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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. Open market operations effect the money supply and _______ _____






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






4. Decreases money supply






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






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






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






8. Four categories of money






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






10. How banks create money






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






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






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






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






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






16. Currency + demand deposits






17. Each group is less liquid than the one before






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






19. Movement along money demand curve






20. Increase interest rates to decrease the money supply






21. The purchase or sale of government securities






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






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






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






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






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






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






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. 1/reserve requirement






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






32. Increases money supply






33. Shift of money demanded curve






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






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






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






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






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






39. Decrease interest rates to increase the money supply






40. Who determines quantity of money supplied?






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






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