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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. Increase interest rates to decrease the money supply






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






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






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






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






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






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






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






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






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






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






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






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






14. Changing the money supply to assist the economy to achieve a full employment - noninflationary level of output






15. Each group is less liquid than the one before






16. Who determines quantity of money supplied?






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






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






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






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






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






22. How banks create money






23. Four categories of money






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






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






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






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






28. The purchase or sale of government securities






29. Decrease interest rates to increase the money supply






30. Movement along money demand curve






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






32. Currency + demand deposits






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






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






35. 1/reserve requirement






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






37. Decreases money supply






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






39. Increases money supply






40. Shift of money demanded curve






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






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