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






2. Movement along money demand curve






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






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






5. Shift of money demanded curve






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






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






8. Increases money supply






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






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






11. 1/reserve requirement






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






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






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






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






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






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






18. Four categories of money






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






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






21. The purchase or sale of government securities






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






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






24. Currency + demand deposits






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






26. Increase interest rates to decrease the money supply






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






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






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






30. Who determines quantity of money supplied?






31. Decrease interest rates to increase the money supply






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






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






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






37. Decreases money supply






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






39. How banks create money






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






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






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