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

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

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

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

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

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

7. The purchase or sale of government securities

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

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

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

11. Each group is less liquid than the one before

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

13. Who determines quantity of money supplied?

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

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

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

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

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

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

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

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

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

23. Currency + demand deposits

24. How banks create money

25. Decrease interest rates to increase the money supply

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

27. Shift of money demanded curve

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

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

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

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

32. 1/reserve requirement

33. Increase interest rates to decrease the money supply

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

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

36. Increases money supply

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

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

39. Four categories of money

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

41. Movement along money demand curve

42. Decreases money supply