Economics - Money and Banking

The Demand for Money is made up of

• M1
• Savings Bonds and Securities
• Real GDP
• Transactions Demand + Assets Demand

A bank can only lend out it's

• required reserves
• total checkable deposits
• excess reserves
• actual reserves

When the money supply increases, nominal interest rate will

• increase
• decrease
• remain the same
• shift left

A commercial bank has two conflicting goals;

• interest payments and interest accrual.
• liabilities and assets.
• money creation and money destruction.
• profits and liquidity.

The demand for money consists of

• M1 plus M2.
• the tools of the Fed.
• asset demand plus transactions demand.
• checkable deposits and savings accounts.

If the Fed increases the money supply, the economy will see

• a decrease in price level and an increase in real GDP.
• an decrease in price level and a decrease in real GDP.
• an increase in price level and a decrease in real GDP.
• an increase in price level and an increase in real GDP.

Money with intrinsic value that can have some other use is called

• commodity money
• token money
• fiat money
• barter money

A bond will increase in value if

• interest rates decrease.
• interest rates increase.
• the company files bankruptcy.
• the government increases it's debt.

Carl wants a new computer. He goes to 6 different stores on the weekend comparing prices. Carl is using money as

• a store of value.
• a medium of exchange.
• commodity money.
• a unit of account.

___ is money that is deemed legal tender by the government, and it is not based on or convertible into a commodity.

• money supply
• liquidity
• fiat money
• commodity money