Money, Banking, and Financial Markets: Tutoring Solution 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. In economics, the word 'liquid' refers to which of the following?

Question 2 2. 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?

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?

Question 4 4. As the price level decreases, how is the value of money impacted?

Question 5 5. Which of the following BEST explains the contractual obligation associated with stock?

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Question 6 6. How does inflation prevent most of the money in use today from serving as a pure store of value?

Question 7 7. Money that has an intrinsic value is called what?

Question 8 8. How do banks make money?

Question 9 9. How does high economic output lead to higher nominal interest rates?

Question 10 10.

When looking at the demand curve for money, which of the following completes this sentence?

When interest rates are 20%, the demand for money is _____.

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Question 11 11. The fractional reserve system's ability to create money is reduced when

Question 12 12. Money is a medium of exchange because:

Question 13 13. 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 14 14. Under fractional banking, when a bank lends to a customer, which of the following happens?

Question 15 15. Which of the following will decrease the quantity of money demanded by consumers and businesses?

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Question 16 16. Which of the following is NOT true regarding the role of banks in the economy?

Question 17 17. Why was money created?

Question 18 18. Which of the following measures of the money supply is largest?

Question 19 19. What is the present value of a series of $50,000 payments for 10 years at an interest rate of 5% per year?

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

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Question 21 21. 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?

Question 22 22. A bond is _____.

Question 23 23. When money can be stored for a length of time and then used later to purchase goods and services, economists say that money is:

Question 24 24. The time value of money teaches us that

Question 25 25. When someone deposits money into a savings account, this demand deposit becomes _____ to the bank?

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Question 26 26. How do banks make money?

Question 27 27. Loretta deposits money into her savings account. If all other factors are held constant, how does this affect M2?

Question 28 28. According to the T-account shown, if the required reserve ratio is 10%, what is the maximum amount of additional loans this bank can make?

Question 29 29. Which of the following is a component of M1?

Question 30 30. When $1,000 gets deposited into the banking system, and the reserve ratio is 10%, what is the most the money supply could increase?

Money, Banking, and Financial Markets: Tutoring Solution 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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