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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. Movement along money demand curve






2. 1/reserve requirement






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






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






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






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






7. Each group is less liquid than the one before






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






9. Four categories of money






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






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






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






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






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






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






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






17. How banks create money






18. Currency + demand deposits






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






20. The purchase or sale of government securities






21. Shift of money demanded curve






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






23. Who determines quantity of money supplied?






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






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






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






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






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






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






30. Decrease interest rates to increase the money supply






31. Increase interest rates to decrease the money supply






32. Increases money supply






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






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






35. Decreases money supply






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






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






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






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






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






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






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