ECON 2301 Week 9 Quiz

ECON 2301 Week 9 Quiz | Assignment Help |  Central Texas College

Review Test Submission: Quiz 9

 

Question 1

If $500 of new reserves generates $1000 of new money in the economy, then the money multiplier is                                                  

·        0.5 and the reserve ratio is 2 percent.

·        2 and the reserve ratio is 50 percent.

·        0.5 and the reserve ratio is 50 percent.

·        2 and the reserve ratio is 2 percent.

 

                       

Question 2

If the Federal Open Market Committee decides to increase the money supply, then the Federal Reserve                                   

                       

·        sells government bonds from its portfolio to the public.

·        creates dollars and uses them to purchase government bonds from the public.

·        creates dollars and uses them to purchase various types of stocks and bonds from the public.

·        sells various types of stocks and bonds from its portfolio to the public.

 

Question 3

A bank has $500,000 in deposits and $475,000 in loans. It has loaned out all it can. It has a reserve ratio of                               

                       

·        9.5 percent.

·        25 percent.

·        2.5 percent.

·        5 percent.

 

 

 

           

Question 4

A bank has a 20 percent reserve requirement, $8,000 in loans, and has loaned out all it can given the reserve requirement.                                   

 

·        It has $6,400 in deposits.

·        It has $10,000 in deposits.

·        It has $9,600 in deposits.

·        It has $1,600 in deposits.

                                   

Question 5

If the Federal Open Market Committee decides to decrease the money supply, it will                               

·        reduce interest rates.

·        purchase government bonds.

·        purchase corporate bonds.

·        sell government bonds.

                                   

Question 6

A decrease in the money supply creates an excess                               

                       

·        demand for money that is eliminated by rising prices.

·        demand for money that is eliminated by falling prices.

·        supply of money that is eliminated by rising prices.

·        supply of money that is eliminated by falling prices.

 

 

 

Question 7

In order to maintain stable prices, a central bank must                        

                       

·        keep unemployment low.

·        tightly control the money supply.

·        sell indexed bonds.

·        maintain low interest rates.

 

Question 8

An assistant manager at a restaurant gets a $100 a month raise. He figures that with his new monthly salary he cannot buy as many goods and services as he could buy last year.                                   

 

·        His real salary has fallen and his nominal salary has risen.

·        His real and nominal salary have fallen.

·        His real and nominal salary have risen.

·        His real salary has risen and his nominal salary has fallen.

 

                                   

Question 9

According to the classical dichotomy, when the money supply doubles which of the following doubles?                                   

 

·        the price level and nominal GDP

·        only the price level

·        only real GDP

·        the price level and real GDP

 

Question 10

According to the assumptions of the quantity theory of money, if the money supply increases by 5 percent, then                        

                       

·        nominal GDP would be unchanged; real GDP would rise by 5 percent.

·        nominal and real GDP would rise by 5 percent.

·        neither nominal GDP nor real GDP would change.

·        nominal GDP would rise by 5 percent; real GDP would be unchanged.