SAMPLE TEST 4

What are the primary functions of money?

• unit of account, medium of exchange, store of value

• unit of liquidity, medium of exchange, store of value

• unit of exchange, medium of account, store of value

• unit of account, medium of exchange, store of liquidity

M1 includes:

• cash, savings deposits, demand deposits, money market deposit accounts, small-denomination time deposits, and shares in retail money market mutual funds.

• cash, demand deposits, and small-denomination time deposits.

• cash, demand deposits, and large-denomination time deposits.

• cash, demand deposits, and other checkable deposits.

Which of the following is the LEAST liquid?

• money in a savings account

• a Picasso painting

• a U.S. Treasury bond

• $100 in cash

Which one of the following will cause the supply of loanable funds curve to shift leftward?

• lowering of firms' expectations about the economy

• an increase in government regulations that make plant expansion difficult

• an increase in asset prices leading to a decrease in purchases of stocks and bonds

• an increase in the government deficit

If households decide to save a larger portion of their income because they fear job loss due to a recession, the loanable funds supply curve will shift from _____ to _____, and the new equilibrium will be at point _____, holding demand constant at D0.

• S0; S1; a

• S0; S1; b

• S1; S0; b

• S1; S0; d

Institutions that acquire funds from savers and then lend those funds to borrowers are called:

• state banks.

• monetary mediums.

• financial intermediaries.

• Federal Reserve banks.

• falls to $875.

• falls to $800.

• rises to $1,125.

• falls to $700.

• 13.8%

• 72.54%

• 1.38%

• 7.25%

Sumit deposits $1,500 cash into his checking account. The reserve requirement ratio is 25%. What is the change in his bank's excess reserves?

• $1,500

• $375

• $1,125

• $0

If the reserve requirement ratio is 20%, the money multiplier is:

• 4.

• 5.

• 0.2.

• 0.8