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Quiz 3

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Question 1 (1.0 points)
An increase in the parameter c, the proportion of money individuals wish to hold as currency, will tend to cause which of the following?
  1. an increase in the monetary base (H)
  2. a reduction in the money multiplier
  3. an increase in the money multiplier
  4. a reduction in H
Question 2 (1.0 points)
Which of the following is a liability for the central bank?
  1. savings accounts
  2. bonds
  3. checkable deposits
  4. loans
  5. currency
Question 3 (1.0 points)
In an economy in which individuals hold both currency and checkable deposits, the money multiplier is represented by which of the following expressions?
  1. 1/q
  2. 1/c
  3. 1/(1-c)
  4. 1/[c + q (1-c)]
  5. [c + q (1-c)]
Question 4 (1.0 points)
In an economy in which individuals do not hold currency, which of the following expressions represents the money multiplier?
  1. 1/(1 - c)
  2. 1/(1- q)
  3. 1/c
  4. 1 - c
  5. 1/q
Question 5 (1.0 points)
An increase in the reserve ratio, q, will cause:
  1. an increase in the monetary base (H).
  2. an increase in the money multiplier.
  3. a reduction in the money multiplier.
  4. a reduction in H.
  5. none of the above
Question 6 (1.0 points)
Banks are different from other financial intermediaries because:
  1. some of a bank's deposits are money.
  2. banks can conduct open market operations on their own.
  3. banks do not need to hold reserves against their deposits.
  4. banks receive funds and make loans.
  5. banks are open longer hours.
Question 7 (1.0 points)
The velocity of money will increase when which of the following occurs?
  1. an increase in income
  2. the introduction of credit cards into the economy
  3. a decrease in the interest rate
  4. all of the above
  5. none of the above
Question 8 (1.0 points)
An open market purchase of bonds will cause:
  1. a reduction in the money multiplier.
  2. a reduction in the monetary base (H).
  3. an increase in the money supply.
  4. an increase in the money multiplier.
Question 9 (1.0 points)
The U.S. government currently insures each bank account up to what level?
  1. $150,000
  2. $50,000
  3. $10,000
  4. $100,000
Question 10 (1.0 points)
If individuals do not hold currency, we know that:
  1. the money multiplier is 1/q.
  2. H = R.
  3. M = D.
  4. all of the above
Question 11 (1.0 points)
An increase in income will tend to cause:
  1. an increase in bond prices and an increase in the interest rate (i).
  2. a reduction in bond prices and a reduction in i.
  3. a reduction in bond prices and an increase in i.
  4. an increase in bond prices and a reduction in i.
  5. none of the above
Question 12 (1.0 points)
The money demand curve will shift to the left when which of the following events occurs?
  1. a reduction in the interest rate
  2. an increase in the interest rate
  3. an open market purchase of bonds by the central bank
  4. an open market sale of bonds by the central bank
  5. none of the above
Question 13 (1.0 points)
Which of the following are a component of M1?
  1. checkable deposits
  2. money market funds
  3. bonds
  4. all of the above
  5. none of the above
Question 14 (1.0 points)
Which of the following events will cause the interest rate to decrease?
  1. an open market sale of bonds
  2. an increase in income
  3. an open market purchase of bonds
  4. none of the above
Question 15 (1.0 points)
Which of the following is a characteristic of "bonds"?
  1. can be used for transactions
  2. pay zero interest
  3. are sold for a price that varies inversely with the interest rate
  4. all of the above
  5. none of the above
Question 16 (1.0 points)
Suppose the supply of money equals the demand for money. Given this information, we know that:
  1. the goods market is also in equilibrium.
  2. the price of bonds will tend increase.
  3. the supply of bonds also equals the demand for bonds.
  4. the price of bonds will tend to fall.
  5. production equals demand.
Question 17 (1.0 points)
A reduction in the parameter c, the proportion of money individuals wish to hold as currency, will tend to cause which of the following?
  1. an increase in the money multiplier
  2. an increase in the monetary base (H)
  3. a reduction in the money multiplier
  4. a reduction in H
Question 18 (1.0 points)
A reduction in income will cause:
  1. a reduction in the supply of central bank money.
  2. a reduction in the demand for currency.
  3. a reduction in the demand for reserves.
  4. all of the above
  5. both B and C
Question 19 (1.0 points)
The demand for money:
  1. decreases as income increases.
  2. increases as the interest rate increases.
  3. decreases as the interest rate increases.
  4. none of the above
Question 20 (1.0 points)
An increase in income will cause:
  1. a reduction in the supply of central bank money.
  2. a reduction in the demand for reserves.
  3. a reduction in the demand for currency.
  4. none of the above
Question 21 (1.0 points)
Which of the following is a component of money?
  1. bills held by the nonbank public
  2. checkable deposits
  3. coins held by the nonbank public
  4. all of the above
Question 22 (1.0 points)
An open market sale of bonds will cause:
  1. an increase in H.
  2. an increase in the money multiplier.
  3. a reduction in the money multiplier.
  4. a reduction in the monetary base (H).
  5. none of the above
Question 23 (1.0 points)
If the public wishes to hold no currency, and the ratio of reserves to deposits is .10, then the money multiplier is ________.
  1. 5
  2. 4
  3. 0.2
  4. 1.25
  5. 10
Question 24 (1.0 points)
Suppose the central bank wishes to conduct contractionary monetary policy. Given this, we would expect which of the following to occur?
  1. a leftward shift in the money demand curve and a rightward shift in the money supply curve
  2. a rightward shift in the money demand curve and a leftward shift in the money supply curve
  3. a rightward shift in the money demand curve and a rightward shift in the money supply curve
  4. a leftward shift in the money demand curve and a leftward shift in the money supply curve
  5. none of the above
Question 25 (1.0 points)
Suppose there is an open market sale of bonds. Such an event will cause:
  1. a reduction in bond prices and an increase in i.
  2. an increase in bond prices and an increase in the interest rate (i).
  3. an increase in bond prices and a reduction in i.
  4. a reduction in bond prices and a reduction in i.
  5. none of the above
Copyright 2008, by the Contributing Authors. Cite/attribute Resource . admin. (2009, January 27). Quiz 3. Retrieved January 07, 2011, from Free Online Course Materials — USU OpenCourseWare Web site: http://ocw.usu.edu/economics/macroeconomics-for-managers/quiz3.htm. This work is licensed under a Creative Commons License Creative Commons License