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Test your basic knowledge |
CLEP Macroeconomics: Money And Banking
Start Test
Study First
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. If the Federal reserve lowers the reserve requirement - the interest rate will ________
excess cash reserve
difference between money groups
decrease
reserve requirement
2. The amount that a bank must keep in its reserve in order to meet cash demands
excess cash reserve
reserve requirement
Federal Reserve
money multiplier equation
3. What determines how much cash people will want to hold?
recession
M1 - M2 - M2+ - M3
Federal Reserve
interest rate
4. The purchase or sale of government securities
asset demand for money
open market operations
false
transactions demand for money
5. Expansionary monetary policy is used during a period of _________
contractionary monetary policy
recession
expansionary monetary policy
reserve requirement
6. When the Fed purchases securities it ________ the banks' reserves
interest rate
three functions of money
increases
Federal Reserve
7. Informal discussions that occur between the commercial banks and the Fed about monetary and other policies
moral suasion
decrease
false
tight money policy
8. The ratio of a bank's cash assets to its deposit liabilities
tight money policy
cash reserve
M1 - M2 - M2+ - M3
interest rate
9. Lender of last resort - supervisor of member banks - provider of check-clearing services - and controller of money supply
means and goal of monetary policy
Federal Reserve
M1
M1 - M2 - M2+ - M3
10. How banks create money
difference between money groups
reserve requirement
easy money policy
loans
11. Who determines quantity of money supplied?
Federal Reserve
M1 - M2 - M2+ - M3
interest rate
loans
12. The amount received by a lender and paid by a borrower expressed as a percentage of the amount of a loan
Federal Reserve
interest rate
M3
expansionary monetary policy
13. The Federal Reserve policies that are aimed at changing the size of the money supply and interest rates to affect the national economy
interest rate
monetary policy
difference between money groups
transmission mechanism
14. Quantity of money demanded and interest rate are ________ related
inversely
Federal Reserve
interest rate
interest rates
15. Increases money supply
expansionary monetary policy
money multiplier equation
three functions of money
interest rates
16. The rate at which the Fed will loan money to commercial banks
monetary policy
bank rate
recession
reserve requirement
17. Currency + demand deposits
transactions demand for money
transmission mechanism
M1
expansionary monetary policy
18. Increase interest rates to decrease the money supply
tight money policy
contractionary monetary policy
switching of deposits
money multiplier equation
19. M2 + deposits held by other financial institutions (trust companies - credit unions)
M2+
means and goal of monetary policy
loans
interest rates
20. Households using money to pay bills - purchase materials - etc.
means and goal of monetary policy
transactions demand for money
moral suasion
interest rates
21. The multiple by which the banking system can expand the money supply for each dollar of excess reserves
money multiplier
inflation
money multiplier equation
interest rates
22. Shift of money demanded curve
false
tight money policy
change in real GDP
three functions of money
23. Equilibrium force in quantity of money demanded and quantity of money supplied
inflation
M2+
interest rate
discount rate
24. Four categories of money
difference between money groups
M1 - M2 - M2+ - M3
interest rate
cash reserve
25. Each group is less liquid than the one before
transmission mechanism
loans
easy money policy
difference between money groups
26. Entity responsible for managing the money supply in accordance with the needs of the economy
Federal Reserve
M1 - M2 - M2+ - M3
change in real GDP
inflation
27. Stems from the fact that money is a store of value and people hold their financial assets in many forms
expansionary monetary policy
increases
Federal Reserve
asset demand for money
28. Decreases money supply
contractionary monetary policy
easy money policy
switching of deposits
reserve requirement
29. The rate the Federal Reserve charges banks to borrow money
money multiplier
Federal Reserve
interest rate
discount rate
30. 1/reserve requirement
interest rate
open market operations
money multiplier equation
interest rate
31. Shows how interest rates affect investment expenditure - and ultimately real GDP - prices and unemployment
Federal Reserve
transmission mechanism
M2+
three functions of money
32. Movement along money demand curve
transactions demand for money
decrease
change in interest rate
interest rate
33. Occurs when the Fed switches the deposits between its own accounts and the accounts of the commercial banks
cash reserve
money multiplier equation
open market operations
switching of deposits
34. Decrease interest rates to increase the money supply
open market operations
easy money policy
expansionary monetary policy
transactions demand for money
35. Contractionary monetary policy is used during a period of _________
inflation
M3
reserve requirement
increases
36. M2+ + non-personal term deposits + foreign currency deposits
easy money policy
monetary policy
M3
money multiplier
37. M1 + personal savings deposits + non-personal notice deposits (from chartered banks)
M2
money multiplier equation
loans
moral suasion
38. Open market operations effect the money supply and _______ _____
expansionary monetary policy
loans
interest rates
cash reserve
39. T/F. The transactions demand for money is dependent on the interest rate.
false
moral suasion
recession
interest rates
40. The money that a bank has in reserve which exceeds the reserve requirement
excess cash reserve
M2+
transactions demand for money
easy money policy
41. Changing the money supply to assist the economy to achieve a full employment - noninflationary level of output
means and goal of monetary policy
switching of deposits
transmission mechanism
money multiplier
42. (1) medium of exchange; (2) store of value; (3) unit of account
tight money policy
three functions of money
change in interest rate
transmission mechanism