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Exam 22: Money Prices and the Federal Reserve

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Question 1

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The reserve-deposit ratio equals:

A) 10 percent of bank reserves.
B) 10 percent of bank deposits.
C) bank reserves divided by bank deposits.
D) bank deposits divided by bank reserves.

E) A) and D)
F) A) and B)

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Question 2

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Commercial banks create new money:

A) when they increase their desired reserve/deposit ratio.
B) by issuing checks.
C) through multiple rounds of lending.
D) when they buy government bonds from the Federal Reserve.

E) A) and B)
F) A) and C)

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Question 3

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The amount of money in the United States is determined by:

The Board of Governors consists of ________ governors appointed for staggered ________ terms.

If you use $1,000 to purchase silver bullion, which you plan to keep in a safe, you are using money as:

When a baker exchanges a pie for dollars, this is an example of dollars serving as:

The main disadvantage of using money as a store of value is that:

The U.S. Congress instituted a system of deposit insurance for banks in:

An open-market purchase of government securities by the Fed will:

Deposit insurance is a system in which the government guarantees that:

Money serves as a medium of exchange when:

Two countries, Alpha and Beta, have the same levels of nominal and real GDP. Each dollar in Alpha is used more frequently than each dollar in Beta. Therefore, it must be the case that ________ in Alpha than in Beta.

The introduction of credit cards and debit cards has ________ velocity.

When the Federal Reserve buys government bonds from the public, this is an example of a(n) :

The M1 measure of money consists of the sum of:

Based on the information in the table, we can conclude that, in 1932, each of the following events occurred except:

Bank reserves are:

When the actual reserve-deposit ratio exceeds the desired reserve-deposit ratio banks:

If banks' desired reserve ratio increases from 0.10 to 0.15, the public still desires to hold the same amount of currency, the money supply will:

Based on the following information, the value of the M1 measure of the money supply is ________ and the value of the M2 measure of the money supply is ________. $\begin{array} { | l | r | } \hline { \text { Assets } } & \text { Billims af Dallars } \\\hline \text { Curency } & \mathbf { 2 0 } \\\hline \text { Demand deposits } & \mathbf { 3 0 0 } \\\hline \text { Money market rmutual Furds } & \mathbf { 8 0 0 } \\\hline \text { Traveler's checks } & 10 \\\hline \text { Bavings deposits } & \mathbf { 1 , 8 0 0 } \\\hline \text { Other checkable deposits } & \mathbf { 2 0 0 } \\\hline \text { Brmall denomination tirne deposits } & 1,100\end{array}$