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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. Who determines quantity of money supplied?






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






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






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






5. Movement along money demand curve






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






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






8. The purchase or sale of government securities






9. Increases money supply






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






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






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






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






14. Each group is less liquid than the one before






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






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






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






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






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






20. Decrease interest rates to increase the money supply






21. Four categories of money






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






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






24. Shift of money demanded curve






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






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






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






28. How banks create money






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






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






31. 1/reserve requirement






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






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






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






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






36. Increase interest rates to decrease the money supply






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






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






39. Currency + demand deposits






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






41. Decreases money supply






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