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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. Shift of money demanded curve

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

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

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

5. Increases money supply

6. Decrease interest rates to increase the money supply

7. How banks create money

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

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

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

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

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

13. Who determines quantity of money supplied?

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

15. Currency + demand deposits

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

17. The purchase or sale of government securities

18. Each group is less liquid than the one before

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

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

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

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

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

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

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

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

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

28. Four categories of money

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

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

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

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

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

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

35. Increase interest rates to decrease the money supply

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

37. 1/reserve requirement

38. Decreases money supply

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

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

41. Movement along money demand curve

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