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






2. How banks create money






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






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






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






6. Shift of money demanded curve






7. Increase interest rates to decrease the money supply






8. 1/reserve requirement






9. Who determines quantity of money supplied?






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






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






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






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






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






15. Four categories of money






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






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






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






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






20. Currency + demand deposits






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






22. Decrease interest rates to increase the money supply






23. Increases money supply






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






25. Each group is less liquid than the one before






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






27. Movement along money demand curve






28. Decreases money supply






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






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






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






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






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






34. The purchase or sale of government securities






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






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






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






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






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






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






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






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