Quiz 4 In Tutorial Library

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TITLE: Quiz 4

UNIVERSITY / INSTITUTE: Saint Leo University

CLASS / COURSE: ECO201

QUESTION DESCRIPTION:

Quiz 4:

 

 
 
1. Question : Cash is an example of a liquid financial asset.
 
  Student Answer:
 True. 
 
  False. 
 
 
 
  Points Received: 5 of 5 
  Comments:
 
 
 
 
 2. Question : When you have $1000 in a savings account at a bank:
 
  Student Answer: the bank holds a financial asset of $1,000 and you hold a financial liability of $1,000. 
 
 the bank holds a financial liability of $1,000 and you hold a financial asset of $1,000. 
 
 both you and the bank now have a financial asset of $1,000. 
  both you and the bank now have a financial liability of $1,000 
 
 
  Points Received: 0 of 5 
  Comments:
 
 
 
 
 3. Question : If the Fed printed too much money, the relative price of money would:
 
  Student Answer:
 fall and the money price of goods would rise. 
 
  rise and the money price of goods would fall. 
 
 
 fall and the money price of goods would fall. 
 
  rise and the money price of goods would rise. 
 
 
 
  Points Received: 0 of 5 
  Comments:
 
 
 
 
 4. Question : A commercial bank's reserve ratio equals the ratio of its reserves to its:
 
  Student Answer: assets. 
 
  required reserves. 
 
 
 deposits. 
 
  excess reserves. 
 
 
 
  Points Received: 5 of 5 
  Comments:
 
 
 
 
 5. Question : Non-liquid assets are least able to perform which of the following functions? 
 
  Student Answer:
 Medium of exchange. 
 
  Financial asset. 
 
 
 Store of value. 
 
  Store of wealth. 
 
 
 
  Points Received: 0 of 5 
  Comments:
 
 
 
 
 6. Question : Checking account deposits are classified as M1 because:
 
  Student Answer: they earn interest income for the depositor. 
 
  they are ultimately obligations of the Treasury. 
 
 
 banks hold currency equal to their outstanding deposits. 
 
 
 they can be readily used in the making of purchases and the payment of debts. 
 
 
  Points Received: 0 of 5 
  Comments:
 
 
 
 
 7. Question : A bank has a reserve requirement of 10 percent. This means that if a customer deposits $10,000, the bank may lend:
 
  Student Answer:
 $1000. 
 
 
 $9000. 
 
  $10,000. 
 
  $11,000. 
 
 
 
  Points Received: 0 of 5 
  Comments:
 
 
 
 
 8. Question : The central bank in the U.S. does all the following except: 
 
  Student Answer: act as a financial adviser and bank to the government. 
 
 
 loan money to individuals. 
 
  loan money to banks. 
 
  issue coin and currency. 
 
 
 
  Points Received: 5 of 5 
  Comments:
 
 
 
 
 9. Question : If the reserve ratio is 0.08, the simple money multiplier is:
 
  Student Answer: 1. 
 
 
 8. 
 
  10.5. 
 
 
 12.5. 
 
 
 
  Points Received: 0 of 5 
  Comments:
 
 
 
 
 10. Question : The fraction of deposits a bank must hold in the form of reserves is called the:
 
  Student Answer: reserve ratio. 
 
  excess reserve ratio. 
 
 
 required reserve ratio. 
 
 
 currency to reserve ratio. 
 
 
 
  Points Received: 0 of 5 
  Comments:
 
 
 
 
 11. Question : When there are no vacancies, how many people serve on the Board of Governors of the Federal Reserve System?
 
  Student Answer:
 5. 
 
 
 7. 
 
  11. 
 
  12. 
 
 
 
  Points Received: 0 of 5 
  Comments:
 
 
 
 
 12. Question : In early 2008, Federal Reserve officials that included 5 Presidents of Fed regional banks and 7 Fed governors were gathered around a table to discuss whether to decrease interest rates. The group was the:
 
  Student Answer:
 Federal Open Market Committee. 
 
  Federal Depository Insurance Corporation. 
 
  Federal Advisory Council. 
 
 
 National Federal Reserve Bank. 
 
 
 
  Points Received: 0 of 5 
  Comments:
 
 
 
 
 13. Question : An increase in the discount rate is a signal that the Fed wants a tighter monetary policy.
 
  Student Answer:
 True. 
 
 
 False. 
 
 
 
  Points Received: 0 of 5 
  Comments:
 
 
 
 
 14. Question : As the reserve ratio goes up, less money will be created because:
 
  Student Answer: people will hold less cash. 
 
  people will hold more cash. 
 
  banks will extend more loans. 
 
 
 banks will extend fewer loans. 
 
 
 
  Points Received: 5 of 5 
  Comments:
 
 
 
 
 15. Question : Given the slide in stock prices in early 2008, many investors switched to bonds, thereby driving the price of bonds up. What effect does this have on interest rates?
 
  Student Answer: no effect. 
 
  interest rates rise. 
 
 
 interest rates fall. 
 
  interest rates are the price of bonds. 
 
 
 
  Points Received: 5 of 5 
  Comments:
 
 
 
 
 16. Question : Federal Reserve sales of government securities:
 
  Student Answer: increase bank reserves and increase the money supply. 
 
 
 decrease bank reserves and decrease the money supply. 
 
  decrease bank reserves and increase the money supply. 
 
  increase bank reserves and decrease the money supply. 
 
 
 
  Points Received: 5 of 5 
  Comments:
 
 
 
 
 17. Question : In early 2008, the Fed cut the federal funds rate given fears of recession. This cut in the interest rate can be classified as:
 
  Student Answer:
 expansionary fiscal policy. 
 
 
 expansionary monetary policy. 
 
  contractionary fiscal policy. 
 
  contractionary monetary policy. 
 
 
 
  Points Received: 0 of 5 
  Comments:
 
 
 
 
 18. Question : To increase the nation's money supply, the Fed can:
 
  Student Answer:
 increase the required reserve ratio. 
 
 
 decrease the discount rate. 
 
  increase the discount rate. 
 
  sell bonds. 
 
 
 
  Points Received: 0 of 5 
  Comments:
 
 
 
 
 19. Question : A bear market in bonds exists when bond prices are falling. In such an environment, interest rates:
 
  Student Answer:
 are falling. 
 
  are constant. 
 
 
 are rising. 
 
  may rise or fall depending on how fast bond prices fall. 
 
 
 
  Points Received: 0 of 5 
  Comments:
 
 
 
 
 20. Question : The difference between the money multiplier and the simple money multiplier is:
 
  Student Answer: They are one and the same. 
 
 
 The simple money multiplier assumes people hold no cash. 
 
 The simple money multiplier assumes people do hold cash, and it is equal to c. 
  The simple money multiplier is used to calculate the money multiplier. 
 
 
  Points Received: 0 of 5 
  Comments:
 
 

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SUBJECTS / CATEGORIES:
1. Business Economics
2. Economics
3. Macroeconomics

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