Ashford ECO 203 Week 4 Quiz – Principles of Macroeconomics

| March 14, 2016

Question

The transactions demand for money depends on

Student Answer: the price level only.

the interest rate only.

real income only.

both the price level and real income.

both the interest rate and the price level.

Question 2. Question : The ability of an asset to be converted easily and conveniently into the medium of exchange is called

Student Answer: convertibility.

topicality.

liquidity.

accessibility.

solidity.

Question 3. Question : The First National Bank of Oklahoma has checkable deposits of $10,000,000 and total reserves of $2,500,000; the reserve ratio is 15 percent. What is the most this bank can lend out?

Student Answer: $500,000

$750,000

$1,000,000

$1,500,000

The amount cannot be calculated from the information given.?

Question 4. Question : The interest-earning assets of a bank are

Student Answer: reserves.

loans.

demand deposits.

Federal funds borrowings from other banks.

net worth.

Question 5. Question : If there is an increase in the money supply, then according to the Keynesian model,

Student Answer: interest rates will increase and spending will increase.

interest rates will fall and spending will fall.

spending will increase because of the surplus of money.

interest rates will fall and spending will increase.

spending will decrease because of the shortage of money.?

Question 6. Question : A bank’s lending out a portion of the deposits of its customers is

Student Answer: not allowed in banking practice today.

allowed with the permission of the borrower.

called fractional reserve banking.

not as important as it was in the Middle Ages.

called 100 percent.

reserves.?

Question 7. Question : The First National Bank of Oklahoma has checkable deposits of $ 10,000,000 and total reserves of $2,500,000; the reserve ratio is 15 percent. What is the required level of reserves for this bank?

Student Answer: $1,500,000

$2,000,000

$2,500,000

The required level exceeds the bank’s total reserves.
Question 8. Question : The fact that money is legal tender increases its

Student Answer: recognizability.

durability.?

acceptability.

divisibility.

portability.

Question 9. Question : Transactions that involve the direct trade of one good for another are called

Student Answer: promissory trades.

supply and demand.

reciprocity.

bills of exchange.

barter.

Question 10. Question : When the Fed changes monetary policy in response to changing economic conditions, it is

Student Answer: following a monetary rule.

responding to the policy suggestions of monetarists.

using discretionary monetary policy.

exceeding its charter.

relying on automatic monetary stabilizers.

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