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






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






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






4. Each group is less liquid than the one before






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






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






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






8. Currency + demand deposits






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






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






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






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






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






14. Shift of money demanded curve






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






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






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






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






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






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






21. Increase interest rates to decrease the money supply






22. How banks create money






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






24. Increases money supply






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






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






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






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






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






30. Movement along money demand curve






31. Four categories of money






32. The purchase or sale of government securities






33. Decreases money supply






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






35. Decrease interest rates to increase the money supply






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






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






38. Who determines quantity of money supplied?






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






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






41. 1/reserve requirement






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