BUSINESS MULTI CHOICE Academic Essay – Write My School Essay

BUSINESS MULTI CHOICE

1.     Which combination of assets is considered to be money?

currency in circulation, checkable bank deposits, and credit cards
currency in circulation, checkable bank deposits, and travelers’ checks
currency in circulation and in bank vaults, checkable bank deposits, and travelers’ checks
currency in circulation and in bank vaults, checkable bank deposits, and credit cards

2.     When a person makes price comparisons among products, money is being used as a(n):

unit of account.
expander of economic activity.
medium of exchange.
checkable deposit.

3.     Because money holds its purchasing power over time, we say that it is:

a store of value.
a unit of account.
a medium of exchange.
the same thing as wealth.

4.     Commodity money is:

whatever the government has decreed is money.
a good used as a medium of exchange that has other uses.
money used for commodity futures trading.
whatever people accept as money.

5.     Commodity-backed money is:

a medium of exchange with no intrinsic value.
equivalent to commodity money.
a medium of exchange with alternative economic uses.
gold and silver coins used for exchange.

6.     Currency in the United States today is _______ money.

fiat
intrinsic
commodity
commodity-backed

7.     Which is true concerning the monetary aggregates?

M2 includes the gold stock but not M1.
M2 includes M1.
The gold stock backs M2 but not M1.
M1 includes M2 but not the gold stock.

8.     Table: Components of the Money System

Reference: Ref 33-2

__(Table: Components of the Money Supply) Refer to the information in the Table: Components of the Money System. The money supply measured by M1 is:

$325 billion.
$450 billion.
$1,425 billion.
$1875 billion.

9.     Table: Components of the Money System

Reference: Ref 33-2

__(Table: Components of the Money Supply) Refer to the information in the Table: Components of the Money System. The money supply measured by M2 is:

$450 billion.
$1425 billion.
$1925 billion.
$2075 billion.

10.     If a bank has deposits of $100,000, loans of $75,000, cash on hand of $10,000, and $15,000 on deposit at the Federal Reserve, then its reserve ratio is:

5 percent.
10 percent.
12.5 percent.
25 percent.

11.     Table: Balance Sheet

Reference: Ref 34-1

__(Table: Balance Sheet) Refer to the information in the Table: Balance Sheet. If the reserve ratio is 25 percent and the bank is exactly meeting its reserve requirement and the bank is exactly meeting its reserve requirement, loans are:

$5000.
$15,000.
$60,000.
$80,000.

12.     Among the liabilities of banks are:

deposits.
loans.
reserves.
loans and reserves.

13.     A bank run occurs when:

too many people are trying to borrow more at one time.
many bank depositors are trying to withdraw their funds from the bank.
interest rates start to increase.
interest rates are higher than inflation rates.

14.     Which is NOT one of the main features designed to protect depositors and the economy against bank runs?

deposit insurance
capital requirements
reserve requirements
interest rate ceilings

15.     Which acts to protect depositors from a bank run by insuring all deposits up to $250,000?

FDIC
capital requirements
reserve requirements
the discount window

16.     Banks create money when they:

make loans.
take deposits.
hold excess reserves.
pay withdrawals to depositors.

17.     Scenario: Money Creation
The reserve requirement is 20 percent, and Leroy deposits the $1000 check he received as a graduation gift in his checking account. The bank does NOT want to hold excess reserves and the public does NOT want to hold any currency.
Reference: Ref 34-2

__(Scenario: Money Creation) According to the Scenario: Money Creation, which is an accurate description of the bank’s balance sheet immediately after the deposit?

Reserves increase by $1000, and demand deposits increase by $1000.
Reserves increase by $1000, and demand deposits decrease by $1000.
Reserves decrease by $1000, and demand deposits decrease by $1000.
Reserves decrease by $200, and demand deposits increase by $1000.

18.     Suppose a bank receives a $5000 deposit and the reserve ratio is 25 percent. For this deposit, the bank is required to keep in reserve:

$1250.
$1000.
$200.
$500.

19.     Suppose your grandma sends you $100 for your birthday and you deposit that $100 in your checking account at the local bank. The reserve ratio is 10 percent. Based upon this deposit, the bank’s excess reserves have increased by _____, and if the bank lends these new excess reserves, the money supply could eventually grow by as much as _____.

$90; $1000
$100; $900
$90; $900
$100; $1000

20.     Scenario: Money Creation
The reserve requirement is 20 percent, and Leroy deposits the $1000 check he received as a graduation gift in his checking account. The bank does NOT want to hold excess reserves and the public does NOT want to hold any currency.
Reference: Ref 34-2

__(Scenario: Money Creation) According to the Scenario: Money Creation, what is the maximum expansion in the money supply possible?

$1000
$1800
$4000
$5000

21.     Scenario: Money Creation
The reserve requirement is 20 percent, and Leroy deposits the $1000 check he received as a graduation gift in his checking account. The bank does NOT want to hold excess reserves and the public does NOT want to hold any currency.
Reference: Ref 34-2

__(Scenario: Money Creation) According to the Scenario: Money Creation, how much money can the bank lend based on the $1000 deposit?

$1000
$200
$800
$0

22.
Scenario: Holding Cash
Suppose that the reserve requirement is 20 percent. Banks hold no excess reserves.
Reference: Ref 34-5

__(Scenario: Holding Cash) According to the Scenario: Holding Cash, the money multiplier is:

equal to 2.
greater than 5.
equal to 5.
less than 5.

23.     The Federal Reserve System was created in:

1913.
1971.
1857.
1873.

24.     Subprime loans are loans:

on houses that are below average value.
with interest rates that are below the prime rate.
with very short maturities.
made to buyers who don’t meet the usual criteria for getting a mortgage.

25.     Assembling a pool of loans and selling shares of the pool to investors is called:

investment banking.
derivation.
deleveraging.
securitization.

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