Question : 51) The monetary base equal to A) banks’ assets plus liabilities. B) : 1227822

 

 

51) The monetary base is equal to

A) banks’ assets plus liabilities.

B) Federal Reserve notes plus coins plus banks’ reserves at the Fed.

C) checkable deposits plus coins plus and traveler’s checks.

D) checkable deposits plus coins plus banks’ assets.

E) M2 minus M1.

Answer:  B

Topic:  Monetary base

Skill:  Level 1: Definition

Section:  Checkpoint 11.3

Status:  DMC

 

52) The monetary base is equal to

A) M1.

B) M2.

C) currency and coins in circulation plus checkable deposits.

D) the sum of coins, Federal Reserve notes, and banks’ reserves at the Fed.

E) the sum of coins, Federal Reserve notes, and gold at the Fed.

Answer:  D

Topic:  Monetary base

Skill:  Level 1: Definition

Section:  Checkpoint 11.3

Status:  TPS

 

53) The monetary base is equal to the sum of coins,

A) currency and banks’ reserves at the Federal Reserve.

B) currency and checkable deposits at banks.

C) currency, banks’ reserves at the Federal Reserve and checkable deposits at banks.

D) and checkable deposits at banks.

E) U.S. government securities owned by the Federal Reserve and Federal Reserve notes.

Answer:  A

Topic:  Monetary base

Skill:  Level 1: Definition

Section:  Checkpoint 11.3

Status:  NAU

54) The monetary base does NOT include which of the following items?

i.Federal Reserve notes

ii.banks’ reserves at the Federal Reserve

iii.U.S. government securities owned by the Federal Reserve

A) i only

B) ii only

C) iii only

D) Both i and ii

E) Both ii and iii

Answer:  C

Topic:  Monetary base

Skill:  Level 1: Definition

Section:  Checkpoint 11.3

Status:  MR

 

55) Regulating the amount of money in the United States is one of the most important responsibilities of the

A) State Department.

B) state governments.

C) Treasury Department.

D) Federal Reserve.

E) U.S. Mint.

Answer:  D

Topic:  Federal Reserve System

Skill:  Level 1: Definition

Section:  Checkpoint 11.3

Status:  STUDY GUIDE

 

56) The Board of Governors of the Federal Reserve System has

A) 12 members appointed by the president of the United States.

B) 12 members elected by the public.

C) seven members appointed by the president of the United States.

D) seven members elected by the public.

E) seven members appointed to life terms.

Answer:  C

Topic:  Federal Reserve System, Board of Governors

Skill:  Level 1: Definition

Section:  Checkpoint 11.3

Status:  STUDY GUIDE

57) The Fed’s policy is determined by the

A) Federal Open Market Committee.

B) Executive Council to the Governor.

C) Regional Federal Reserve Banks.

D) Board of Governors.

E) Federal Monetary Policy Committee.

Answer:  A

Topic:  FOMC

Skill:  Level 1: Definition

Section:  Checkpoint 11.3

Status:  STUDY GUIDE

 

58) The Fed’s policy tools include

A) required reserve ratios, the discount rate, open market operations, and extraordinary crisis measures.

B) holding deposits for the U.S. government, reserve requirements, and the discount rate.

C) setting regulations for lending standards and extraordinary crisis measures.

D) supervision of the banking system and buying and selling commercial banks.

E) required reserve ratios, income tax rates, and open market operations.

Answer:  A

Topic:  Fed policy tools

Skill:  Level 1: Definition

Section:  Checkpoint 11.3

Status:  STUDY GUIDE – revised

 

59) The minimum percent of deposits that banks must hold and cannot loan is determined by the

A) interest rate.

B) discount rate.

C) required reserve ratio.

D) federal funds rate.

E) ratio of M2 to M1.

Answer:  C

Topic:  Fed policy tools, required reserve ratio

Skill:  Level 2: Using definitions

Section:  Checkpoint 11.3

Status:  STUDY GUIDE

 

60) The discount rate is the interest rate that

A) commercial banks charge their customers.

B) commercial banks charge each other for the loan of reserves.

C) the Fed charges the government for loans.

D) the Fed charges commercial banks when it loans reserves to the banks.

E) the Fed pays commercial banks on their reserves held at the Fed.

Answer:  D

Topic:  Fed policy tools, discount rate

Skill:  Level 1: Definition

Section:  Checkpoint 11.3

Status:  STUDY GUIDE

61) The monetary base is the

A) minimum reserve banks must hold to cover any losses from unpaid loans.

B) sum of coins, Federal Reserve notes, and banks’ reserves at the Fed.

C) sum of gold and foreign exchange held by the Fed.

D) sum of government securities and loans to banks held by the Fed.

E) sum of coins, required reserves, and banks’ loans.

Answer:  B

Topic:  Monetary base

Skill:  Level 1: Definition

Section:  Checkpoint 11.3

Status:  STUDY GUIDE

 

62) If Federal Reserve notes and coins are $765 billion, and banks’ reserves at the Fed are $8 billion, the gold stock is $11 billion, and the Fed owns $725 billion of government securities, what does the monetary base equal?

A) $765 billion

B) $773 billion

C) $776 billion

D) $744 billion

E) $1,509 billion

Answer:  B

Topic:  Monetary base

Skill:  Level 2: Using definitions

Section:  Checkpoint 11.3

Status:  STUDY GUIDE

 

63) If the Federal Reserve ________ the required reserve ratio, the interest rate ________.

A) lowers; rises

B) lowers; falls

C) raises; does not change

D) raises; falls

E) Not enough information is given because the effect depends also on the size of the monetary base.

Answer:  B

Topic:  Required reserve ratio

Skill:  Level 2: Using definitions

Section:  Checkpoint 11.3

Status:  STUDY GUIDE