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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. Open market operations effect the money supply and _______ _____






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






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






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






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






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






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






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






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






10. Increases money supply






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






12. 1/reserve requirement






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






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






15. Shift of money demanded curve






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






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






18. Who determines quantity of money supplied?






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






20. The purchase or sale of government securities






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






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






23. Currency + demand deposits






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






25. Decrease interest rates to increase the money supply






26. Movement along money demand curve






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






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






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






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






31. Decreases money supply






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






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






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






35. Each group is less liquid than the one before






36. Four categories of money






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






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






39. Increase interest rates to decrease the money supply






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






41. How banks create money






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