Chapter 9宏观经济学原理 弗兰克版 题库

Chapter 9

Student: ___________________________________________________________________________

1. In the United States saving is allocated to its most productive use by:

A. t he Federal Reserve.

B. t he federal, state, and local governments.

C. r egulations and laws designed to improve productivity.

D. a decentralized, market-oriented financial system.

2. Decentralized market-based financial systems improve the allocation of saving by:

A. e nsuring capital gains exceed dividend payments.

B. e liminating the need for commercial banks or other financial intermediaries.

C. m atching net capital inflows to net capital outflows.

D. p roviding information and risk-sharing services.

3. The financial system consists of financial _____, such as commercial banks, and financial

markets, such as the stock market.

A. c orporations

B. a llocations

C. i ntermediaries

D. b rokers

4. Firms that extend credit to borrowers using funds from raised from savers are called:

A. b ond dealers.

B. s tock brokers.

C. c entral banks.

D. f inancial intermediaries.

5. The specialized information-gathering activities that banks use to evaluate borrowers are an

example of the:

A. c ost-benefit principle.

B. p rinciple of comparative advantage.

C. s carcity principle.

D. p rinciple of increasing opportunity cost.

6. Privately-owned firms that accept deposits from individuals and businesses and use those

deposits to make loans are called:

A. m ortgage banks.

B. b rokerage firms.

C. c ommercial banks.

D. i nvestment banks.

7. Banks help savers find productive uses for their funds because banks are specialized in:

A. g athering information about and evaluating potential borrowers.

B. o btaining preferential tax treatment for savers.

C. s ecuring government guarantees for loans.

D. e valuating the riskiness of stocks.

8. Financial intermediaries, such as commercial banks, help borrowers, particularly small borrowers,

by:

A. p roviding information to evaluate financial investments.

B. o ffering tax-preferred borrowing opportunities.

C. e liminating the risk of borrowing.

D. p roviding credit that might otherwise not be available.

9. Savers may prefer to use financial intermediaries rather than lending directly to borrowers

because financial intermediaries:

A. r educe the cost of gathering information about borrowers.

B. h ave a monopoly on lending.

C. i ncrease the risk of lending.

D. o ffer higher rates of return than available elsewhere.

10. Two reasons savers keep deposits at banks are to:

A. s ecure mortgages and to purchase stocks.

B. e arn a return on their savings and to facilitate making payments.

C. l ower interest rates and to increase the money supply.

D. e qualize loan supply and demand and to earn interest.

11. Money is:

A. t he same as income.

B. a ll financial assets.

C. a ny asset used to make purchases.

D. t he sum of assets minus debts.

12. The direct trade of goods and services for other goods and services is called:

A. f inancial intermediation.

B. d iversification.

C. b arter.

D. u sing a medium of exchange.

13. Double coincidence of wants is avoided if money is used as a:

A. m edium of exchange.

B. m easure of value.

C. s tandard of deferred payment.

D. s tore of value

14. Finding both parties to a trade who have something the other party wishes to trade for is called a:

A. u nit of account.

B. s tore of value.

C. m edium of exchange.

D. d ouble coincidence of wants.

15. Money serves as a medium of exchange when:

A. i t is used to purchase goods and services.

B. t here is direct trade of goods and services.

C. i t is a basic measure of economic value.

D. i t is a means of holding wealth.

16. When a baker exchanges a pie for dollars, this is an example of dollars serving as:

A. b arter.

B. a medium of exchange.

C. a unit of account.

D. a store of value.

17. When your grandfather keeps a bundle of $100 dollar bills behind a brick in the basement, this is

an example of dollars serving as:

A. b ank reserves.

B. a medium of exchange.

C. a unit of account.

D. a store of value.

18. If you use $1,000 to purchase silver bullion, which you plan to keep in a safe, you are using

money as:

A. b ank reserves.

B. a medium of exchange.

C. a unit of account.

D. a store of value.

19. If you post your car on eBay with a Buy-It-Now price of $1,800, you are using money as:

A. b ank reserves.

B. a medium of exchange.

C. a unit of account.

20. If you put a $20 bill in the pocket of your winter coat at the beginning of spring so that you will be

surprised when you find it again next winter, you are using money as:

A. b ank reserves.

B. a medium of exchange.

C. a unit of account.

D. a store of value.

21. The main disadvantage of using money as a store of value is that:

A. o ther assets provide greater anonymity than cash.

B. b arter is a more efficient way to conduct transactions than using money.

C. u nlike other assets, money serves as a medium of exchange.

D. o ther assets pay relatively higher rates of interest than money.

22. The three functions of money are:

A. s pending for consumption, investment, and government purchases.

B. m easuring balance of payments, exchange rates, and interest rates.

C. i mplementing monetary policy, fiscal policy, and structural policy.

D. s erving as a medium of exchange, unit of account, and store of value.

23. Money serves as a basic yardstick for measuring economic value (a unit of account), allowing:

A. p eople to hold their wealth in a liquid form.

B. g overnments to restrict the issuance of private monies.

C. e asy comparison of the relative prices of goods and services.

D. g oods and services to be exchanged with a double coincidence of wants.

24. The M1 measure of money consists of the sum of:

A. c urrency, checking deposits, and travelers' checks.

B. c urrency and travelers' checks.

C. c urrency, checking deposits, and savings deposits.

D. c hecking deposits and travelers' checks.

25. The M2 measure of money consists of the sum of:

A. s avings deposits, small time deposits, and money market mutual funds.

B. c urrency, checking and savings deposits, and small time deposits.

C. c urrency, checking and savings deposits.

D. M1, savings deposits, small time deposits, and money market mutual funds.

26. The components of M2 that are not also in M1:

A. s um to an amount that is smaller than the sum of the components of M1.

B. p ay lower rates of interest than do the components of M1.

C. a re not usable for making payments.

D. a re usable for making payments, but at a greater cost or inconvenience than currency or

checks.

27. M1 differs from M2 in that:

A. M1 includes currency and balances held in checking accounts, which are not included in M2.

B. M2 includes savings deposits, small-denomination time deposits, and money market mutual

funds that are not included in M1.

C. M1 is a broader measure of the money supply than M2.

28. Savings deposits are ______ the M1 measure of money and ______ the M2 measure of money.

A. i ncluded in; excluded from

B. i ncluded in; included in

C. e xcluded from; excluded from

D. e xcluded from; included in

29. Money market mutual funds are ______ the M1 measure of money and ______ the M2 measure of

money.

A. i ncluded in; excluded from

B. i ncluded in; included in

C. e xcluded from; excluded from

D. e xcluded from; included in

30. Credit card balances are not considered to be money primarily because they:

A. a re rarely used to make purchases.

B. a re not part of people's wealth.

C. a re an asset used in making transactions.

D. d o not represent an obligation to pay someone else.

31. Based on the following information, the value of the M1 measure of the money supply is ______

and the value of the M2 measure of the money supply is ______.

A. $530 billion; $3,700 billion

B. $330 billion; $4,230 billion

C. $520 billion; $4,320 billion

D. $530 billion; $4,230 billion

32. The amount of money in the United States is determined by:

A. t he Federal Reserve.

B. t he combined behavior of commercial banks and the public, as well as actions of the Federal

Reserve.

C. t he public

D. t he combined behavior of commercial banks and the public.

33. Assets of the commercial banking system include:

A. r eserves and loans.

B. d eposits.

C. r eserves and deposits.

D. l oans and deposits.

34. Liabilities of the commercial banking system include:

A. r eserves and loans.

B. d eposits.

C. r eserves and deposits.

D. l oans and deposits.

35. Bank reserves are:

A. c urrency and customer checking deposits.

B. c urrency, customer checking and savings deposits.

C. a ny asset used to purchase goods and services.

D. c ash and similar assets held to meet depositor withdrawals or payments.

36. One hundred percent reserve banking refers to a situation in which banks' reserves equal 100

percent of their:

A. l oans.

B. d eposits.

C. p rofits.

D. i ncome.

37. Banks hold reserves:

A. t o earn interest.

B. t o increase profits.

C. o nly because the government requires them to hold reserves.

D. t o meet depositor withdrawals and payments.

38. In a fractional-reserve banking system the reserve/deposit ratio equals:

A. m ore than 100 percent.

B. c urrency held by the public divided by deposits.

C. 100 percent.

D. l ess than 100 percent.

39. Commercial banks create new money:

A. w hen they increase their desired reserve/deposit ratio.

B. b y issuing checks.

C. t hrough multiple rounds of lending.

D. w hen they buy government bonds from the Federal Reserve.

40. When a bank makes a loan by crediting the borrower's checking account balance with an amount

equal to the loan:

A. m oney is created.

B. t he bank gains new reserves.

C. t he bank immediately loses reserves.

D. t he Fed has made an open-market purchase.

41. When the actual reserve/deposit ratio exceeds the desired reserve/deposit ratio banks:

A. d o nothing because this is a profitable situation.

B. s top making loans.

C. s end the extra reserves to the central bank.

D. m ake more loans.

42.

There is $5,000,000 of currency in Econland, all held by banks as reserves. The public does not hold any currency. If the banks' desired reserve/deposit ratio is 0.25, then the money supply equals:

A. $5,000,000

B. $6,250,000

C. $10,000,000

D. $20,000,000

43. If the Central Bank of Macroland puts an additional 1,000 dollars of currency into the economy,

the public deposits all currency into the banking system, and banks have a desired

reserve/deposit ratio of 0.10, then the banks will eventually make new loans totaling ______ and the money supply will increase by _______.

A. $1,000; $1,000

B. $9,000; $9,000

C. $9,000; $10,000

D. $1,000; $9,000

44. When an individual deposits currency into a checking account:

A. b ank reserves increase, which allows banks to lend more and increases the money supply.

B. b ank reserves decrease, which reduces the amount banks can lend and reduces the growth of

the money supply.

C. b ank reserves are unchanged.

D. b ank liabilities increase, which reduces the amount banks can lend and reduces the growth of

the money supply.

45. The money supply will increase by a multiple of the increase in bank reserves created by the

central bank unless:

A. t here is fractional reserve banking.

B. t here is 100 percent reserve banking.

C. t he public holds no currency.

D. b anks' desired reserve/deposit ratio is 0.20.

46. After the Federal Reserve increases reserves in the banking system, banks create new deposits

through multiple rounds of lending and accepting deposits until the:

A. F ederal Reserve requires them to stop.

B. d eposit insurance limit is reached.

C. a ctual reserve/deposit ratio is greater than the desired reserve/deposit ratio.

D. a ctual reserve/deposit ratio is equal to the desired reserve/deposit ratio.

47. In Macroland there is $10,000,000 in currency. The public holds half of the currency and banks

hold the rest as reserves. If banks' desired reserve/deposit ratio is 10%, deposits in Macroland equal ______ and the money supply equals _______.

A. $50,000,000; $60,000,000

B. $55,000,000; $55,000,000

C. $50,000,000; $55,000,000

D. $100,000,000; $100,000,000

48. In Macroland there is $12,000,000 in currency. The public holds half of the currency and banks

hold the rest as reserves. If banks' desired reserve/deposit ratio is 12.5%, deposits in Macroland equal ______ and the money supply equals _______.

A. $48,000,000; $75,000,000

B. $54,000,000; $54,000,000

C. $48,000,000; $54,000,000

D. $96,000,000; $96,000,000

49. In Macroland there is $1,000,000 in currency that can either be held by the public as currency or

deposited into banks. Banks' desired reserve/deposit ratio is 10%. If the public of Macroland decides to hold more currency, increasing the proportion they hold from 50% to 75%, the money supply in Macroland will ______.

A. i ncrease.

B. d ecrease.

C. r emain the same.

D. e ither increase or decrease.

50. If the public switches from using cash for most transactions to using checks instead, then all else

equal, the money supply will:

A. i ncrease.

B. d ecrease.

C. n ot change.

D. e ither increase or decrease.

51. If the desired reserve/deposit ratio equals 0.10, then every dollar of currency in bank reserves

supports ______ of deposits and the money supply, while every dollar of currency held by the public contributes ______ to the money supply.

A. $1; $10

B. $0.10; $1

C. $1; $0.10

D. $10; $1

52. If banks' desired reserve ratio increases from 0.10 to 0.15, the public still desires to hold the

same amount of currency, and the Fed takes no actions, the money supply will:

A. i ncrease.

B. d ecrease.

C. n ot change.

D. e ither increase or decrease.

53. If bank reserves are 200, the public holds 400 in currency, and the desired reserve/deposit ratio is

0.25, the deposits are ______ and the money supply is _____.

A. 200; 600

B. 400; 800

C. 600; 1,000

D. 800; 1,200

54. If a bank's desired reserve/deposit ratio is 0.33 and it has deposit liabilities of $100 million and

reserves of $50 million, it:

A. h as too few reserves and will reduce its lending.

B. h as too many reserves and will increase its lending.

C. h as the correct amount of reserves and outstanding loans.

D. s hould increase the amount of its reserves.

55. If the desired reserve/deposit ratio is 0.25 and the banking system receives an additional $10

million in reserves, bank deposits will increase by:

A. $10 million.

B. $250 million.

C. $40 million.

D. $4 million.

56. The money supply in Econland is 1,000, and currency held by the public equals bank reserves.

The desired reserve/deposit ratio is 0.25. Bank reserves equal _____.

A. 200

B. 250

C. 500

D. 800

57. The central bank of the United States is:

A. B ank of America.

B. B ank of the United States.

C. t he U.S. Treasury.

D. t he Federal Reserve System.

58. The two main responsibilities of the Federal Reserve System are to ______ and to ______.

A. a pprehend counterfeiters; regulate the stock market

B. e nable banks to make affordable mortgages; control the exchange rate of the U.S. dollar

C. i nsure bank deposits; print currency

D. c onduct monetary policy; oversee financial markets

59. The most important, most convenient, and most flexible way in which the Federal Reserve affects

the supply of bank reserves is through:

A. c onducting open-market operations.

B. c hanging the Federal Reserve discount rate.

C. c hanging bank reserve requirement ratios.

60. The most important tool of monetary policy is:

A. r eserve requirement ratios.

B. t he discount rate.

C. o pen-market operations.

D. m arket interest rates.

61. In an open-market purchase the Federal Reserve ______ government bonds from the public and

the supply of bank reserves ______.

A. b uys; increases

B. b uys; decreases

C. s ells; decreases

D. s ells; increases

62. In an open-market sale the Federal Reserve ______ government bonds and the supply of bank

reserves ____.

A. b uys; increases

B. b uys; decreases

C. s ells; increases

D. s ells; decreases

63. When the Fed sells government securities, the banks':

A. r eserves will increase and lending will expand, causing an increase in the money supply.

B. r eserves will decrease and lending will contract, causing a decrease in the money supply.

C. r eserve requirements will increase and lending will contract, causing a decrease in the money

supply.

D. r eserves/deposit ratio will increase and lending will expand, causing an increase in the money

supply.

64. An open-market purchase of government securities by the Fed will:

A. i ncrease bank reserves, and the money supply will increase.

B. d ecrease bank reserves, and the money supply will increase.

C. i ncrease bank reserves, and the money supply will decrease.

D. d ecrease bank reserves, and the money supply will decrease.

65. In Macroland, currency held by the public is 2,000 econs, bank reserves are 300 econs, and the

desired reserve/deposit ratio is 10%. If the Central Bank prints an additional 200 econs and uses this new currency to buy government bonds from the public, the money supply in Macroland will increase from ______ econs to ______ econs, assuming that the public does not wish to change the amount of currency it holds.

A. 20,000; 22,000

B. 5,000; 2,000

C. 3,000; 5,000

D. 5,000; 7,000

66. When the central bank buys $1,000,000 worth of government bonds from the public, the money

supply:

A. i ncreases by more than $1,000,000.

B. i ncreases by $1,000,000.

C. i ncreases by less than $1,000,000.

D. d ecreases by $1,000,000.

67. When the central bank sells $1,000,000 worth of government bonds to the public, the money

supply:

A. d ecreases by more than $1,000,000.

B. d ecreases by $1,000,000.

C. d ecreases by less than $1,000,000.

D. i ncreases by $1,000,000.

68. The money supply in Macroland is currently 2,500, bank reserves are 200, currency held by

public is 500, and banks' desired reserve/deposit ratio is 0.10. Assuming the values of the currency held by the public and the desired reserve/deposit ratio do not change, if the Central Bank of Macroland wishes to increase the money supply to 3,000, then it should conduct an open-market ______ government bonds.

A. p urchase of 50

B. p urchase of 250

C. s ale of 500

D. s ale of 50