econ quiz 10-12
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Transcript of econ quiz 10-12
You have completed the Lesson 10 Quiz.
Score
Your score on this attempt: 17 out of a possible 20 ( 85.0%)Graded Score: 17 out of a possible 20 ( 85.0%)Completion Time: 28 minutes 43 seconds
Question Results
Question 1:
Commercial banking is a dynamic industry which must adjust to ____________ forces by using new technology and adjusting to accommodate new business climates.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
global
Correct Answer(s) (in green):
global nationwide only local none of the above
Question 2:
________ is the “narrow measure of the money supply” and includes the circulating currency (paper and coin) plus checkable deposits of Households and Businesses.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
M1
Correct Answer(s) (in green):
M4 M3
M2 M1
Question 3:
____________ money is money that is declared as having value (purchasing power) by a government.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
fiat
Correct Answer(s) (in green):
commodity fiat token fake
Question 4:
In “financial panics” prior to 1913, loans were often recalled by the lenders leading to __________ in the money supply and additional “runs” on the banking system.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
decreases
Correct Answer(s) (in green):
increases decreases no changes none of the above
Question 5:
A surplus of funds in the money market can be addressed by the Federal Reserve ___________ bonds to promote deletions from the supply of money.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
selling
Correct Answer(s) (in green):
buying selling printing burning
Question 6:
The FED’s Board of Governors consists of seven members appointed for staggered _________ year terms by the President of the U.S. The purpose of this arrangement is to make the Board less political by having various board members serve under a succession of Presidents.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
fourteen
Correct Answer(s) (in green):
two four eight fourteen
Question 7:
In the graph below (the market for money), the ___________ is determined by the total demand for money intersecting with the total supply of money.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
interest rate
Correct Answer(s) (in green):
price of a dollar interest rate purchasing power none of the above
Question 8:
The value (purchasing power)of money does decline when there is ________________.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
inflation
Correct Answer(s) (in green):
recession depression deflation inflation
Question 9:
The twelve Regional Fed banks are “bankers' banks” and they hold deposits of member banks and make loans to member banks to meet ___________ requirements.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
reserve
Correct Answer(s) (in green):
discount rate fed funds reserve prime rate
Question 10:
_____________________ at commercial banks are considered part of the “money supply” because they represent the debts of those banks that are circulating as purchasing power.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
checking accounts
Correct Answer(s) (in green):
savings accounts checking accounts CD’s None of the above
Question 11:
Approximately ___________ of commercial banks in the U.S. are chartered by state banking commissions with the remainder being chartered by the Federal Comptroller of the Currency.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
two-thirds
Correct Answer(s) (in green):
one-third one-fourth two-thirds nine-tenths
Question 12:
The __________ demand for money stays the same regardless of the interest rate.
Type: Multiple ChoicePoints Awarded: 0/1Your Answer(s):
asset
Correct Answer(s) (in green):
asset transactions speculative none of the above
Question 13:
If _________________ choices are made by the newly added “hybrid organization” in our Circular Flow diagram, then a great deal of long term damage can be done to the economy.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
weak
Correct Answer(s) (in green):
net borrowing and spending reserve adjustment strong weak
Question 14:
In general the more money (M1) held by the public, the greater the tendency for people to spend and the public holds more money when interest rates are _________.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
low
Correct Answer(s) (in green):
high moderate low none of the above
Question 15:
In the middle portion of this decade, “currency” was a little over 50 percent of the M1 and “____________________” were a little less than 50% of the M1.
Type: Multiple ChoicePoints Awarded: 0/1Your Answer(s):
small time deposits (CD’s)
Correct Answer(s) (in green):
money market accounts checkable deposits savings deposits small time deposits (CD’s)
Question 16:
The ___________ is the source of many decisions regarding the implementation of monetary policy and is closely watched by investors to value stocks.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
FOMC
Correct Answer(s) (in green):
FOMC Federal Advisory Council Board of Governors Chairman of the FED
Question 17:
Because of the definition of M1, when a bank spends (or loans) money or receives money (interest & loan payments, etc.) the size of the money supply (M1)changes.
Type: True or FalsePoints Awarded: 1/1Your Answer(s):True Correct Answer(s) (in green):
TRUE FALSE
Question 18:
Government stabilizes the value (purchasing power) of money by appropriate _________ policies and effective control over the money supply size.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
fiscal
Correct Answer(s) (in green):
fiscal global warming agricultural none of the above
Question 19:
The value of money has a ___________ relationship to the price level ( 1 / price level ).
Type: Multiple ChoicePoints Awarded: 0/1Your Answer(s):
multiplier
Correct Answer(s) (in green):
denominator
numerator reciprocal multiplier
Question 20:
When interest rates being paid on new bonds are higher but the interest payments on an existing bond remain fixed, the only way for the existing bond to compete is for its price to go _______________.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
down
Correct Answer(s) (in green):
to zero to infinity up down
Score
Your score on this attempt: 18 out of a possible 20 ( 90.0%)Graded Score: 18 out of a possible 20 ( 90.0%)Completion Time: 18 minutes 26 seconds
Question Results
Question 1:
The money multiplier process also works in reverse when a loan is repaid since fewer checkable funds are then available to generate excess reserves.
Type: True or FalsePoints Awarded: 1/1Your Answer(s):True Correct Answer(s) (in green):
TRUE FALSE
Question 2:
_______________ consists of several tools to control and to influence the growth of the money supply.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
monetary policy
Correct Answer(s) (in green):
fiscal policy foreign policy monetary policy military policy
Question 3:
________________are the mandated form of required reserves. These must be in cash in the vault or a deposit with the Fed.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
Legal Reserves
Correct Answer(s) (in green):
Excess Reserves Net Worth Reserves Legal Reserves None of the above
Question 4:
The multiplier process is limited by banks that do not fully loan out, but routinely maintain a ______________ (or during recessions banks may not be willing to lend fully).
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
safety margin
Correct Answer(s) (in green):
prime rate fed funds discount rate safety margin
Question 5:
Making the correct adjustments in the money supply can be difficult for the Fed because the economy is constantly ____________.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
changing
Correct Answer(s) (in green):
changing collapsing out of control all the above
Question 6:
Money is __________ when a bank makes a loan to a customer.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
created
Correct Answer(s) (in green):
created not affected destroyed none of the above
Question 7:
Through the operation of the Goldsmiths’ principle and making loans on excess reserves, new _________ and purchasing power was (were) created in the local economy.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
money
Correct Answer(s) (in green):
money credit cards stocks and bonds jewelry
Question 8:
Commercial bank deposits with the Fed become ___________ of the bank making the deposit.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
Assets
Correct Answer(s) (in green):
Profits Assets Net Income Net Worth
Question 9:
When a check is drawn against a customer’s account at Bank A, the legal reserves (cash) is _____________ for Bank A when the check clears through another bank.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
decreased
Correct Answer(s) (in green):
decreased increased zeroed out multiplied by the inverse of the required reserve ratio
Question 10:
Changes in the money supply M1 relate strongly to changes in _____________ that are determined largely by loans made by the banking system.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
checkable deposits
Correct Answer(s) (in green):
savings deposits small time deposits (passbook and CD’s) checkable deposits all the above
Question 11:
Assume a required reserve ratio of 10 percent. If a loan of $100 is deposited into First Bank which then lends out $90 and the process continues to its maximum through the banking system, then the total increase in money supply M1 is $________ .
Type: Multiple ChoicePoints Awarded: 0/1Your Answer(s):
900
Correct Answer(s) (in green):
1000 900 100 90
Question 12:
When Bank A makes a loan, the funds are deposited into the customer’s checking account and then transferred to Bank B if the customer’s check is deposited there. The funds ____________ then be loaned again by Bank B.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
can
Correct Answer(s) (in green):
can cannot all the above none of the above
Question 13:
During a period of _____________, a tight money policy is recommended to control over expansion of the money supply.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
inflation
Correct Answer(s) (in green):
recession inflation deflation depression
Question 14:
The Fed was created by Congress to be independent so that _________ considerations would not drive the actions of the Fed.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
political
Correct Answer(s) (in green):
military economic political none of the above
Question 15:
Banks play a very important role by providing savers a channel for their funds to be deposited and held safely while at the same time providing those funds as investment into the process of economic growth.
Type: True or FalsePoints Awarded: 1/1Your Answer(s):True Correct Answer(s) (in green):
TRUE FALSE
Question 16:
Assume $1,000 is deposited in a checkable account by Mr. X in Bank A. Assume further that the reserve requirement is 0.20. The total amount of money which can be created through the entire banking system is $__________ .
Type: Multiple ChoicePoints Awarded: 0/1Your Answer(s):
2000
Correct Answer(s) (in green):
1000 2000 3000 4000
Question 17:
Money (as defined in M1) is created in the loan process because when a bank makes a loan these funds are usually deposited into a _______________ .
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
checkable account
Correct Answer(s) (in green):
savings account checkable account Certificate of Deposit (CD) None of the above
Question 18:
A bank pays “interest” (the rental price paid for use of the money) on savings accounts, CD’s and on some types of__________________.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
checking accounts
Correct Answer(s) (in green):
checking accounts coffee can deposits sugar bowl deposits doggy deposits
Question 19:
___________________ are mandated by the Fed to exert control over the amount of funds that banks can loan.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
Required Reserves
Correct Answer(s) (in green):
Fed Funds Required Reserves Extenuating Reserves None of the above
Question 20:
In this decade the average reserve requirement has been in the area of __________ percent.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
10
Correct Answer(s) (in green):
90 50 10 none of the above
You have completed the Lesson 12 Quiz.
Score
Your score on this attempt: 18 out of a possible 20 ( 90.0%)Graded Score: 18 out of a possible 20 ( 90.0%)Completion Time: 25 minutes 58 seconds
Question Results
Question 1:
In the equation of exchange, M x V = P x Q, the V represents ___________________
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
the average frequency with which a dollar is spent
Correct Answer(s) (in green):
the average amount of money in circulation the average frequency with which a dollar is spent the average price level quantity purchased
Question 2:
The quantity theory of money is based upon the equation of exchange and assumes that V and Q are both ________ over time.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
stable
Correct Answer(s) (in green):
unstable stable erratic none of the above
Question 3: One problem in the implementation of monetary policy is the lack of control over the __________ (the number of times a dollar is spent).
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
velocity
Correct Answer(s) (in green):
acceleration multiplier velocity none of the above
Question 4:
The basic concepts for the Fed to implement an “easy money” policy would include
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
All the above
Correct Answer(s) (in green):
Federal Reserve buys securities Reserve ratio is reduced Discount rate is reduced All the above
Question 5:
The level and growth of the NDP is directly impacted by the amount of Business Investment which, in turn, is directly impacted by _______________ (the cost of renting money).
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
the interest rate
Correct Answer(s) (in green):
the interest rate the weather global warming the success of whale reproduction
Question 6:
Only funds inside a bank’s vault are counted as part of the M1 money supply.
Type: True or FalsePoints Awarded: 0/1Your Answer(s):
True
Correct Answer(s) (in green):
TRUE FALSE
Question 7:
When the Fed ___________ reserve requirements, banks are allowed to hold back less money on customer deposits and can make more loans.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
decreases
Correct Answer(s) (in green):
decreases maintains the same increases all the above
Question 8:
In a recession the money supply can be _____________ by the Fed buying securities.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
increased
Correct Answer(s) (in green):
kept from growing decreased increased all the above
Question 9:
_____________ would argue that the unstable nature of V can cause a significant impact on GDP.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
Keynesians
Correct Answer(s) (in green):
Classical economists Monetarists Keynesians All the above
Question 10:
The effectiveness of changes in the Discount Rate depends on commercial banks’ changing their ___________ practices to impact the money supply.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
lending
Correct Answer(s) (in green):
lending bond buying advertising accounting
Question 11:
According to the Monetarist theory, _____________is a critical causal force that determines the nominal GDP.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
Money supply
Correct Answer(s) (in green):
Government spending Money demand Money supply the Trade deficit
Question 12:
A net outflow of dollars resulting from a trade deficit is often returned to the United States for purchase of Treasury bonds that pay a market interest rate with __________ risk.
Type: Multiple ChoicePoints Awarded: 0/1Your Answer(s):
high
Correct Answer(s) (in green):
high moderate low none of the above
Question 13:
The Fed sets the percentage of depositor funds which must be retained by the bank in “legal reserves” (cash in the vault or _________________).
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
on deposit with the Fed
Correct Answer(s) (in green):
Treasury bonds Treasury bills on deposit with the Fed all of the above
Question 14:
______________ believe that there is only a small amount of crowding-out if any at all.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
Keynesians
Correct Answer(s) (in green):
Monetarists Keynesians All the above None of the above
Question 15:
The open market operations of the FOMC are the _______________ tool of the Fed.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
most frequently used
Correct Answer(s) (in green):
most frequently used most powerful least used least powerful
Question 16:
One reason that monetary policy is believed to be very effective by it supporters is because it does not impact all citizens in an equal manner.
Type: True or FalsePoints Awarded: 1/1Your Answer(s):
False
Correct Answer(s) (in green):
TRUE FALSE
Question 17:
The _______________ school was very influencial during the Reagan Administration and continues to this day to be an important part of monetary considerations.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
Monetarist
Correct Answer(s) (in green):
Monetarist Keynesian Utopian Socialist None of the above
Question 18:
The Fed’s three basic tools operate by adjusting interest rates (rental price of money) and the __________ of money.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
supply
Correct Answer(s) (in green):
demand supply both a. and b. none of the above
Question 19:
A tight money policy (high interest rates) will _________ the value of the dollar, reduce exports, slow the American economy, but will attract a return of American dollars spent for imports.
Type: Multiple ChoicePoints Awarded: 1/1Your Answer(s):
increase
Correct Answer(s) (in green):
increase maintain decrease none of the above
Question 20:
_____________ argue that requiring the Fed to operate with a “monetary rule” for money growth at the same rate as increases in real GDP would be very wise.
Type: Multiple Choice
Points Awarded: 1/1Your Answer(s):
Monetarists
Correct Answer(s) (in green):
Monetarists Keynesians All the above None of the above