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Money, Banking and 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 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. Money that has an intrinsic value is called what?

Question 3 3. How does the economy change every time banks loan out excess reserves?

Question 4 4. 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 5 5. A bond is _____.

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Question 6 6. The time value of money teaches us that

Question 7 7. There is a company offering $5000 bonds which will earn an annual interest of $200. What is the coupon rate?

Question 8 8. How do banks make money?

Question 9 9. Most bonds pay interest:

Question 10 10. $10,000 gets deposited into the Ceelo First National Bank. As a result, excess reserves go up by $8,000. This means that the required reserve ratio must be:

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Question 11 11. How do banks make money?

Question 12 12. Which of the following BEST explains the contractual obligation associated with stock?

Question 13 13. Which of these is TRUE regarding money demand and price level?

Question 14 14. How does high economic output lead to higher nominal interest rates?

Question 15 15. Most bonds have par values of:

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Question 16 16. 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?

Question 17 17. Which of the following is NOT true regarding the role of banks in the economy?

Question 18 18. In the formula C = i / p, what does the p represent?

Question 19 19. Money is a medium of exchange because:

Question 20 20. 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 21 21. Loretta deposits money into her savings account. If all other factors are held constant, how does this affect M2?

Question 22 22. 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 23 23. Which of the following statements is true regarding the money supply?

Question 24 24. 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 25 25. 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 26 26. When a deposit is made into a bank, what does the bank do?

Question 27 27. When economists illustrate the money market, the demand curve is _____ while the supply curve is _____.

Question 28 28. When GDP is rising, money demand will most likely

Question 29 29. The fractional reserve system's ability to create money is reduced when

Question 30 30. Because the central bank controls the money supply, it also controls what other economic driver?

Money, Banking and 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 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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