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5 Written questions

5 Matching questions

  1. Money is functioning as a standard of value when you
  2. Which of the following is not part of M1 but is included in "near money" according to the text?
  3. The reserve ratio is the ratio of:
  4. If Mr. Nguyen takes $650 from his savings account and hides it in his mattress in the form of cash, the immediate result of this transaction is that:
  5. Suppose Caroline finds $10,000 under her bed and deposits it in her checking account. If the required reserve ratio is 25 percent, this deposit has the potential of increasing the money supply by
  1. a $30,000
  2. b Use it to compare two houses in different price ranges
  3. c Bank reserves to total transaction deposits
  4. d M1 increases by $650
  5. e Savings accounts

5 Multiple choice questions

  1. Traveler's checks
  2. Excess reserves will increase by $170,000
  3. Zero
  4. Total reserves minus required reserves
  5. $50,000

5 True/False questions

  1. Suppose the entire banking system has $70,000 in excess reserves and a required reserve ratio of 25 percent. The deposit-creation potential of the banking system is$280,000


  2. If total reserves for a bank are $25,000, excess reserves are zero and demand deposits are $100,000, then the money multiplier must be:4.00


  3. The overwhelming majority of the basic money supply in the U.S. is in the form ofTransactions accounts and currency in circulation


  4. The assets held by a bank to fulfill its deposit obligations are known asBank reserves


  5. Almost all Internet purchases are paid for by:Cash


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