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

2. Who determines quantity of money supplied?

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

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

5. Decreases money supply

6. The purchase or sale of government securities

7. Currency + demand deposits

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

9. Four categories of money

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

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

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

13. How banks create money

14. 1/reserve requirement

15. Each group is less liquid than the one before

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

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

18. Decrease interest rates to increase the money supply

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

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

21. Shift of money demanded curve

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

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

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

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

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

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

28. Increases money supply

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

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

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

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

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

34. Movement along money demand curve

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

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

37. Increase interest rates to decrease the money supply

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

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

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

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

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