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CLEP Macroeconomics: Money And Banking

Subjects : clep, economics
  • Answer 42 questions in 15 minutes.
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  • Match each statement with the correct term.
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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. Currency + demand deposits

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

3. Movement along money demand curve

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

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

6. Increase interest rates to decrease the money supply

7. Increases money supply

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

9. Each group is less liquid than the one before

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

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

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

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

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

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

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

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

18. Who determines quantity of money supplied?

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

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

21. Decrease interest rates to increase the money supply

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

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

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

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

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

27. Four categories of money

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

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

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

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

32. Shift of money demanded curve

33. Decreases money supply

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

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

36. How banks create money

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

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

39. 1/reserve requirement

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

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

42. The purchase or sale of government securities