Intermediate Macroeconomics Final Exam Questions with Complete Solutions
The principal advantage money has over barter is its function as:
a.) A store of value.
b.) A medium of exchange.
c.) Unit of account.
d.)
...
Intermediate Macroeconomics Final Exam Questions with Complete Solutions
The principal advantage money has over barter is its function as:
a.) A store of value.
b.) A medium of exchange.
c.) Unit of account.
d.) Debt. -Answer- b.) A medium of exchange.
Securitization refers to:
a.) Buying and selling securities.
b.) Insurance against potential losses due to defaults.
c.) Bundling loans, mortgages, and corporate bonds into new securities.
d.) All of the above. -Answer- c.) Bundling loans, mortgages, and corporate bonds into new securities.
If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as:
a.) A medium of exchange.
b.) A store of value.
c.) A unit of account.
d.) An economic investment. -Answer- a.) A medium of exchange.
To say that coins are "token money" means that:
a.) Their face value is less than their intrinsic value.
b.) Their face value is greater than their intrinsic value.
c.) Their face value is equal to their intrinsic value.
d.) They are not legal tender. -Answer- b.) Their face value is greater than their intrinsic value.
The purchasing power of money and the price level vary:
a.) Inversely.
b.) Directly during recessions, but inversely during inflations.
c.) Directly, but not proportionally.
d.) Directly, and proportionally. -Answer- a.) Inversely.
Stabilizing a nation's price level and the purchasing power of its money can be achieved:
a.) Only with fiscal policy.
b.) Only with monetary policy.
c.) With both fiscal and monetary policy.
d.) With neither fiscal nor monetary policy. -Answer- c.) With both fiscal and monetary policy.
The basic policy-making body in the U.S.banking system is the:
a.) Federal Open Market Committee (FOMC).
b.) Board of Governors of the Federal Reserve.
c.) Federal Monetary Authority.
d.) Council of Economic Advisors. -Answer- b.) Board of Governors of the Federal Reserve.
The Federal Open Market Committee (FOMC) is made of:
a.) The chair of the Board of Governors along with the 12 presidents of the Federal Reserve Banks.
b.) The seven members of the Board of Governors along with the president of the Federal Reserve Bank.
c.) The seven members of the Board of Governors of the Federal Reserve System along with the three members of the Council of Economic Advisors.
d.) The seven members of the Board of Governors of the Federal Reserve System along with the president of the New York Federal Reserve Bank and four other Federal Reserve Banks presidents on a rotating basis. -Answer- d.) The seven members of the Board of Governors of the Federal Reserve System along with the president of the New York Federal Reserve Bank and four other Federal Reserve Banks presidents on a rotating basis.
Currency in circulation is part of:
a.) M1 only.
2.) M2 only.
c.) neither M1 nor M2.
d.) both M1 and M2. -Answer- d.) both M1 and M2.
Moral hazard created during financial crisis occurred because:
a.) The Federal government bailed out large firms.
b.) The Federal Reserve took a variety of actions as a lender of last resort.
c.) A and B.
d.) Companies created collateralized default swaps. -Answer- c.) A and B.
Bank panics:
a.) Occur frequently in fractional reserve banking systems.
b.) Are a risk of fractional reserve banking, but are unlikely when banks are highly regulated and lend prudently.
c.) Cannot occur in a fractional reserve banking system.
d.) Occur more frequently when the monetary system is banked by gold. -Answer- b.) Are a risk of fractional reserve banking, but are unlikely when banks are highly regulated and lend prudently.
Other things equal, if the required reserve ration was lowered:
a.) Banks would have to reduce their lending
b.) The size of the monetary multiplier would increase.
c.) The actual reserves of banks would increase.
d.) The Federal funds interest rate would rise. -Answer- b.) The size of the monetary multiplier would increase.
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