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CLEP Macroeconomics: Money And Banking

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






2. Movement along money demand curve






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






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






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






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






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






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






9. Decreases money supply






10. The purchase or sale of government securities






11. Each group is less liquid than the one before






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






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






14. Increases money supply






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






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






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






18. Who determines quantity of money supplied?






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






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






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






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






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






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






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






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






27. 1/reserve requirement






28. How banks create money






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






30. Shift of money demanded curve






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






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






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






34. Decrease interest rates to increase the money supply






35. Four categories of money






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






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






38. Increase interest rates to decrease the money supply






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






40. Currency + demand deposits






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






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