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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. Contractionary monetary policy is used during a period of _________






2. The purchase or sale of government securities






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






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






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






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






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






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






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






10. Movement along money demand curve






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






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






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






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






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






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






17. Shift of money demanded curve






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






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






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






21. Decreases money supply






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






23. Four categories of money






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






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






26. Increases money supply






27. Decrease interest rates to increase the money supply






28. 1/reserve requirement






29. Increase interest rates to decrease the money supply






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






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






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






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






34. Currency + demand deposits






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






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






37. Who determines quantity of money supplied?






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






39. Each group is less liquid than the one before






40. How banks create money






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






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