devry ECON-312 week 6 quiz

Question # 00003857 Posted By: vikas Updated on: 11/21/2013 09:17 PM Due on: 11/30/2013
Subject Economics Topic General Economics Tutorials:
Question
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(TCO 7) A $70 price tag on a sweater in a department store window is an example of money functioning as a

Student Answer: unit of account.

standard of deferred payments.

store of value.

medium of exchange.

Instructor Explanation: Chapter 31

Points Received: 1 of 1

Comments:

Question 2. Question :

(TCO 7) Currency held in the vault of First National Bank is

Student Answer: counted as part of M1.

counted as part of M2, but not M1.

only counted as part of M1 if it was deposited into a checking account.

not counted as part of the money supply.

Instructor Explanation: Chapter 31

Points Received: 1 of 1

Comments:

Question 3. Question :

(TCO 7) Answer the question on the basis of the following list of assets:

1. Large-denominated ($100,000 and more) time deposits

2. Noncheckable savings deposits

3. Currency (coins and paper money) in circulation

4. Small-denominated (less than $100,000) time deposits

5. Stock certificates

6. Checkable deposits

7. Money market deposit accounts

8. Money market mutual fund balances held by individuals

9. Money market mutual fund balances held by businesses

10. Currency held in bank vaults

Refer to the above list. The M2 definition of money comprises

Student Answer: items 2, 3, 4, 6, 7, 8, and 10.

items 3, 4, 5, and 6.

items 2, 3, 4, 6, 7, and 8.

all of the items listed.

Instructor Explanation: Chapter 31

Points Received: 1 of 1

Comments:

Question 4. Question :

(TCO 7) Assume the Standard Internet Company negotiates a loan for $5,000 from the Metro National Bank and receives a checkable deposit for that amount in exchange for its promissory note (IOU). As a result of this transaction

Student Answer: the supply of money is increased by $5,000.

the supply of money declines by the amount of the loan.

a claim has been "demonetized."

the Metro Bank acquires reserves from other banks.

Instructor Explanation: Chapter 32

Points Received: 1 of 1

Comments:

Question 5. Question :

(TCO 7) A bank temporarily short of required reserves may be able to remedy this situation by

Student Answer: borrowing funds in the federal funds market.

granting new loans.

shifting some of its vault cash to its reserve account at the Federal Reserve.

buying bonds from the public.

Instructor Explanation: Chapter 32

Points Received: 1 of 1

Comments:

Question 6. Question :

(TCO 7) Money is destroyed when

Student Answer: loans are made.

checks written on one bank are deposited in another bank.

loans are repaid.

the net worth of the banking system declines.

Instructor Explanation: Chapter 32

Points Received: 1 of 1

Comments:

Question 7. Question :

(TCO 7) The asset demand for money

Student Answer: is unrelated to both the interest rate and the level of GDP.

varies inversely with the rate of interest.

varies inversely with the level of real GDP.

varies directly with the level of nominal GDP.

Instructor Explanation: Chapter 33

Points Received: 1 of 1

Comments:

Question 8. Question :

(TCO 7) If the quantity of money demanded exceeds the quantity supplied

Student Answer: the supply-of-money curve will shift to the left.

the demand-for-money curve will shift to the right.

the interest rate will rise.

the interest rate will fall.

Instructor Explanation: Chapter 33

Points Received: 1 of 1

Comments:

Question 9. Question :

(TCO 7) Which of the following is not a tool of monetary policy?

Student Answer: Open market operations

Changes in banking laws

Changes in the amount of reserves available at the term auction facility

Changes in the reserve ratio

Instructor Explanation: Chapter 33

Points Received: 1 of 1

Comments:

Question 10. Question :

(TCO 7) The purpose of an expansionary monetary policy is to shift the

Student Answer: aggregate-demand curve leftward.

aggregate-demand curve rightward.

aggregate-supply curve leftward.

investment-demand curve leftward.

Instructor Explanation: Chapter 33

Points Received: 1 of 1

Comments:

Question 11. Question :

(TCO 7) Explain what is meant by fractional reserve banking. Relate this to money creation and risk to the bank.


Comments:

Question 12. Question :

(TCO 7) Which tool of monetary policy is most important? Why is this more important than the other tools?


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  1. Tutorial # 00003648 Posted By: vikas Posted on: 11/21/2013 09:31 PM
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