Multiple Choice Identify the
choice that best completes the statement or answers the question.
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1.
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Which of the following is a correct listing of money's functions?
a. | source of credit, value of transaction costs, unit of barter | b. | medium of barter,
medium of exchange, medium of transactions | c. | unit of barter, unit of account, a unit of
income | d. | store of value, store of exchange, measure of account | e. | store of value,
medium of exchange, unit of account |
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2.
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Let’s suppose that there are two people. One person owes the other
person a debt because they did some work for the other. The two people decide that the debt is
worth $200. In this situation, money is functioning as a
a. | a unit of account or unit of measurement. | b. | a store of
value. | c. | a medium of exchange. | d. | none of the
above |
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3.
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The requirement of a "double coincidence of wants" is the chief
__________ of the __________ exchange system.
a. | advantage; barter | b. | advantage; monetary | c. | disadvantage;
barter | d. | disadvantage; monetary |
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4.
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M1 is comprised of currency held outside banks + checkable deposits +
__________.
a. | credit cards | b. | savings deposits | c. | gold | d. | traveler's
checks |
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5.
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Reserves equal
a. | checkable deposits + vault cash + traveler's checks. | b. | vault cash +
currency in the hands of the nonbanking public. | c. | bank deposits at the Federal
Reserve. | d. | bank deposits at the Federal Reserve + vault cash. |
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6.
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If checkable deposits in Bank A total $12 million and the required reserve ratio
is 15 percent, then required reserves at Bank A equal
a. | $2.0 million. | b. | $1.5 million. | c. | $1.8
million. | d. | $10.2 million. |
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7.
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Ninth National Bank holds $148,000,000 in checkable deposits and $18,000,000 in
reserves. With a required reserve ratio of 12 percent, how much in excess reserves is Ninth National
holding?
a. | $2,160,000 | b. | $240,000 | c. | $35,760,000 | d. | $15,840,000 |
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8.
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Bank A has deposits of $5,000 and reserves of $1,800. If the required reserve
ratio is 0.20, the bank has required reserves of
a. | $1,000. | b. | $2,000. | c. | $3,000. | d. | $4,000. |
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9.
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Suppose that the excess reserves in Bank A increase by $700. If the required
reserve ratio is 25 percent, what is the maximum change in checkable deposits brought about by the
banking system?
a. | $175 | b. | $2,400 | c. | $2,600 | d. | $2,800 |
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10.
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A bank has zero excess reserves, with a required reserve ratio of 10 percent. If
$100,000 in cash is withdrawn from the bank, it has a reserve deficiency of
a. | $10,000. | b. | $90,000. | c. | $100,000. | d. | $1,000,000. |
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11.
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When a bank makes a loan to one of its customers, to the bank the loan is
classified as
a. | an asset. | b. | a liability. | c. | neither an asset nor
a liability. | d. | an asset in some cases and a liability in other cases, depending on the type of
loan. |
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12.
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National Bank holds $74,000,000 in checkable deposits, holds $7,400,000 in
reserves, and has excess reserves of exactly zero. If $3,000,000 in checkable deposits is transferred
to this bank, what is the maximum amount of new money National Bank can create (without assuming that
any new loan is deposited)?
a. | $10,400,000 | b. | $3,300,000 | c. | $3,000,000 | d. | $2,700,000 | e. | There is not enough
information to answer the question. |
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