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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. Increases money supply






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






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






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






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






7. Shift of money demanded curve






8. Each group is less liquid than the one before






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






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






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






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






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






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






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






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






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






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






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






20. Movement along money demand curve






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






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






23. Decrease interest rates to increase the money supply






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






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






26. The purchase or sale of government securities






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






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






29. Increase interest rates to decrease the money supply






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






31. Decreases money supply






32. 1/reserve requirement






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






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






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






36. Currency + demand deposits






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






38. How banks create money






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






40. Four categories of money






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






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