- “Crowding out” means that
a. a government budget deficit lowers interest rates and causes investment spending to rise
b. an increase in marginal tax rates lowers production
c. a government budget deficit raises interest rates and causes investment spending to fall
d. a government budget deficit raises American exports and lowers American imports
Answers: D D B D D C C A A C - Which of the following IS a function of money?
a. medium of exchange
b. store of value
c. unit of accounting
d. all of the above - Which of the following is a component of M-1?
a. savings deposits
b. credit card
c. checkable deposits
d. gold - Which of the following is a NOT component of M-2?
a. small time deposits
b. money market mutual funds
c. stocks
d. checkable deposits - Which of the following is true about the Federal Reserve System (Fed)?
a. it is a system of 12 central banks
b. its Board of Governors is elected by a vote of the people
c. its main policy-making body is the FDIC
d. it accepts deposits from the public and makes loans to businesses
e. all of the above - An IOU of the Federal Reserve Bank of San Francisco to Bank of America is called:
a. discounts
b. federal funds
c. reserves
d. collateral - Which of the following is the most liquid?
a. a savings account
b. a 6 month CD
c. a home
d. water - The monetary base is composed of:
a. gold and silver
b. currency only
c. currency and reserves
d. currency and checkable deposits - If the monetary base is increased by $1,000 and the reserve requirement is 10% (1/10), by how much will the money supply be increased?
a. $100
b. $1,000
c. $5,000
d. $10,000 - If the Federal Reserve wishes to increase the money supply, it should:
a. raise the reserve requirement
b. raise the discount rate
c. buy Treasury securities in the open market
d. all of the above - An increase in the money supply will cause interest rates to
a. rise
b. fall
c. remain unchanged
Answers: D C C A C A C D C B
