Question

Question 1. Which of the following is not included in M1?
a- currency
b- demand deposits
c- traveller's checks
d- credit cards

Question 2. When the Fed purchases $200 worth of government bonds from the public, the U.S. money supply eventually increases by

a- more than $200.
b- exactly $200.
c- less than $200.
d- None of the above are correct.

Question 3. Savings deposits are included in

a- M1 but not M2.
b- M2 but not M1.
c- M1 and M2.
d- neither M1 nor M2.

Question 4. Credit cards

a- defer payments.
b- are a store of value.
c- have led to wider use of currency.
d- are part of the money supply.

Question 5. Table 16-3.
The First Bank of Fairfield

Assets	Liabilities
Reserves $2,000	Deposits $10,000
Loans 8,000

Refer to Table 16-3. The reserve ratio for this bank is

a- 0 per cent.
b- 20 percent.
c- 80 per cent.
d- 100 per cent.

Question 6. If an economy uses silver as money, then that economy's money

a- serves as a store of value but not as a medium of exchange.
b- serves as a medium of exchange but not as a unit of account.
c- is commodity money.
d- has no intrinsic value.

Question 7. In the United States, currency holdings per person average about

a- $125; one explanation for this relatively small average is that many people use credit and debit cards to make transactions.
b- $125; one explanation for this relatively small average is that U.S. citizens hold a lot of foreign currency.
c- $3,700; one explanation for this relatively large amount is that criminals probably prefer currency as a medium of exchange.
d- $3,700; one explanation for this relatively large average is that U.S. citizens hold a lot of foreign currency.

Question. 8. Money is the most liquid asset available because

a- it is a store of value.
b- it is a medium of exchange.
c- it is a unit of account.
d- it has intrinsic value.

Question  9. All Fed purchases and sales of

a- corporate stocks and bonds are conducted at the New York Fed's trading desk.
b- government bonds are conducted at the New York Fed's trading desk.
c- real estate and other real assets are conducted by the Federal Open Market Committee.
d- All of the above are correct.

Question 10. The Fed's policy decisions have an important influence on

a- inflation in the long run and employment and production in the short run.
b- inflation in the long run and employment and production in the long run.
c- inflation in the short run and employment and production in the short run.
d- inflation in the short run and employment and production in the long run.