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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. The purchase or sale of government securities

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

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

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

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

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

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

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

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

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

11. Currency + demand deposits

12. Four categories of money

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

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

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

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

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

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

19. Each group is less liquid than the one before

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

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

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

23. Increases money supply

24. 1/reserve requirement

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

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

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

28. Decrease interest rates to increase the money supply

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

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

31. Shift of money demanded curve

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

33. Who determines quantity of money supplied?

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

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

36. How banks create money

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

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

39. Increase interest rates to decrease the money supply

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

41. Decreases money supply

42. Movement along money demand curve