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






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






3. How banks create money






4. The purchase or sale of government securities






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






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






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






8. Decreases money supply






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






10. Movement along money demand curve






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






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






13. 1/reserve requirement






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






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






16. Who determines quantity of money supplied?






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






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






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






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






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






22. Four categories of money






23. Each group is less liquid than the one before






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






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






26. Decrease interest rates to increase the money supply






27. Increases money supply






28. Shift of money demanded curve






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






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






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






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






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






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






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






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






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






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






39. Increase interest rates to decrease the money supply






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






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






42. Currency + demand deposits