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

2. Shift of money demanded curve

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

4. Who determines quantity of money supplied?

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

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

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

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

9. Movement along money demand curve

10. The purchase or sale of government securities

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

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

13. Decrease interest rates to increase the money supply

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

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

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

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

18. Increases money supply

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

20. How banks create money

21. Each group is less liquid than the one before

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

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

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

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

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

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

28. Decreases money supply

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

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

31. Increase interest rates to decrease the money supply

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

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

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

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

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

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

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

39. 1/reserve requirement

40. Four categories of money

41. Currency + demand deposits

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