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devry econ 312 week 6 quiz




Question;(TCO 7) If you write a check on a bank to purchase a used;Honda Civic, you are using money primarily as;a medium of exchange.;a store of value.;a unit of account.;an economic investment.;Question 2. Question;(TCO 7) The amount of money reported as M2;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);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;$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;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) Which of the following is correct?;Both the granting and repaying of bank loans;expand the aggregate money supply.;Granting and repaying bank loans do not affect;the money supply.;Granting a bank loan destroys money, repaying;a bank loan creates money.;Granting a bank loan creates money, repaying a;bank loan destroys money.;Question 7. Question;(TCO 7) The asset demand for money;is unrelated to both the interest rate and the;level of GDP.;varies inversely with the rate of interest.;varies inversely with the level of real GDP.;varies directly with the level of nominal GDP.;Question 8. Question;(TCO 7) If the quantity of money demanded exceeds the;quantity supplied;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) Which of the following is not a tool of monetary;policy?;Open market operations;Changes in banking laws;Changes in the amount of reserves available at;the term auction facility;Changes in the reserve ratio;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;prevent rising inflation.;stop a banking crisis.;stimulate economic growth.;strengthen the international value of the;dollar.;Question 11. Question;(TCO 7) Explain what is meant by fractional reserve banking.;Relate this to money creation and risk to the bank.;Question 12. Question;(TCO 7) Identify the four major instruments of monetary;policy.


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