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Money, Banking, and Financial Markets: Help and Review 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 yellow "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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Question 1 1. Yvette is risk intolerant and does not want there to be much fluctuation in value for her assets. Which asset would Yvette most likely keep?

Question 2 2. Because the central bank controls the money supply, it also controls what other economic driver?

Question 3 3. Besides being known as the reserve ratio, what is the fraction of a customer's deposits that a bank is required to hold in reserve also called?

Question 4 4. 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?

Question 5 5. Which of the following is NOT true regarding the role of banks in the economy?

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Question 6 6. Why was money created?

Question 7 7. Which of the following measures of the money supply is largest?

Question 8 8. A bank has demand deposits of $50,000 and actual reserves of $5,000. If the reserve requirement is 10%, what is the maximum the bank can loan out at this time?

Question 9 9. The government issues a new two-dollar and fifty cent bill. What is the intrinsic value of the new currency?

Question 10 10. How does the demand curve for money shift?

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Question 11 11. In economics, the word 'liquid' refers to which of the following?

Question 12 12. How does inflation prevent most of the money in use today from serving as a pure store of value?

Question 13 13. How does the economy change every time banks loan out excess reserves?

Question 14 14. When a deposit is made into a bank, what does the bank do?

Question 15 15. When economists illustrate the money market, the demand curve is _____ while the supply curve is _____.

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Question 16 16. The money multiplier is a relationship between which two drivers?

Question 17 17. Lydia deposits $70,000 into the First National Bank of Ceelo. The required reserve ratio is 10%. How much will the money supply increase if the bank loans out excess reserves?

Question 18 18. The demand for money will fall when

Question 19 19. When interest rates are 20%, the demand for money is:

Question 20 20. Which of the following insures that the US dollar maintains its value?

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Question 21 21. How do banks make money?

Question 22 22. Loretta deposits money into her savings account. If all other factors are held constant, how does this affect M2?

Question 23 23. 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?

Question 24 24. What is the present value of a series of $50,000 payments for 10 years at an interest rate of 5% per year?

Question 25 25. If banks have excess reserves of $5,000, and the money supply increased by $20,000, what is the reserve ratio?

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Question 26 26. How do banks make money?

Question 27 27. Which of the following will decrease the quantity of money demanded by consumers and businesses?

Question 28 28. How does high economic output lead to higher nominal interest rates?

Question 29 29. What is the economics model that describes the demand and supply of money in a nation called?

Question 30 30. When GDP is rising, money demand will most likely

Money, Banking, and Financial Markets: Help and Review 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 yellow "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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