Exam 4 SP 23

In order for barter trades to occur, there must be a

•   bargaining intermediary.

•   sufficient supply of cash.

•   double coincidence of wants.

•   singularity of interests.

If money were not used as a medium of exchange,

•   the gains from trade would be severely limited.

•   our standard of living would probably improve.

•   the transaction costs of exchange would be lower.

•   economic efficiency would increase.

What is meant by the expression, "There is too much money chasing too few goods"?

• People would be better off if the monetary authorities increased the supply of money more rapidly.

• The value of money will tend to decline when the supply of gold increases.

• An expansion in the supply of money relative to the availability of goods and services is causing an increase in the general level of prices.

• People spend too much time chasing after money.

Are funds available on a credit card included in a definition of the money supply?

•   Yes, because these funds are included in M2.

•   No, because these funds are hard to measure total credit card spending.

•   Yes, because these funds can be used to pay for goods and services.

•   No, because these funds are not a store of value.

In the United States, the money supply (M1) consists of

• coins, paper currency, demand deposits, other checkable deposits, and traveler's checks.

• government bonds, currency, demand deposits, other checkable deposits, and traveler's checks.

• paper currency, coins, demand deposits, and savings deposits.

•   paper currency and coins.

Which of the following guarantees the deposits in almost all banks up to a $250,000 limit per account?

•   the Federal Reserve

•   the FDIC

•   the U.S. Treasury

•   Bank of America Corporation

The fraction that banks must, by law, hold as reserves against the checking deposits of their customers is called the

•   excess reserve requirement.

•   vault cash quota.

•   required reserve ratio.

•   federal deposit insurance premium.

If the public decides to hold less currency and more deposits in banks, bank reserves

•   decrease but the money supply does not change.

•   increase and the money supply eventually increases.

•   increase but the money supply does not change.

•   decrease and the money supply eventually decreases.

Excess reserves are

• the portion of deposits that banks are required by the Fed to hold as reserves against their deposits.

•   actual reserves held by banks that exceed the legal requirement.

•   savings deposits that are included in the M2 money supply but not the M1.

• checking deposits that are included in the M1 money supply but not the M2.

Suppose the Fed purchases $40,000 of U.S. Treasury bonds from Benjamin, who deposits the money with First National Bank. If the required reserve ratio is 20 percent, this transaction will increase the excess reserves of First National Bank by

• $40,000.

• $8,000.

•  

  $200,000.

• $32,000.