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






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






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






4. Each group is less liquid than the one before






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






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






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






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






9. Increase interest rates to decrease the money supply






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






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






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






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






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






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






16. Movement along money demand curve






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






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






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






20. Increases money supply






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






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






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






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






25. Currency + demand deposits






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






27. The purchase or sale of government securities






28. Four categories of money






29. Decrease interest rates to increase the money supply






30. Who determines quantity of money supplied?






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






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






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






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






35. Decreases money supply






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






37. How banks create money






38. 1/reserve requirement






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






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






41. Shift of money demanded curve






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