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

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

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

4. Increases money supply

5. Four categories of money

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

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

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

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

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

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

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

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

14. Who determines quantity of money supplied?

15. How banks create money

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

17. Increase interest rates to decrease the money supply

18. Currency + demand deposits

19. Shift of money demanded curve

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

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

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

23. The purchase or sale of government securities

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

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

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

27. Decreases money supply

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

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

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

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

32. 1/reserve requirement

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

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

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

36. Movement along money demand curve

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

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

39. Each group is less liquid than the one before

40. Decrease interest rates to increase the money supply

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

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