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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+ + non-personal term deposits + foreign currency deposits






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






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






4. Each group is less liquid than the one before






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






6. The purchase or sale of government securities






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






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






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






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






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






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






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






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






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






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






17. Increase interest rates to decrease the money supply






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






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






20. Who determines quantity of money supplied?






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






22. Increases money supply






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






24. Decrease interest rates to increase the money supply






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






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






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






28. Shift of money demanded curve






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






30. How banks create money






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






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






33. Currency + demand deposits






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






35. Movement along money demand curve






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






37. Decreases money supply






38. Four categories of money






39. 1/reserve requirement






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






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






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