Test your basic knowledge |

CLEP Macroeconomics: Money And Banking

Subjects : clep, economics
  • 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. The ratio of a bank's cash assets to its deposit liabilities

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

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

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

5. Increase interest rates to decrease the money supply

6. Decrease interest rates to increase the money supply

7. Currency + demand deposits

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

9. Movement along money demand curve

10. Shift of money demanded curve

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

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

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

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

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

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

17. Four categories of money

18. The purchase or sale of government securities

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

20. Decreases money supply

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

22. 1/reserve requirement

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

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

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

26. How banks create money

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

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

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

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

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

32. Increases money supply

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

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

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

36. Who determines quantity of money supplied?

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

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

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

40. Each group is less liquid than the one before

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

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