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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. Increase interest rates to decrease the money supply






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






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






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






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






6. Decrease interest rates to increase the money supply






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






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






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






10. Shift of money demanded curve






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






12. Four categories of money






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






14. The purchase or sale of government securities






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






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






17. Increases money supply






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






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






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






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






22. Currency + demand deposits






23. 1/reserve requirement






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






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






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






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






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






29. Who determines quantity of money supplied?






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






31. Each group is less liquid than the one before






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






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






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






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






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






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






38. Movement along money demand curve






39. How banks create money






40. Decreases money supply






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






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