Macroeconomics : money, banking and monetary policy.

SStudent ID: 21784984 Exam: 050475RR – MONEY, BANKING AND MONETARY POLICY

When you have completed your exam and reviewed your answers, click Submit Exam. Answers will not be recorded until you hit Submit Exam. If you need to exit before completing the exam, click Cancel Exam.

Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page break, so be sure that you have seen the entire question and all the answers before choosing an answer.

1. The primary purpose of the legal reserve requirement is to A. provide a dependable source of interest income for commercial banks. B. provide a means by which the monetary authorities can influence the lending ability of commercial banks. C. prevent banks from hoarding too much vault cash. D. prevent commercial banks from earning excess profits.

2. If the Federal Reserve System buys government securities from commercial banks and the public A. the money supply will contract. B. it will be easier to obtain loans at commercial banks. C. commercial bank reserves will decline.

D. commercial bank reserves will be unaffected.

3. Which one of the following statements about default is correct? A. “Default” occurs when bond purchasers fails to pay full price for a bond. B. “Default” occurs when stocks are not federally insured. C. “Default” occurs when corporations go bankrupt and stock becomes worthless. D. “Default” occurs when bond issuers fails to make promised payments.

4. An important routine function of the Federal Reserve Bank is to A. advise commercial banks as to the most profitable ways of reinvesting profits. B. supervise the liquidation of the assets of bankrupt state banks. C. help large commercial banks develop correspondent relationships with smaller commercial banks. D. provide facilities by which commercial banks and thrift institutions may collect checks.

5. It’s costly to hold money because A. deflation may reduce its purchasing power. B. bond prices are highly variable. C. in doing so, one sacrifices interest income. D. the rate at which money is spent may decline.

6. To say that the Federal Reserve Banks are quasi-public banks means that A. they deal only with banks of foreign nations and don’t have direct business contact with U.S. banks.B. they deal only with commercial banks, and not the public. C. they’re publicly owned, but privately managed. D. they’re privately owned, but managed in the public interest.

7. During periods of rapid inflation, money may cease to work as a medium of exchange A. because people and businesses won’t want to accept it in transactions. B. unless it has been designated legal tender. C. unless it’s backed by gold.

D. because it’s too scarce for everyone to have enough for transactions. 8. George buys an antique car for $20,000 and sells it five years later for $24,000. George’s per year rate

of return is A. 4 percent. B. 10 percent. C. 20 percent. D. 12 percent.

9. Commercial banks and thrifts usually hold only small amounts of excess reserves because A. the Fed doesn’t pay interest on reserves. B. the Fed constantly uses open market operations to eliminate excess reserves. C. the presence of such reserves tends to boost interest rates and reduce investment.

D. the Fed doesn’t want commercial banks and thrifts to be too liquid.

10. Denny buys a rare coin for $200 and sells the coin 1 year later for $220. Denny’s rate of return is A. 91 percent. B. 20 percent. C. 10 percent.

D. 110 percent.

11. Which one of the following statements is correct? A. A $20 bill is a Treasury note. B. A $20 bill is a gold certificate. C. A $20 bill is a Federal Reserve Note.

D. A $20 bill is a Treasury bill.

12. Other things equal, if the supply of money is reduced, A. investment spending will increase. B. bond prices will fall. C. the interest rates will fall.

D. the demand for money will increase.

13. Firms whose central business is to offer security advice and buy and sell individual stocks and bonds for clients are known as

A. insurance companies. B. pension fund companies. C. thrifts. D. securities firms.

14. If a corporation goes bankrupt, A. bondholders get paid from the sale of company assets before stockholders do. B. neither stockholders nor bondholders receive any money. C. stockholders must honor the debts to bondholders out of personal assets if necessary. D. stockholders get paid from the sale of company assets before bondholders do.

15. Paper money (currency) in the United States is issued by the A. Federal Reserve Banks. B. United States Treasury. C. United States Mint.

D. national banks.

16. Which one of the following statements about open-market operations is correct? A. Open-market operations refer to central bank lending to commercial banks. B. Open-market operations refer to purchases of stocks in the New York Stock Exchange. C. Open-market operations refer to the purchase or sale of government securities by the Fed.

D. Open-market operations refer to the specifying of loan maximums on stock purchases.

17. The four main tools of monetary policy are A. tax rate changes, the discount rate, open-market operations, and the federal funds rate. B. tax rate changes, changes in government expenditures, open-market operations, and the term auction facility. C. changes in government expenditures, the reserve ratio, the federal funds rate, and the discount rate. D. the discount rate, the reserve ratio, the term auction facility, and open-market operations.

18. Most modern banking systems are based on A. 100 percent reserves. B. money of intrinsic value. C. commodity money.

D. fractional reserves. 19. If the Fed wants commercial banks to borrow and expand their reserves by a specific amount, what

monetary policy tool best guarantees that it will happen? A. Term auction facility B. Reserve ratio C. federal funds rate

D. Open-market operations

20. When economists say that money serves as a medium of exchange, they mean that it’s A. a means of payment. B. declared as legal tender by the government. C. a monetary unit for measuring and comparing the relative values of goods.

D. a way to keep wealth in a readily spendable form for future use.

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more