Chapters 14-16 Homework Q&A

The U.S. Treasury is the only agency authorized to put money into circulation in the U.S. economy.

If you place a part of your summer earnings in a savings account, you are using money primarily as a:

Other things equal, an excessive increase in the money supply will:

Suppose that the federal government suddenly declared that wheat was to be used as money. What is a possible outcome of that decision?

Assume that Jimmy Cash has $2,000 in his checking account at Folsom Bank and uses his checking account card to withdraw $200 of cash from the bank's ATM machine. By what dollar amount did the M1 money supply change as a result of this single, isolated transaction?

Which of the following is the basic economic policy function of the Federal Reserve Banks?

The money supply is backed:

Credit cards are defined as money because they facilitate transactions.

To say that coins are "token money" means that:

Coins held in commercial bank's:

If you are estimating your total expenses for school next semester, you are using money primarily as:

Assuming no other changes, if checkable deposits increase by $40 billion and currency in circulation decreases by $40 billion, the:

In the U.S. economy, the money supply is controlled by the:

During periods of rapid inflation, money may cease to work as a medium of exchange:

A checking account entry is money because it:

If the price index rises from 100 to 120, the purchasing power value of the dollar:

What explains what backs the money supply in the US?

Suppose the price level and value of the U.S. dollar in year one are 1 and $1.00, respectively. a. If the price level rises to 1.25 in year two, what is the new value of the dollar? b. If, instead, the price level falls to 0.50, what is the value of the dollar?

The reserve ratio refers to the ratio of a bank's:

The goldsmith's ability to create money was based on the fact that:

If a portion of the loans extended by commercial banks is taken as cash rather than as checkable deposits, the maximum money-creating potential of the commercial banking system will:

If the reserve ratio is 15 percent and commercial bankers decide to hold additional excess reserves equal to 5 percent of any newly acquired checkable deposits, then the relevant monetary multiplier for the banking system will be:

If the reserve ratio is 100 percent, the value of the monetary multiplier is:

The reserves of a commercial bank consist of:

Assume Company X deposits $100,000 in cash in commercial Bank A. If no excess reserves exist at the time this deposit is made and the reserve ratio is 20 percent, Bank A can increase the money supply by a maximum of:

The multiple by which the commercial banking system can expand the supply of money is equal to the reciprocal of:

If actual reserves in the banking system are $40,000, excess reserves are $10,000, and checkable deposits are $240,000, then the legal reserve requirement is:

Suppose the ABC bank has excess reserves of $4,000 and outstanding checkable deposits of $80,000. If the reserve requirement is 25 percent, what is the size of the bank's actual reserves?

A fractional reserve banking system:

The primary purpose of the legal reserve requirement is to:

When the Fed wants to lower the Federal funds rate, it:

If the Fed buys $1 million in government securities from Bank A, then the immediate effect of this transaction is an increase in:

A bond with no expiration has an original price of $10,000 and a fixed annual interest payment of $1000. If the price of this bond increases by $2500, the interest rate in effect will:

A newspaper headline reads: "Fed Cuts Federal Funds Rate for Fifth Time This Year." This headline indicates that the Federal Reserve is most likely trying to:

A consumer holds money to meet spending needs. This would be an example of the:

A few years ago, you bought a bond with no expiration and a fixed annual interest payment of $1000 at a price of $10,000. If the interest rate in the economy is now 12.5% a year and you want to sell the bond, the maximum price that you can get for it is:

Which of the following statements is correct? Commercial bank reserves are a liabili

There is an asset demand for money primarily because of which function of money?

The largest liability item in the Federal Reserve Banks' consolidated balance sheet (as illustrated in the book, for April 2013) is:

When the Federal Reserve raises the target Federal funds rate, it:

A decrease in the interest rate will cause a(n):

The interest rate that the Fed charges banks for loans to them through the traditional channel is called:

The lending ability of commercial banks increases when the