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Money, Banking and Monetary Policy Flashcards | StudBud
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Money, Banking and Monetary Policy
Money, Banking and Monetary Policy
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1
The Federal Funds Rate is the interest rate for
Commercial short term Loans.
Bank to bank short termloans.
FOMC to FED short term loans
FED to bank short term loans.
2
When Kanye saves to buy his wife 150 Christmas presents, this illustrates which function of $?
Unit of Account
Store of Value
Medium of Exchange
Commodity Backed Money
3
The type of spending most sensitive to interest rates is
Consumer Spending
Government Spending
Export Spending
Investment Spending
4
If a customer deposits $10,000 when the reserve ratio is .20. That banking system may
Increase the money supply by $40,000
Increase the money supply by $45,000
Increase the money supply by $8,000
Increase the money supply by $9,000
5
If the money supply decreases, interest rates _____ and bond prices _____.
increase, increase
increase, decrease
decrease, decrease
decrease, increase
6
If the government borrows money, what changes in the market for loanable funds?
the demand for loanable funds increase
the federal funds rate decreases
the demand for loanable funds decreases
the supply of loanable funds increases
7
The price of loanable funds is the
federal funds rate
nominal interest rate
real interest rate
discount rate
8
When Kanye pays his barber $300 for his daily hair cut, this illustrates which function of $?
Store of Value
Medium of Exchange
Commodity Money
Unit of Account
9
If the nominal interest rate is 10% and inflation is 4%, the real interest rate is
14%
6%
8%
4%
10
If the Fed sells bonds, the money supply ____, interest rates _____ and Investment ______.
Decreases, Increase, Decreases
Increases, Decrease, Increases
Increases, Increase, Increases
Decreases, Decrease, Decreases
11
Transaction demand varies directly with
Nominal GDP
Monetary Policy
Interest Rates
Fiscal Policy
12
If the money supply increases, interest rates _____ and bond prices _____.
Decrease, Decrease
Increase, Increase
Decrease, Increase
Increase, Decrease
13
When the FED buys bonds from a bank, bank excess reserves ______
increase and the potential money supply increases
decrease and the potential money supply decreases
decrease and potential money supply increase
increase and the potential money supply stays the same
14
Which of the following is NOT a tool of monetary policy
Open Market Operations
Transfer Payments
Discount Rate
Reserve Ratio
15
In an
Ample Reserve framework
, the most frequently used tool of monetary policy is
Discount Rate
Interest on Reserves
Reserve Requirement
Open Market Operations
16
The Discount Rate is the interest rate for
Bank to bank loans.
FOMC to FED loans
FED to bank loans.
Commercial Loans.
17
Which of the following is NOT part of M1?
Checking Accounts
Money Market Accounts
Savings Accounts
Currency
18
A pair of YEEZY's costs $1200. This illustrates which function of money?
Store of Value
Unit of Account
Medium of Exchange
Fiat Money
19
Transaction demand for money is
Money saved for later.
Money backed by gold.
Money held as collectibles.
Money used to purchase products.
20
If the economy was facing a recession, in a
Limited Reserves framework
, the first thing the FED would do is
Raise the discount rate
Lower the Discount Rate
Sell Bonds
Buy Bonds
21
In an
Ample Reserve framework
, the reserve requirement is
0%
10%
20%
100%
22
If a customer deposits $10,000 when the reserve ratio is .20. That bank may
Loan out $10,000
Loan out $8,000
Loan out $9,000
Loan out $2,000
23
If the Fed buys bonds, the money supply ____, interest rates _____ and Investment ______.
Increases, Increase, Increases
Increases, Decrease, Increases
Decrease, Decreases, Decreases
Decreases, Increase, Decreases
24
Monetary Policy is controlled by
Ways and Means Committee
Congress and the President
Council of Economic Advisors
Federal Open Market Committee
25
If the money supply increases, interest rates _______ and Real GDP _______.
Increase, Increase
Decrease, Decrease
Increase, Decrease
Decrease, Increase
26
Open market operations refer to
the buying and selling of government bonds.
The increase and decrease of the discount rate.
The taxing and spending by the government.
The increase and decrease of transfer payments.