1 Use the table below to answer the next question. Type of Money Amount (million
ID: 1155387 • Letter: 1
Question
1 Use the table below to answer the next question.
Type of Money
Amount (millions)
Currency and reserves held by banks at the Fed
$50
Currency held by the public
$100
Checkable deposits
$250
Savings deposits
$150
Money market mutual funds
$25
Small-time deposits
$10
Refer to the above table. What is the M1 money supply?
a
$150 million.
b
$250 million.
c
$350 million.
d
$400 million.
2) M2 includes the following:
I. checkable deposits.
II. currency.
III. small-time deposits.
a
I and II only.
b
II and III only.
c
II only.
d
I and III only.
e
All are correct.
3) If the average reserve ratio (RR) in the banking system is 20% and the Federal Reserve increases bank reserves by $100,000, what will be the total potential increase in the money supply?
a
$100,000.
b
$120,000.
c
$500,000.
d
$2 million.
4) The Federal Funds rate is the interest rate charged on a(n):
a
low interest loans from the Federal Reserve to a bank.
b
loan from the Federal Reserve to a bank.
c
long-term loan from one bank to another.
d
overnight loan from one bank to another.
5 When uncertainty causes a delay in investment activity, it leads to a:
a scarcity of information.
b
delay in action by the Federal Reserve.
c
coordination failure.
d
bandwagon effect.
6 Use the table below to answer the next question.
Taxable Household Income
Taxes Paid (in dollars)
$10,000
$800
$15,000
$1,200
$20,000
$1,600
$25,000
$2,000
Using the data in the table above, this country uses a _________ tax system.
a
flat.
b
progressive.
c
regressive.
d
None of the above answers is correct.
7 Suppose the tax rate on the first $20,000 of income earned is 5%; 10% on the next $20,000 earned; and 20% on any additional income earned. A person earning $100,000 of taxable income would have an average tax rate of:
a
10%.
b
11.67%.
c
15%.
d
20%.
8 If you purchased 10 shares of Goldman Sachs stock for $1,200 five years ago and decide to sell the stock today at a price of $1,500, how much will you owe in capital gains tax on your 10 shares? Assume the tax rate on capital gains is set at 15%.
a
$0.
b
$45.
c
$180.
d
$225.
9 Economists who think that the Federal Reserve is likely to make a lot of mistakes believe that the Federal Reserve is best advised to:
a
adjust to every aggregate supply shock.
b
adjust to every aggregate demand shock.
c
follow a consistent policy.
d
follow a discretionary policy.
10) What kind of rising costs will most likely cause U.S. government spending to increase dramatically in the future?
a Health care.
b
Defense.
c
Environmental protection.
d
Education.
11 Which of the following is NOT one of the four programs that make up nearly two-thirds of the federal spending in the United States?
a
Social Security.
b
Medicare.
c Medicaid.
d
Unemployment insurance.
Type of Money
Amount (millions)
Currency and reserves held by banks at the Fed
$50
Currency held by the public
$100
Checkable deposits
$250
Savings deposits
$150
Money market mutual funds
$25
Small-time deposits
$10
Explanation / Answer
1)The correct option is (d). That is 400.
That's currency reserved by bank and held by public and checkable deposit.
50+100+250=400
2)- The correct option is (e).
That includes all the given option.
3)- The correct option is (c).
That is 500,000
Money multiplier=1/required reserved=1/.20=5
Money supply= Reserved money*money multiplier
4)-the correct option is (d).
Charge on overnight loan.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.