1. which of the following is a necessary characteristic of money? a) real money
ID: 1188178 • Letter: 1
Question
1. which of the following is a necessary characteristic of money? a) real money will always be backed up by reserves of gold, silver or some other intrinsically valuable commodity. b) it serves as a generally accepted medium of exchange. c) real money will be made of something valuable. d) all of the above is true e) none of the above is true 2. the most important policy tool of the Fed is _______________. a) changing the discount rate b) changing the reserve requirements c) open market operations d) moral suasion 3. which is the most important job of money? a) medium of exchange b) store of value c) standard of value d) receipt for gold e) standard of deferred payment 4. the main job of the Fed is to ______________________. a) control the rate of growth of the money supply. b) manage the national debt. c) provide low- interest rate loans to all financial institutions d) none of the above 5. according to the concept of the "liquidity trap", ___________________ a) at very low interest rates people would put their money in the bank b) at very low interest rates, people would simply hold their money c) at very high interest rates people would simply hold their money d) people will loan out their money no matter what the interest rate happens to be e) none of the above describes the 'liquidity trap." 6. if the monetary authorities want to lower the size of the monetary multiplier, they should _________________. a) lower the legal reserve ratio b) raise the legal reserve ratio c) take actions to increase bank reserves d) do none of the above 7) which statement is true? a) credit cards are a form of money. b) M1 is closer to the size of M2 than M2 is to the size of M3 c) M2 is almost five times the size of M1. d) M3 is about $2 trillion 8. when the Federal Reserve buys U.S government securities on the open market, this tends to _______________ bank reserves and _____________ the money supply. a) raise; raise b) lower; raise c) raise; lower d) lower; raise 9. the difference between the four measures of the money supply reflect ________________________. a) variations in the liquidity of the components b) variations in what components are included c) whether components are domestic or international d) all of the above e) none of the above 10. an increase in the reserve ratio ___________________ a) increases the size of the income multiplier b) decreases the size of the income multiplier c) increases the size of the deposit expansion multiplier d) decreases the size of the deposit expansion multiplier e) does not affect the size of any of the multiplier measuresExplanation / Answer
1 b 2 c 3 a (but b is important too) 4 a) the Treasury controls the debt 5 e (liquidity trap means that rates are so low monetary policy becomes ineffective) 6 b 7 c (I think) 8 a (raise raise) 9 a) 10 d)
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