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CLEP Macroeconomics: Money And Banking

Subjects : clep, economics
Instructions:
  • Answer 42 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Changing the money supply to assist the economy to achieve a full employment - noninflationary level of output






2. Who determines quantity of money supplied?






3. Each group is less liquid than the one before






4. The multiple by which the banking system can expand the money supply for each dollar of excess reserves






5. Open market operations effect the money supply and _______ _____






6. Occurs when the Fed switches the deposits between its own accounts and the accounts of the commercial banks






7. Decrease interest rates to increase the money supply






8. Entity responsible for managing the money supply in accordance with the needs of the economy






9. What determines how much cash people will want to hold?






10. How banks create money






11. Movement along money demand curve






12. M2+ + non-personal term deposits + foreign currency deposits






13. Currency + demand deposits






14. 1/reserve requirement






15. The rate the Federal Reserve charges banks to borrow money






16. Contractionary monetary policy is used during a period of _________






17. M1 + personal savings deposits + non-personal notice deposits (from chartered banks)






18. (1) medium of exchange; (2) store of value; (3) unit of account






19. Shows how interest rates affect investment expenditure - and ultimately real GDP - prices and unemployment






20. M2 + deposits held by other financial institutions (trust companies - credit unions)






21. Stems from the fact that money is a store of value and people hold their financial assets in many forms






22. Quantity of money demanded and interest rate are ________ related






23. The purchase or sale of government securities






24. The amount received by a lender and paid by a borrower expressed as a percentage of the amount of a loan






25. The rate at which the Fed will loan money to commercial banks






26. Expansionary monetary policy is used during a period of _________






27. Increases money supply






28. Shift of money demanded curve






29. Households using money to pay bills - purchase materials - etc.






30. If the Federal reserve lowers the reserve requirement - the interest rate will ________






31. Equilibrium force in quantity of money demanded and quantity of money supplied






32. When the Fed purchases securities it ________ the banks' reserves






33. Increase interest rates to decrease the money supply






34. Four categories of money






35. The money that a bank has in reserve which exceeds the reserve requirement






36. Informal discussions that occur between the commercial banks and the Fed about monetary and other policies






37. The Federal Reserve policies that are aimed at changing the size of the money supply and interest rates to affect the national economy






38. Lender of last resort - supervisor of member banks - provider of check-clearing services - and controller of money supply






39. The amount that a bank must keep in its reserve in order to meet cash demands






40. T/F. The transactions demand for money is dependent on the interest rate.






41. The ratio of a bank's cash assets to its deposit liabilities






42. Decreases money supply