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AEPA: Money, Banking & Financial Markets Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

Page 1

Question 1 1. Which of these is TRUE regarding money demand and price level?

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Question 2 2. George reaches into his wallet and pulls out a $20 US bill to pay for his coffee. By using currency to make a purchase, what is George actually doing?

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Question 3 3. Which of the following lists is in the correct order, from least to most, of the market value of each of these financial assets?

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Question 4 4. Which of the following will decrease the quantity of money demanded by consumers and businesses?

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Question 5 5. When GDP is rising, money demand will most likely

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Page 2

Question 6 6. Samantha just celebrated her first holy communion. Her parents opened a savings account (that earns 3% interest) for her to deposit the money that was gifted to her on this special occasion. Samantha deposits the $400 from her party. What will that amount will be worth in exactly 1 year from now?

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Question 7 7. Loretta deposits money into her savings account. If all other factors are held constant, how does this affect M2?

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Question 8 8. Because the central bank controls the money supply, it also controls what other economic driver?

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Question 9 9. As the price level decreases, how is the value of money impacted?

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Question 10 10. Assume that there are two parties to an exchange and that they value the goods they would receive as much as the goods they would give away. What do economists call this?

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Question 11 11. What does it mean if everything in an economy can be quoted in terms of money?

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Question 12 12. The time value of money teaches us that

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Question 13 13. What happens when there is an increase in the demand for money when the supply of money is unchanged?

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Question 14 14. In economics, the word 'liquid' refers to which of the following?

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Question 15 15. Which of the following BEST explains the contractual obligation associated with stock?

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Question 16 16. Which of the following is a component of M1?

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Question 17 17. Which of the following measures of the money supply is largest?

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Question 18 18. The money multiplier is a relationship between which two drivers?

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Question 19 19. Why was money created?

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Question 20 20. Which of the following financial assets is a debt instrument - a promise by the issuer to pay the holder their principal plus interest at some future date?

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Question 21 21. Which of the following is NOT true regarding the role of banks in the economy?

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Question 22 22. Under fractional banking, when a bank lends to a customer, which of the following happens?

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Question 23 23. A bank gets a demand deposit of $50,000. If the reserve requirement is 10%, what is the maximum the bank can loan out at this time?

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Question 24 24. How does high economic output lead to higher nominal interest rates?

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Question 25 25. What happens when money demand increases and all other things remain constant?

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Question 26 26. Assume that the reserve requirement is 25%. If banks have excess reserves of $10,000, which of the following is the maximum amount of additional money that can be created by the banking system through the lending process?

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Question 27 27. How do banks make money?

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Question 28 28. When economists illustrate the money market, the demand curve is _____ while the supply curve is _____.

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Question 29 29. How does inflation prevent most of the money in use today from serving as a pure store of value?

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Question 30 30. Which of the following statements correctly describes the relationship between existing bond prices and market interest rates?

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AEPA: Money, Banking & Financial Markets Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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