978-1259723223 Test Bank TBChap034 Part 4

increase in checkable deposits.

158. Which of the following would be considered to be the most liquid?

159. Which of the following items are included in money supply M2 but not M1?

160. As of February 2016, M1 accounted for roughly what percentage of M2?

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C. 50 percent

D. 75 percent

161. Checkable deposits are included in

162.

Item

Billions of Dollars

Checkable Deposits

$597

Small TIme Deposits

818

Currency

639

Money-Market Mutual Funds Held By Businesses

1,045

Savings Deposits, Including Money-Market Deposit Accounts

2,866

Money-Market Mutual Funds Held By Individuals

979

Refer to the accompanying table. The size of the M1 money supply is

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D. $1,618 billion.

163.

Item

Billions of Dollars

Checkable Deposits

$597

Small TIme Deposits

818

Currency

639

Money-Market Mutual Funds Held By Businesses

1,045

Savings Deposits, Including Money-Market Deposit Accounts

2,866

Money-Market Mutual Funds Held By Individuals

979

Refer to the accompanying table. The size of the M2 money supply is

164.

Item

Billions of Dollars

Checkable Deposits

$597

Small TIme Deposits

818

Currency

639

Money-Market Mutual Funds Held By Businesses

1,045

Savings Deposits, Including Money-Market Deposit Accounts

2,866

Money-Market Mutual Funds Held By Individuals

979

Refer to the accompanying table. The value of the money included in M2 but not counted in M1

is

165. Items

1. Money market mutual funds held by individuals

2. Savings deposits, including money market deposit accounts

3. Money market mutual funds held by businesses

4. Currency held by the public

5. Small time deposits

6. Checkable deposits

Refer to the accompanying list. The M1 money supply is composed of items

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A c c e s s i b i l i t y : Keyboard Navigation

Blooms: Remember

Difficulty: 01 Easy

Learning Objective: 34-02 List and describe the components of the U.S. money supply.

Test Bank: II

Topic: The Components of the Money Supply

166. Items

1. Money market mutual funds held by individuals

2. Savings deposits, including money market deposit accounts

3. Money market mutual funds held by businesses

4. Currency held by the public

5. Small time deposits

6. Checkable deposits

Refer to the accompanying list. The M2 money supply is composed of items

167. Items

1. Money market mutual funds held by individuals

2. Savings deposits, including money market deposit accounts

3. Money market mutual funds held by businesses

4. Currency held by the public

5. Small time deposits

6. Checkable deposits

Refer to the accompanying list. Which items are included in the M2 money supply but not the

M1 money supply?

168.

Item

Billions of Dollars

Checkable Deposits

$2,000

Small TIme Deposits

350

Currency Held By The Public

80

Savings Deposits, Including Money-Market Deposit Accounts

1,300

Money-Market Mutual Funds Held By Individuals

600

Money-Market Mutual Funds Held By Businesses

700

The accompanying table contains hypothetical data for an economy. The size of the M1 money

supply is

169.

Item

Billions of Dollars

Checkable Deposits

$2,000

Small TIme Deposits

350

Currency Held By The Public

80

Savings Deposits, Including Money-Market Deposit Accounts

1,300

Money-Market Mutual Funds Held By Individuals

600

Money-Market Mutual Funds Held By Businesses

700

The accompanying table contains hypothetical data for an economy. The size of the M2 money

supply is

170. The so-called near monies have the following characteristics, except

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A c c e s s i b i l i t y : Keyboard Navigation

Blooms: Remember

Difficulty: 01 Easy

Learning Objective: 34–02 List and describe the components of the U.S. money supply.

Test Bank: II

Topic: The Components of the Money Supply

171. People can generally get the following items at their commercial banks, except

172. Michelle transfers $4,000 from her savings account to her checking account. What effect is

this change likely to have on M1 and M2?

173. One reason that near monies are important is because

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and investment in the economy.

D. credit cards synchronize one’s expenditures and income, thereby reducing the cash and

checkable deposits one must hold.

174. The use of a credit card is most similar to

175. The use of a debit card is most similar to

176. One major advantage of credit cards used for transactions is that they

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A. offer discounts on most transactions.

B. charge a lower interest rate than other means of payment.

C. give consumers the lowest prices on products purchased.

D. allow consumers to coordinate timing and payment for purchases.

178. Which of the following “backs” the value of money in the United States?

179. United States currency has value primarily because it

180. The Federal backing for money in the United States comes from

181. What “backs” the money supply of the United States?

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182. Money in the U.S. is essentially debt of

183. The basic requirement for an item to function as money is that it be

184. Checkable deposits are money because they are

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A. legal tender.

B. fiat money.

C. acceptable as payment.

D. token money.

185. When paper money is designated as legal tender, it means that

186. When there is inflation in the economy, it implies that the

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Topic: What Backs the Money Supply?

187. If the price index rises from 100 to 130, then the purchasing power of the dollar will fall

by about

188. If the purchasing power of the dollar is falling, then it follows that

189. The purchasing power of the dollar would fall by 20 percent if the price index rises by

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Blooms: Understand

Difficulty: 02 Medium

Learning Objective: 34-03 Describe what backs the money supply, making us willing to

accept it as payment.

Test Bank: II

Topic: What Backs the Money Supply?

190. An inflation rate of 8 percent would erode the purchasing power of the dollar by

191. To keep high inflation from eroding the value of money, monetary authorities in the United

States

192. The Federal Reserve Banks are owned by the

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C. United States Treasury.

D. member banks.

193. The Federal Reserve System consists of which of the following?

194. How many members can serve on the Board of Governors of the Federal Reserve System?

195. The Federal Reserve System was established by the Federal Reserve Act of

196. The Federal Reserve System of the United States is the country’s

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to banks and thrifts.

Test Bank: II

Topic: The Federal Reserve and the Banking System

198. Members of the Federal Reserve Board of Governors are

199. Which group aids the Board of Governors of the Federal Reserve System in conducting

monetary policy?

200. The Federal Open Market Committee (FOMC).

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AACSB: Knowledge Application

A c c e s s i b i l i t y : Keyboard Navigation

Blooms: Understand

Difficulty: 02 Medium

Learning Objective: 34-04 Discuss the makeup of the Federal Reserve and its relationship

to banks and thrifts.

Test Bank: II

Topic: The Federal Reserve and the Banking System

201. The Federal Open Market Committee (FOMC) of the Federal Reserve System is primarily

for

202. The 12 Federal Reserve Banks can best be characterized as

203. The most important among the Federal Reserve district banks in conducting monetary

policy is the

204. The Federal Reserve System is divided into

205. Holding the money deposits of businesses and households and making loans to the public

are the basic functions of