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