851 | Written in 18-Jul-2015

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