Test your basic knowledge |

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






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






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






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






5. Each group is less liquid than the one before






6. Who determines quantity of money supplied?






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






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






9. Shift of money demanded curve






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






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






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






13. The purchase or sale of government securities






14. Decreases money supply






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






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






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






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






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






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






21. Increases money supply






22. Increase interest rates to decrease the money supply






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






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






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






26. Four categories of money






27. 1/reserve requirement






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






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






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






31. Movement along money demand curve






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






33. Decrease interest rates to increase the money supply






34. How banks create money






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






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






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






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






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






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






41. Currency + demand deposits






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