ECON 2301 Week 9 Quiz | Assignment Help | Central Texas College
- Central Texas College / ECON 2301
- 30 Apr 2021
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- Accounting & Economics Assignment Help / Microeconomics
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
Answers: a.
0.5 and the reserve ratio is 2 percent.
b.
2 and the reserve ratio is 50 percent.
c.
0.5 and the reserve ratio is 50 percent.
d.
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
Answers: a.
sells government bonds from its portfolio to the public.
b.
creates dollars and uses them to purchase government bonds from the public.
c.
creates dollars and uses them to purchase various types of stocks and bonds from the public.
d.
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
Answers: a.
9.5 percent.
b.
25 percent.
c.
2.5 percent.
d.
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.
Answers: a.
It has $6,400 in deposits.
b.
It has $10,000 in deposits.
c.
It has $9,600 in deposits.
d.
It has $1,600 in deposits.
• Question 5
If the Federal Open Market Committee decides to decrease the money supply, it will
Answers: a.
reduce interest rates.
b.
purchase government bonds.
c.
purchase corporate bonds.
d.
sell government bonds.
• Question 6
A decrease in the money supply creates an excess
Answers: a.
demand for money that is eliminated by rising prices.
b.
demand for money that is eliminated by falling prices.
c.
supply of money that is eliminated by rising prices.
d.
supply of money that is eliminated by falling prices.
• Question 7
In order to maintain stable prices, a central bank must
Answers: a.
keep unemployment low.
b.
tightly control the money supply.
c.
sell indexed bonds.
d.
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.
Answers: a.
His real salary has fallen and his nominal salary has risen.
b.
His real and nominal salary have fallen.
c.
His real and nominal salary have risen.
d.
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?
Answers: a.
the price level and nominal GDP
b.
only the price level
c.
only real GDP
d.
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
Answers: a.
nominal GDP would be unchanged; real GDP would rise by 5 percent.
b.
nominal and real GDP would rise by 5 percent.
c.
neither nominal GDP nor real GDP would change.
d.
nominal GDP would rise by 5 percent; real GDP would be unchanged.
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