Assignment 14 Macro

1.

1 point

The transactions demand for money is most closely related to money functioning as a:

unit of account.

medium of exchange.

store of value.

measure of value.

2.

1 point

The asset demand for money is most closely related to money functioning as a:

unit of account.

medium of exchange.

store of value.

measure of value.

3.

1 point

The desire to hold money for transactions purposes arises because:

receipts of income and expenditures are not perfectly synchronized.

people fear that prices will rise.

households want money on hand in case a good financial investment opportunity arises.

low interest rates reduce the opportunity cost of holding money.

4.

1 point

It is costly to hold money because:

deflation may reduce its purchasing power.

in doing so, one sacrifices interest income.

bond prices are highly variable.

the rate at which money is spent may decline.

5.

1 point

The opportunity cost of holding money:

is zero because money is not an economic resource.

varies inversely with the interest rate.

varies directly with the interest rate.

varies inversely with the level of economic activity.

6.

1 point

Which of the following statements is correct?

Interest rates and bond prices vary directly.

Interest rates and bond prices vary inversely.

Interest rates and bond prices are unrelated.

Interest rates and bond prices vary directly during inflations and inversely during recessions.

7.

1 point

The Federal Reserve alters the amount of the nation's money supply by:

Reducing the liabilities of the banking system

Controlling the assets of the nation's largest banks

Minting coins and printing currency that is distributed to banks

Manipulating the size of excess reserves held by commercial banks

8.

1 point

If the Fed buys government securities from commercial banks in the open market:

The Fed gives the securities to the commercial banks and increases the banks' reserves

The Fed gives the securities to the commercial banks decreases the banks' reserves

Commercial banks give the securities to the Fed, and the Fed increases the banks' reserves

Commercial banks give the securities to the Fed, and the Fed decreases the banks' reserves

9.

1 point

If the Fed sells government securities to the general public in the open market:

The Fed gives the securities to the public; the public pays for the securities by writing checks that when cleared will increase commercial bank reserves at the Fed

The Fed gives the securities to the public; the public pays for the securities by writing checks that when cleared will decrease commercial bank reserves at the Fed

The public gives the securities to the Fed in exchange for a Fed check, which when deposited at commercial banks will increase their reserves at the Fed

The public gives the securities to the Fed in exchange for a Fed check, which when deposited at commercial banks will decrease their reserves at the Fed

10.

1 point

Which of the following Fed actions increases the excess reserves of commercial banks?

Selling bonds to the public

Selling bonds to commercial banks

Increasing the discount rate

Lower the reserve ratio