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






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






3. Decreases money supply






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






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






6. How banks create money






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






8. Shift of money demanded curve






9. Four categories of money






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






11. Currency + demand deposits






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






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






14. Increases money supply






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






16. Movement along money demand curve






17. 1/reserve requirement






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






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






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






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






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






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






24. Who determines quantity of money supplied?






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






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






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






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






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






30. Decrease interest rates to increase the money supply






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






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






33. Each group is less liquid than the one before






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






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






36. The purchase or sale of government securities






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






38. Increase interest rates to decrease the money supply






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






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






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






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