Macroeconomics Chapter 16 Practice Questions with complete Solutions Rated A+
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Macroeconomics
Institution
Macroeconomics
Macroeconomics Chapter 16 Practice Questions with complete Solutions Rated A+
T/F: Demand deposits are balances in bank accounts that depositors can access by writing a check or using a debit card. - Answers TRUE
Which of the following is included in both M1 and M2?
A. demand deposits
B. cur...
Macroeconomics Chapter 16 Practice Questions with complete Solutions Rated A+
T/F: Demand deposits are balances in bank accounts that depositors can access by writing a check or
using a debit card. - Answers TRUE
Which of the following is included in both M1 and M2?
A. demand deposits
B. currency
C. other checkable deposits
D. All of the above are correct. - Answers D. All of the above
Money is
A. not the most liquid asset but a perfect store of value.
B. the most liquid asset but an imperfect store of value.
C. neither the most liquid asset and nor a perfect store of value.
D. the most liquid asset and a perfect store of value. - Answers B. The most liquid asset but an imperfect
store of value
The primary difference between commodity money and fiat money is that
A. fiat money is a medium of exchange but commodity money is not.
B. fiat money has intrinsic value but commodity money does not.
C. commodity money has intrinsic value but fiat money does not.
D. commodity money is a medium of exchange but fiat money is not. - Answers C. Commodity money
has intrinsic value but fiat money does not
The existence of money
A. reduces specialization.
B. allows for barter.
C. hinders production.
D. makes trade easier. - Answers D. Makes trade easier
T/F: An increase in the reserve requirement increases reserves and decreases the money supply. -
Answers FALSE
, If the reserve ratio is 5 percent, then $500 of additional reserves can create up to
A. $10,500 of new money.
B. $10,000 of new money.
C. $9,500 of new money.
D. $2,500 of new money. - Answers B. $10,000 of new money
The Fed increases reserves if it conducts open market
A. sales or auctions term credit
B. purchases or auctions term credit.
C. purchases but not if it auctions term credit
D. term-8sales but not if it auctions term credit - Answers B. Purchases or auctions term credit
Assets:
1. Reserves $1200
2. Loans $8000
3. Short term securities $800
Liabilities:
1. Deposits $9000
2. Debt $800
3. Capital $200
The required reserve ratio is 12 percent. Which of the following is true?
A. This banks reserve ratio is 12 percent. Its excess reserves are $0.
B. This banks reserve ratio is 13.3 percent. Its excess reserves are $120.
C. This banks reserve ratio is 10 percent. Its excess reserves are $300.
D. This banks reserve ratio is 15 percent. Its excess reserves are $240. - Answers B. This banks reserve
ratio is 13.3 percent. Its excess reserves are $120
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