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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. 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