1. The Federal Reserve banks are owned by: a. the citizens of each Federal Reser

Question

1. The Federal Reserve banks are owned by:
a. the citizens of each Federal Reserve district.
b. the American people as a whole.
c. the Federal Government.
d. commercial banks.

2. Decisions regarding purchases and sales of securities by the Fedare made by:
a. FDIC.
b. Discount Committee.
c. Federal Open Market Committee.
d. Federal Funds Committee.

3. The equation of exchange states that:
a. government spending = taxes plus the federal budget deficit.
b. the reciprocal of the reserve requirement = the depositexpansion multiplier.
c. the money supply times the velocity of money = the price leveltimes the quantity of goods
and services produced.
d. the price level times the velocity of money = the money supplytimes the quantity of goods
and services produced.

4. Velocity can be defined as:
a. the turnover rate of money
b. the speed at which economic activity takes place.
c. the speed at which multiplier effect takes place.
d. the speed at which tax cuts are spent.
e. the speed at which money creation takes place.

5. If M increases and V decreases:
a. nominal GDP increases.
b. nominal GDP decreases.
c. nominal GDP stays the same.
d. there is an indeterminate effect on nominal GDP.

6. If the amount of money in circulation is $50 million and nominalGDP is $150 million, then the velocity
of money is:
a. 0.33.
b. 2.
c. 3.
d. impossible to determine from the information provided.

Explanation / Answer

2.c 3.d 4.a 5.d 6.c Hope this helps!

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