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

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

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

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

5. Each group is less liquid than the one before

6. Who determines quantity of money supplied?

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

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

9. Shift of money demanded curve

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

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

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. The purchase or sale of government securities

14. Decreases money supply

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

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

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

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

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

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

21. Increases money supply

22. Increase interest rates to decrease the money supply

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

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

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

26. Four categories of money

27. 1/reserve requirement

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

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

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

31. Movement along money demand curve

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

33. Decrease interest rates to increase the money supply

34. How banks create money

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

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

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

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

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

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

41. Currency + demand deposits

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