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ECO Multiple Choice Questions




Question;The actual expansion of the money supply may be less than the potential maximum if (Points: 1)banks choose to hold excess reserves.individuals deposit currency in banks.there are fewer banks in the system.fiscal policy is contractionary.less money is printed.Question 2.2. Which of the following actions by the Fed would expand the money supply? (Points: 1)raising the discount rateraising the reserve ratiomaking fewer loans to financial institutionsbuying government bondsbuying government stocksQuestion 3.3. Checkable deposits are (Points: 1)not money.deposits at bank that are redeemed by writing checks.not stores of paper, but a very small part of the supply.Question 4.4. The banking system can expand the total number of loans (Points: 1)as long as it wants long as there are excess reserves in the system.only if it has the consent of the Fed.only if all banks are national banks.Question 5.5. The monetary base is defined as (Points: 1)currency plus bank borrowings from the reserves.the public's holding of reserves plus currency in the hands of the reserves plus bank vault cash.Question 6.6. Individuals accept dollars because (Points: 1)dollars are backed by gold.the government says they must.?they believe someone else will accept the dollars.the Federal Reserve says they must.there is no other choice.Question 7.7. If the demand for money is highly sensitive to changes in the interest rate, a small decrease in the interest rate will cause (Points: 1)people to buy more bonds.people to hold much more money.the money supply to fall.the aggregate supply curve to shift to the left.Question 8.8. If the Federal Reserve creates excess bank reserves, banks are likely to (Points: 1)call in loans to cover reserves.raise interest rates.lower interest rates.raise service charges.Question 9.9. The transactions demand for money is related to (Points: 1)money as a store of as a unit of as a medium of exchange.the interest rate.the value of money as a form of wealth.Question 10.10. When the Fed sets an interest rate target, the interest rate that it focuses on specifically is (Points: 1)the T-bill rate.the nominal rate.the federal funds rate.the prime rate.the real rate.


Paper#57098 | Written in 18-Jul-2015

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