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Test your basic knowledge |
CLEP Macroeconomics: Money And Banking
Start Test
Study First
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
M3
tight money policy
reserve requirement
interest rate
2. M2+ + non-personal term deposits + foreign currency deposits
transactions demand for money
bank rate
M3
interest rate
3. Entity responsible for managing the money supply in accordance with the needs of the economy
cash reserve
tight money policy
interest rate
Federal Reserve
4. Informal discussions that occur between the commercial banks and the Fed about monetary and other policies
transactions demand for money
moral suasion
interest rate
monetary policy
5. Occurs when the Fed switches the deposits between its own accounts and the accounts of the commercial banks
switching of deposits
interest rate
difference between money groups
excess cash reserve
6. Households using money to pay bills - purchase materials - etc.
money multiplier
discount rate
Federal Reserve
transactions demand for money
7. The money that a bank has in reserve which exceeds the reserve requirement
cash reserve
excess cash reserve
bank rate
decrease
8. The rate at which the Fed will loan money to commercial banks
contractionary monetary policy
switching of deposits
bank rate
M2+
9. Contractionary monetary policy is used during a period of _________
inflation
change in real GDP
M1 - M2 - M2+ - M3
Federal Reserve
10. The Federal Reserve policies that are aimed at changing the size of the money supply and interest rates to affect the national economy
contractionary monetary policy
monetary policy
change in real GDP
change in interest rate
11. T/F. The transactions demand for money is dependent on the interest rate.
contractionary monetary policy
transactions demand for money
inflation
false
12. Shows how interest rates affect investment expenditure - and ultimately real GDP - prices and unemployment
transmission mechanism
discount rate
three functions of money
inversely
13. Open market operations effect the money supply and _______ _____
interest rate
open market operations
interest rates
switching of deposits
14. Changing the money supply to assist the economy to achieve a full employment - noninflationary level of output
means and goal of monetary policy
three functions of money
M2+
interest rate
15. Each group is less liquid than the one before
Federal Reserve
interest rate
three functions of money
difference between money groups
16. Who determines quantity of money supplied?
Federal Reserve
M2
increases
change in interest rate
17. The amount received by a lender and paid by a borrower expressed as a percentage of the amount of a loan
money multiplier
decrease
M2+
interest rate
18. Lender of last resort - supervisor of member banks - provider of check-clearing services - and controller of money supply
recession
bank rate
Federal Reserve
money multiplier equation
19. Quantity of money demanded and interest rate are ________ related
moral suasion
transmission mechanism
inversely
change in interest rate
20. When the Fed purchases securities it ________ the banks' reserves
increases
transactions demand for money
recession
inversely
21. Equilibrium force in quantity of money demanded and quantity of money supplied
monetary policy
change in interest rate
interest rate
Federal Reserve
22. How banks create money
change in interest rate
M1 - M2 - M2+ - M3
loans
M2+
23. Four categories of money
M2
loans
open market operations
M1 - M2 - M2+ - M3
24. M2 + deposits held by other financial institutions (trust companies - credit unions)
M2
inversely
transactions demand for money
M2+
25. Stems from the fact that money is a store of value and people hold their financial assets in many forms
excess cash reserve
M2+
moral suasion
asset demand for money
26. The ratio of a bank's cash assets to its deposit liabilities
money multiplier
cash reserve
increases
recession
27. The rate the Federal Reserve charges banks to borrow money
transactions demand for money
three functions of money
interest rate
discount rate
28. The purchase or sale of government securities
M2
transactions demand for money
Federal Reserve
open market operations
29. Decrease interest rates to increase the money supply
easy money policy
Federal Reserve
Federal Reserve
monetary policy
30. Movement along money demand curve
means and goal of monetary policy
transactions demand for money
Federal Reserve
change in interest rate
31. Expansionary monetary policy is used during a period of _________
increases
monetary policy
recession
means and goal of monetary policy
32. Currency + demand deposits
M1
Federal Reserve
three functions of money
Federal Reserve
33. The multiple by which the banking system can expand the money supply for each dollar of excess reserves
M2+
recession
money multiplier
switching of deposits
34. The amount that a bank must keep in its reserve in order to meet cash demands
money multiplier equation
Federal Reserve
interest rate
reserve requirement
35. 1/reserve requirement
change in interest rate
M2+
difference between money groups
money multiplier equation
36. (1) medium of exchange; (2) store of value; (3) unit of account
Federal Reserve
expansionary monetary policy
three functions of money
interest rate
37. Decreases money supply
bank rate
transactions demand for money
interest rate
contractionary monetary policy
38. If the Federal reserve lowers the reserve requirement - the interest rate will ________
decrease
monetary policy
change in real GDP
change in interest rate
39. Increases money supply
expansionary monetary policy
interest rate
increases
M1
40. Shift of money demanded curve
easy money policy
M3
false
change in real GDP
41. What determines how much cash people will want to hold?
inflation
false
interest rate
M3
42. M1 + personal savings deposits + non-personal notice deposits (from chartered banks)
false
inflation
M2
loans