WorksheetsChapter 34
Total questions: 31
Worksheet time: 31mins
Name
Class
Date
1.
The purpose of easy money is to
a)
alleviate recessions
b)
raise interest rates and restrict the availability of bank credit.
c)
decrease aggregate demand and GDP.
d)
decrease investment spending.
2.
Modern banking systems use gold as the basis for the fractional reserve system.
a)
true
b)
false
3.
The balance sheet of a commercial bank shows the transactions in which the bank has engaged during a given period of time.
a)
true
b)
false
4.
A commercial bank's assets plus its net worth equal the bank liabilities.
a)
true
b)
false
5.
Cash held by a bank is sometimes called vault cash.
a)
true
b)
false
6.
When a bank accepts deposits of cash and puts them into a checking account, there has been a change in the composition of the money supply.
a)
true
b)
false
7.
A commercial bank may maintain its legal reserve as a deposit in its Federal Reserve Bank or as government bonds in its own vault.
a)
true
b)
false
8.
Which one is an economic function of money?
a)
A store of gold
b)
A unit of account
c)
A factor of production
d)
A medium of communications
9.
The claims of the owners of the bank against the bank's assets is the bank's
a)
net worth
b)
liabilities
c)
balance sheet
d)
fractional reserves
10.
What is the federal funds rate?
a)
The interest rate that U.S. banks and other depository institutions charge one another on overnight loans made out of their excess reserves.
b)
The interest rate that the Federal Reserve Banks charge on loans they make to commercial banks and thrift institutions.
c)
The annual rate at which interest is paid.
d)
The payment for the use of borrowed money.
11.
What is the discount rate?
a)
The interest rate that the Federal Reserve Banks charge on loans they make to commercial banks and thrift institutions.
b)
The interest rate that U.S. banks and other depository institutions charge one another on overnight loans made out of their excess reserves.
c)
The annual rate at which interest is paid.
d)
The payment for the use of borrowed money.
12.
The goal of monetary policy is to lower interest rates
a)
true
b)
false
13.
The fundamental goal of monetary policy is to
a)
to achieve and maintain price stability, full employment, and economic growth.
b)
is the price paid for the use fo money.
c)
use money as a medium of exchange.
d)
none of the choices.
e)
all of the choices
14.
There is a transaction demand for money because households and business firms use money as a store of value.
a)
true
b)
false
15.
An increase in the price level would increase the transactions demand for money.
a)
true
b)
false
16.
The Federal Reserve Banks sell government securities to the public. As a result, the checkable deposits
a)
and reserves of commercial banks both decrease
b)
and reserves of commercial banks both increase.
c)
and reserves of commercial banks both remain unchanged.
d)
none of the choices.
17.
Which of the following is an asset of the consolidated balance sheet of Federal Reserve Banks?
a)
Loans to commercial banks.
b)
Federal Reserve Notes in Circulation.
c)
Treasury deposits.
d)
reserves of commercial banks.
18.
The commercial banking system borrows from the Federal Reserve Banks. As a result, the checkable deposits
a)
of commercial banks are unchanged, but their reserves increase.
b)
and reserves of commercial banks both decrease.
c)
of commercial banks are unchanged, but their reserves decrease.
d)
and reserves of commercial banks are both unchanged.
19.
Reserves must be deposited by the Federal Reserve Banks by:
a)
all depository institutions, that is all commercial institutions and thrift institutions.
b)
some of the financial institutions they deal with.
c)
some commercial banks they have affliliations with.
d)
a few broker-dealers.
20.
The securities held as assets by the Federal Reserve Banks consist mainly of
a)
Treasury bills and bonds.
b)
Stocks and mutual funds
c)
currency
d)
token coins
21.
Federal Reserve Notes in circulation are
a)
a liability as viewed by the Federal Reserve Banks.
b)
an asset as viewed by the Federal Reserve Banks.
c)
both and asset and a liability of Federal Reserve Banks.
d)
none of the choices.
22.
Regulation of the money supply is accomplished through the Federal Reserve System by
a)
altering the reserves of commercial banks, largely through sales and purchases of government bonds.
b)
leaving the reserves of commercial banks alone.
c)
buying and selling of publicly traded stocks.
d)
buying and selling of corporate bonds.
23.
The interest rate at which the Federal Reserve Banks lend to commercial banks is called the
a)
Prime Rate
b)
Short-Term Rate
c)
Discount Rate
d)
Federal Funds Rate
24.
When a commercial bank borrows from a Federal Reserve Bank,
a)
the commercial banks lending is increased
b)
the commercial banks lending is decreased
c)
the commercial banks lending remains the same
d)
none of the choices
25.
Which of the following is a tool of monetary policy?
a)
open market operations
b)
closed market operations
c)
buying stocks and bonds
d)
buying mutual funds
26.
In the United States monetary policy is the responsibility of the:
a)
Board of Governors of the Federal Reserve System
b)
the President
c)
the Vice President
d)
the Secretary of the Treasury.
27.
The three main tools of monetary policy are:
a)
the discount rate, the reserve ratio, and open-market operations.
b)
the prime rate, federal funds rate, and the interest rate.
28.
Open-market operations refer to
a)
the purchase or sale of government securities by the Fed
b)
the purchase or sale of government securities by commercial banks
c)
the purchase or sale of government securities by thrift institutions
d)
the purchase or sale of government securities by stock brokerages
29.
If the Federal Reserve System buys government securities from commercial banks and the public
a)
it will be easier to obtain loans at commercial banks
b)
it will be harder to obtain loans at commercial banks
c)
the difficulty to get a loan at a commercial bank will remain the same
d)
none of the choices
30.
When the Federal Reserve buys government securities from the public, the money supply:
a)
expands and commercial bank reserves increase.
b)
expands and commercial bank reserves decrease.
c)
expands and commercial bank reserves remain the same.
d)
none of the choices.
31.
The best Disney character is
a)
Mickey Mouse
b)
Donald Duck
c)
Minnie Mouse
d)
Tigger
e)
matter of opinion
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