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CLEP Macroeconomics: Money And Banking

Subjects : clep, economics
  • Answer 42 questions in 15 minutes.
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  • Match each statement with the correct term.
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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. Increases money supply

2. Shift of money demanded curve

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

4. Movement along money demand curve

5. Increase interest rates to decrease the money supply

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

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

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

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

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

11. Decreases money supply

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

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

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

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

16. Each group is less liquid than the one before

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

18. Decrease interest rates to increase the money supply

19. Currency + demand deposits

20. 1/reserve requirement

21. Who determines quantity of money supplied?

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

23. The purchase or sale of government securities

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

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

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

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

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

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

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

31. Four categories of money

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

33. How banks create money

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

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

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

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

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

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

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

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

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