1. The money supply in the U.S. is backed: A. by the government\'s ability to co
ID: 1162104 • Letter: 1
Question
1. The money supply in the U.S. is backed: A. by the government's ability to control the supply of money and keep its value relatively stable. B. by government bonds. C. dollar-for-dollar by gold and silver. D. by gold reserves representing a fraction of the total value of dollars in circulation.
2. The fractional reserve banking system in the U.S. is based on the practices of a. the goldsmiths. b. the federal reserve system c. the latest world banking regulations. d. currency speculators. 3. Expansionary monetary policy operates initially by a. increasing aggregate supply b. decreasing the inflation rate c. increasing investment and thereby increasing aggregate demand d. all of the above 4. An easy money policy would include the Fed: a. increasing the discount rate b. increasing the reserve requirement c. buying bonds. d. all of the above. e. none of the above. 5. A tight money policy would include the Fed: a. decreasing the discount rate b. increasing the reserve requirement c. buying bonds d. all of the above e. none of the above 6. The speculative demand for money Is a function of: a. consumer incomes. b. the current interest rate. c. producer expectations about consumer demand d. expected emergencies by consumers. e. all of the above. 7. The transactions demand for money is a function of: a. consumer incomes b. the current interest rate. c. the current inflation rate. d. the current unemployment rate. e. none of the above. 8. The most frequently used tool by the Fed to control the money supply is: a. moral suasion b. the reserve requirement c. the buying and selling of bonds d. federal funds discount rate e. the use of margin requirements on stock purchases 9. The cyclical asymmetry problem faced by the Fed is a. equivalent to stimulating the economy with bond purchases b. not expected to be a problem in 21st century America. c. determined by real interest rates. d. equivalent to the concept of money illusion e. equivalent to pushing on a string 10. An advantage of using monetary policy over fiscal policy is that: A. monetary policy supposedly is independent from political influences. B. monetary policy is a demand side approach to economic stimulation. C. fiscal policy usually creates macroeconomic surpluses. D. all of the above are advantages.
11. With a reserve ratio of .25, a new deposit at one bank of $100 could lead to a total of how much new money in the banking system? a. $100 b. $200 c. $400 d. $800 12. When a commercial bank has excess reserves: A. it is in a position to make additional loans. B. its actual reserves are less than its required reserves. C. it is charging too high an interest rate on its loans. D. its reserves exceed its assets. 13. A bank temporarily short of required reserves may be able to remedy this situation by: A. borrowing funds in the Federal funds market. B. granting new loans. C. shifting some of its vault cash to its reserve account at the Federal Reserve. D. buying bonds from the public.
14. The asset demand for money is most closely related to money functioning as a: A. unit of account. B. medium of exchange. C. store of value. D. measure of value.
15. The four main tools of monetary policy are: A. tax rate changes, the discount rate, open-market operations, and the Federal funds rate. B. tax rate changes, changes in government expenditures, open-market operations, and the term auction facility. C. the discount rate, the reserve ratio, the term auction facility, and open-market operations. D. changes in government expenditures, the reserve ratio, the Federal funds rate, and the discount rate.
16. The purchase of government securities from the public by the Fed will cause: A. commercial bank reserves to decrease. B. the money supply to increase. C. demand deposits to decrease. D. the interest rate to increase.
17. Open-market operations change: A. the size of the monetary multiplier, but not commercial bank reserves. B. commercial bank reserves, but not the size of the monetary multiplier. C. neither commercial bank reserves nor the size of the monetary multiplier. D. both commercial bank reserves and the size of the monetary multiplier.
18. When the reserve requirement is increased: A. required reserves are changed into excess reserves. B. the excess reserves of member banks are increased. C. a single commercial bank can no longer lend dollar-for-dollar with its excess reserves. D. the excess reserves of member banks are reduced.
19. Which country is the United States' largest trading partner in terms of volume of trade? A. Mexico B. Japan C. China D. Canada
20. An example of a nontariff barrier would be: A. A minimum limit on the quantity of imports B. Excessive licensing requirements C. A tax on an imported product D. Voluntary export restraints
21. From an economic perspective, studies of the costs of trade barriers show that they: A. Are outweighed by the reduction in foreign competition provided by the barriers B. Are much less than benefits for domestic producers and workers C. Are about equal to the benefits from trade barriers D. Far exceed their benefits for society
22. Which is not a commonly heard argument for protectionism? A. A strong national defense requires that some military products be produced domestically B. Infant industries need short-run, but not long-run, protection from foreign competition C. Specialization along the lines of comparative advantage can lead to greater economic instability for a nation D. When other nations' economies grow they typically import fewer goods and services
23. A major goal of the World Trade Organization is to: A. Increase the protection of producers against foreign trade competition B. Encourage bilateral trade agreements between nations C. Liberalize international trade among nations D. Maximize tariff revenue for governments
24. The World Trade Organization is the successor to the: A. General Agreement on Tariffs and Trade (GATT) B. United Nations Commission on Trade Law (UNCTL) C. World Customs Organization D. United Nations Conference on Trade and Development (UNCTAD)
25. The so-called Euro Zone refers to: A. All members of the European Union B. The EU nations that have adopted a common currency C. The combined Eastern and Western Europe D. Nations in Europe where the U.S. has military bases
26. Common arguments often raised to present the case for protectionism included the following, except: A. Protecting infant industries until they mature B. Protection against foreign suppliers' dumping C. Raising domestic employment in specific industries D. Reducing the price of the product to consumers
27. The statement that "tariffs are needed to protect American firms from foreign producers which sell excess goods in the American market at less than cost" would be most closely associated with which tariff argument? A. Cheap foreign labor B. Protection against dumping C. Diversification for stability D. Increased domestic employment
28. The NAFTA established a free-trade area and eliminated trade barriers between: A. The U.S. and Canada only B. The U.S., Mexico, and China C. The U.S., Mexico, and Canada D. The U.S., China, and Canada
29. The Trade Adjustment Assistance Act is focused mainly on assisting: A. U.S. firms to establish export markets around the world B. Other nations to become familiar with, and adjust to, U.S. products C. Workers displaced by imports or plant relocations abroad D. Businesses who wish to globalize and compete in the world market 30. The main point of Frederic Bastiat's satire is that: A. French candle makers would benefit from government restrictions on trade B. French soybean farmers would benefit from a tariff on U.S. soybeans C. The arguments in favor of trade protectionism are sometimes ridiculous D. The arguments in favor of trade protectionism are sometimes well-intended. 31. People demand some money for precautionary reasons mostly because they are: a. reacting to government policies. b. risk averse c. not worried about future uncertainty. d. concerned about future interest rates. e. all of the above. 32. If an economy is experiencing recession, the FED should: a. raise the discount rate. b. buy government bonds. c. sell government bonds d. raise the reserve ratio e. raise margin requirements 33. If an economy is experiencing inflation, the FED should: a. raise the discount rate b. lower the reserve ratio c. buy government bonds d. all of the above e. none of the above 34. FED policy is intended to have an initial short run impact on: a. Aggregate Supply. b. Aggregate Demand. c. Government Purchases. d. Consumption. e. all of the above. 35. Which of the following would lead to an increase in the transactions demand for money? a. an increase in the rate of return on stocks and other financial assets. b. a reduction in the real interest rate. c. an increase in the government’s national debt. d. an increase in consumers’ incomes. e. all of the above. 36. Which of the following is a relevant question today about the Fed? a. Should it be audited? b. Who owns it? c. Is it still relevant? d. All of the above 37. If the reserve ratio is 5 percent, the simple money multiplier is: a. 5 b. 10 c. 15 d. 20 e. 25 38. Use the correct answer from question 37 above to determine how much the money supply could change if the Fed buys $1,000 in government bonds. a. It will increase by 20,000 b. It will increase by 25,000 c. It will decrease by 10,000 d. It will decrease by 20,000 e. None of the above. 39. The asset demand for money is a function of: a. income. b. government transfer payments. c. anticipated emergencies. d. FED monetary policy. e. the prevailing interest rate. 40. The new tariffs on aluminum and steel imposed by the Trump Administration are based on which argument for protection: a. the infant industry argument b. the military self sufficiency argument c. the cheap labor argument d. the dumping argument e. any of the above could be correct
1. The money supply in the U.S. is backed: A. by the government's ability to control the supply of money and keep its value relatively stable. B. by government bonds. C. dollar-for-dollar by gold and silver. D. by gold reserves representing a fraction of the total value of dollars in circulation.
2. The fractional reserve banking system in the U.S. is based on the practices of a. the goldsmiths. b. the federal reserve system c. the latest world banking regulations. d. currency speculators. 3. Expansionary monetary policy operates initially by a. increasing aggregate supply b. decreasing the inflation rate c. increasing investment and thereby increasing aggregate demand d. all of the above 4. An easy money policy would include the Fed: a. increasing the discount rate b. increasing the reserve requirement c. buying bonds. d. all of the above. e. none of the above. 5. A tight money policy would include the Fed: a. decreasing the discount rate b. increasing the reserve requirement c. buying bonds d. all of the above e. none of the above 6. The speculative demand for money Is a function of: a. consumer incomes. b. the current interest rate. c. producer expectations about consumer demand d. expected emergencies by consumers. e. all of the above. 7. The transactions demand for money is a function of: a. consumer incomes b. the current interest rate. c. the current inflation rate. d. the current unemployment rate. e. none of the above. 8. The most frequently used tool by the Fed to control the money supply is: a. moral suasion b. the reserve requirement c. the buying and selling of bonds d. federal funds discount rate e. the use of margin requirements on stock purchases 9. The cyclical asymmetry problem faced by the Fed is a. equivalent to stimulating the economy with bond purchases b. not expected to be a problem in 21st century America. c. determined by real interest rates. d. equivalent to the concept of money illusion e. equivalent to pushing on a string 10. An advantage of using monetary policy over fiscal policy is that: A. monetary policy supposedly is independent from political influences. B. monetary policy is a demand side approach to economic stimulation. C. fiscal policy usually creates macroeconomic surpluses. D. all of the above are advantages.
11. With a reserve ratio of .25, a new deposit at one bank of $100 could lead to a total of how much new money in the banking system? a. $100 b. $200 c. $400 d. $800 12. When a commercial bank has excess reserves: A. it is in a position to make additional loans. B. its actual reserves are less than its required reserves. C. it is charging too high an interest rate on its loans. D. its reserves exceed its assets. 13. A bank temporarily short of required reserves may be able to remedy this situation by: A. borrowing funds in the Federal funds market. B. granting new loans. C. shifting some of its vault cash to its reserve account at the Federal Reserve. D. buying bonds from the public.
14. The asset demand for money is most closely related to money functioning as a: A. unit of account. B. medium of exchange. C. store of value. D. measure of value.
15. The four main tools of monetary policy are: A. tax rate changes, the discount rate, open-market operations, and the Federal funds rate. B. tax rate changes, changes in government expenditures, open-market operations, and the term auction facility. C. the discount rate, the reserve ratio, the term auction facility, and open-market operations. D. changes in government expenditures, the reserve ratio, the Federal funds rate, and the discount rate.
16. The purchase of government securities from the public by the Fed will cause: A. commercial bank reserves to decrease. B. the money supply to increase. C. demand deposits to decrease. D. the interest rate to increase.
17. Open-market operations change: A. the size of the monetary multiplier, but not commercial bank reserves. B. commercial bank reserves, but not the size of the monetary multiplier. C. neither commercial bank reserves nor the size of the monetary multiplier. D. both commercial bank reserves and the size of the monetary multiplier.
18. When the reserve requirement is increased: A. required reserves are changed into excess reserves. B. the excess reserves of member banks are increased. C. a single commercial bank can no longer lend dollar-for-dollar with its excess reserves. D. the excess reserves of member banks are reduced.
19. Which country is the United States' largest trading partner in terms of volume of trade? A. Mexico B. Japan C. China D. Canada
20. An example of a nontariff barrier would be: A. A minimum limit on the quantity of imports B. Excessive licensing requirements C. A tax on an imported product D. Voluntary export restraints
21. From an economic perspective, studies of the costs of trade barriers show that they: A. Are outweighed by the reduction in foreign competition provided by the barriers B. Are much less than benefits for domestic producers and workers C. Are about equal to the benefits from trade barriers D. Far exceed their benefits for society
22. Which is not a commonly heard argument for protectionism? A. A strong national defense requires that some military products be produced domestically B. Infant industries need short-run, but not long-run, protection from foreign competition C. Specialization along the lines of comparative advantage can lead to greater economic instability for a nation D. When other nations' economies grow they typically import fewer goods and services
23. A major goal of the World Trade Organization is to: A. Increase the protection of producers against foreign trade competition B. Encourage bilateral trade agreements between nations C. Liberalize international trade among nations D. Maximize tariff revenue for governments
24. The World Trade Organization is the successor to the: A. General Agreement on Tariffs and Trade (GATT) B. United Nations Commission on Trade Law (UNCTL) C. World Customs Organization D. United Nations Conference on Trade and Development (UNCTAD)
25. The so-called Euro Zone refers to: A. All members of the European Union B. The EU nations that have adopted a common currency C. The combined Eastern and Western Europe D. Nations in Europe where the U.S. has military bases
26. Common arguments often raised to present the case for protectionism included the following, except: A. Protecting infant industries until they mature B. Protection against foreign suppliers' dumping C. Raising domestic employment in specific industries D. Reducing the price of the product to consumers
27. The statement that "tariffs are needed to protect American firms from foreign producers which sell excess goods in the American market at less than cost" would be most closely associated with which tariff argument? A. Cheap foreign labor B. Protection against dumping C. Diversification for stability D. Increased domestic employment
28. The NAFTA established a free-trade area and eliminated trade barriers between: A. The U.S. and Canada only B. The U.S., Mexico, and China C. The U.S., Mexico, and Canada D. The U.S., China, and Canada
29. The Trade Adjustment Assistance Act is focused mainly on assisting: A. U.S. firms to establish export markets around the world B. Other nations to become familiar with, and adjust to, U.S. products C. Workers displaced by imports or plant relocations abroad D. Businesses who wish to globalize and compete in the world market 30. The main point of Frederic Bastiat's satire is that: A. French candle makers would benefit from government restrictions on trade B. French soybean farmers would benefit from a tariff on U.S. soybeans C. The arguments in favor of trade protectionism are sometimes ridiculous D. The arguments in favor of trade protectionism are sometimes well-intended. 31. People demand some money for precautionary reasons mostly because they are: a. reacting to government policies. b. risk averse c. not worried about future uncertainty. d. concerned about future interest rates. e. all of the above. 32. If an economy is experiencing recession, the FED should: a. raise the discount rate. b. buy government bonds. c. sell government bonds d. raise the reserve ratio e. raise margin requirements 33. If an economy is experiencing inflation, the FED should: a. raise the discount rate b. lower the reserve ratio c. buy government bonds d. all of the above e. none of the above 34. FED policy is intended to have an initial short run impact on: a. Aggregate Supply. b. Aggregate Demand. c. Government Purchases. d. Consumption. e. all of the above. 35. Which of the following would lead to an increase in the transactions demand for money? a. an increase in the rate of return on stocks and other financial assets. b. a reduction in the real interest rate. c. an increase in the government’s national debt. d. an increase in consumers’ incomes. e. all of the above. 36. Which of the following is a relevant question today about the Fed? a. Should it be audited? b. Who owns it? c. Is it still relevant? d. All of the above 37. If the reserve ratio is 5 percent, the simple money multiplier is: a. 5 b. 10 c. 15 d. 20 e. 25 38. Use the correct answer from question 37 above to determine how much the money supply could change if the Fed buys $1,000 in government bonds. a. It will increase by 20,000 b. It will increase by 25,000 c. It will decrease by 10,000 d. It will decrease by 20,000 e. None of the above. 39. The asset demand for money is a function of: a. income. b. government transfer payments. c. anticipated emergencies. d. FED monetary policy. e. the prevailing interest rate. 40. The new tariffs on aluminum and steel imposed by the Trump Administration are based on which argument for protection: a. the infant industry argument b. the military self sufficiency argument c. the cheap labor argument d. the dumping argument e. any of the above could be correct
1. The money supply in the U.S. is backed: A. by the government's ability to control the supply of money and keep its value relatively stable. B. by government bonds. C. dollar-for-dollar by gold and silver. D. by gold reserves representing a fraction of the total value of dollars in circulation.
2. The fractional reserve banking system in the U.S. is based on the practices of a. the goldsmiths. b. the federal reserve system c. the latest world banking regulations. d. currency speculators. 3. Expansionary monetary policy operates initially by a. increasing aggregate supply b. decreasing the inflation rate c. increasing investment and thereby increasing aggregate demand d. all of the above 4. An easy money policy would include the Fed: a. increasing the discount rate b. increasing the reserve requirement c. buying bonds. d. all of the above. e. none of the above. 5. A tight money policy would include the Fed: a. decreasing the discount rate b. increasing the reserve requirement c. buying bonds d. all of the above e. none of the above 6. The speculative demand for money Is a function of: a. consumer incomes. b. the current interest rate. c. producer expectations about consumer demand d. expected emergencies by consumers. e. all of the above. 7. The transactions demand for money is a function of: a. consumer incomes b. the current interest rate. c. the current inflation rate. d. the current unemployment rate. e. none of the above. 8. The most frequently used tool by the Fed to control the money supply is: a. moral suasion b. the reserve requirement c. the buying and selling of bonds d. federal funds discount rate e. the use of margin requirements on stock purchases 9. The cyclical asymmetry problem faced by the Fed is a. equivalent to stimulating the economy with bond purchases b. not expected to be a problem in 21st century America. c. determined by real interest rates. d. equivalent to the concept of money illusion e. equivalent to pushing on a string 10. An advantage of using monetary policy over fiscal policy is that: A. monetary policy supposedly is independent from political influences. B. monetary policy is a demand side approach to economic stimulation. C. fiscal policy usually creates macroeconomic surpluses. D. all of the above are advantages.
11. With a reserve ratio of .25, a new deposit at one bank of $100 could lead to a total of how much new money in the banking system? a. $100 b. $200 c. $400 d. $800 12. When a commercial bank has excess reserves: A. it is in a position to make additional loans. B. its actual reserves are less than its required reserves. C. it is charging too high an interest rate on its loans. D. its reserves exceed its assets. 13. A bank temporarily short of required reserves may be able to remedy this situation by: A. borrowing funds in the Federal funds market. B. granting new loans. C. shifting some of its vault cash to its reserve account at the Federal Reserve. D. buying bonds from the public.
14. The asset demand for money is most closely related to money functioning as a: A. unit of account. B. medium of exchange. C. store of value. D. measure of value.
15. The four main tools of monetary policy are: A. tax rate changes, the discount rate, open-market operations, and the Federal funds rate. B. tax rate changes, changes in government expenditures, open-market operations, and the term auction facility. C. the discount rate, the reserve ratio, the term auction facility, and open-market operations. D. changes in government expenditures, the reserve ratio, the Federal funds rate, and the discount rate.
16. The purchase of government securities from the public by the Fed will cause: A. commercial bank reserves to decrease. B. the money supply to increase. C. demand deposits to decrease. D. the interest rate to increase.
17. Open-market operations change: A. the size of the monetary multiplier, but not commercial bank reserves. B. commercial bank reserves, but not the size of the monetary multiplier. C. neither commercial bank reserves nor the size of the monetary multiplier. D. both commercial bank reserves and the size of the monetary multiplier.
18. When the reserve requirement is increased: A. required reserves are changed into excess reserves. B. the excess reserves of member banks are increased. C. a single commercial bank can no longer lend dollar-for-dollar with its excess reserves. D. the excess reserves of member banks are reduced.
19. Which country is the United States' largest trading partner in terms of volume of trade? A. Mexico B. Japan C. China D. Canada
20. An example of a nontariff barrier would be: A. A minimum limit on the quantity of imports B. Excessive licensing requirements C. A tax on an imported product D. Voluntary export restraints
21. From an economic perspective, studies of the costs of trade barriers show that they: A. Are outweighed by the reduction in foreign competition provided by the barriers B. Are much less than benefits for domestic producers and workers C. Are about equal to the benefits from trade barriers D. Far exceed their benefits for society
22. Which is not a commonly heard argument for protectionism? A. A strong national defense requires that some military products be produced domestically B. Infant industries need short-run, but not long-run, protection from foreign competition C. Specialization along the lines of comparative advantage can lead to greater economic instability for a nation D. When other nations' economies grow they typically import fewer goods and services
23. A major goal of the World Trade Organization is to: A. Increase the protection of producers against foreign trade competition B. Encourage bilateral trade agreements between nations C. Liberalize international trade among nations D. Maximize tariff revenue for governments
24. The World Trade Organization is the successor to the: A. General Agreement on Tariffs and Trade (GATT) B. United Nations Commission on Trade Law (UNCTL) C. World Customs Organization D. United Nations Conference on Trade and Development (UNCTAD)
25. The so-called Euro Zone refers to: A. All members of the European Union B. The EU nations that have adopted a common currency C. The combined Eastern and Western Europe D. Nations in Europe where the U.S. has military bases
26. Common arguments often raised to present the case for protectionism included the following, except: A. Protecting infant industries until they mature B. Protection against foreign suppliers' dumping C. Raising domestic employment in specific industries D. Reducing the price of the product to consumers
27. The statement that "tariffs are needed to protect American firms from foreign producers which sell excess goods in the American market at less than cost" would be most closely associated with which tariff argument? A. Cheap foreign labor B. Protection against dumping C. Diversification for stability D. Increased domestic employment
28. The NAFTA established a free-trade area and eliminated trade barriers between: A. The U.S. and Canada only B. The U.S., Mexico, and China C. The U.S., Mexico, and Canada D. The U.S., China, and Canada
29. The Trade Adjustment Assistance Act is focused mainly on assisting: A. U.S. firms to establish export markets around the world B. Other nations to become familiar with, and adjust to, U.S. products C. Workers displaced by imports or plant relocations abroad D. Businesses who wish to globalize and compete in the world market 30. The main point of Frederic Bastiat's satire is that: A. French candle makers would benefit from government restrictions on trade B. French soybean farmers would benefit from a tariff on U.S. soybeans C. The arguments in favor of trade protectionism are sometimes ridiculous D. The arguments in favor of trade protectionism are sometimes well-intended. 31. People demand some money for precautionary reasons mostly because they are: a. reacting to government policies. b. risk averse c. not worried about future uncertainty. d. concerned about future interest rates. e. all of the above. 32. If an economy is experiencing recession, the FED should: a. raise the discount rate. b. buy government bonds. c. sell government bonds d. raise the reserve ratio e. raise margin requirements 33. If an economy is experiencing inflation, the FED should: a. raise the discount rate b. lower the reserve ratio c. buy government bonds d. all of the above e. none of the above 34. FED policy is intended to have an initial short run impact on: a. Aggregate Supply. b. Aggregate Demand. c. Government Purchases. d. Consumption. e. all of the above. 35. Which of the following would lead to an increase in the transactions demand for money? a. an increase in the rate of return on stocks and other financial assets. b. a reduction in the real interest rate. c. an increase in the government’s national debt. d. an increase in consumers’ incomes. e. all of the above. 36. Which of the following is a relevant question today about the Fed? a. Should it be audited? b. Who owns it? c. Is it still relevant? d. All of the above 37. If the reserve ratio is 5 percent, the simple money multiplier is: a. 5 b. 10 c. 15 d. 20 e. 25 38. Use the correct answer from question 37 above to determine how much the money supply could change if the Fed buys $1,000 in government bonds. a. It will increase by 20,000 b. It will increase by 25,000 c. It will decrease by 10,000 d. It will decrease by 20,000 e. None of the above. 39. The asset demand for money is a function of: a. income. b. government transfer payments. c. anticipated emergencies. d. FED monetary policy. e. the prevailing interest rate. 40. The new tariffs on aluminum and steel imposed by the Trump Administration are based on which argument for protection: a. the infant industry argument b. the military self sufficiency argument c. the cheap labor argument d. the dumping argument e. any of the above could be correct
Explanation / Answer
1. A. by the government's ability to control the supply of money and keep its value relatively stable.
US money supply is not backed by any metal like gold and silver but by faith in Fed's ability to keep value of money stable.
2. b. the federal reserve system
The central bank (the US Federal bank) decides the proportion of the deposits that should be kept as reserve by the bank and it is known as fractional reserve banking.
3. c. increasing investment and thereby increasing aggregate demand
Expansionary monetary policy refers to an increase in money supply which results in a decline in interest rates. A decline in interest rates increase investment and hence increase aggregate demand.
4. c. buying bonds.
When Fed buys the bonds it gives cash to the security dealers who then put the cash in their bank account and hence increase the money supply (also known as easy money policy)
PS: According to Chegg policy, in the event of descriptive MCQs only first 4 are attempted
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