ECO203 Assignments Week 4 – Quiz

Question 1

1 / 1 pts

The banking system can expand the total number of loans

only if all banks are national banks.

only if it has the consent of the Fed.

Correct!

as long as there are excess reserves in the system.

as long as it wants to.

The answer can be found in Section 12.2 EXCESS RESERVES AND THE MONEY SUPPLY in Macroeconomics

Question 2

1 / 1 pts

M1 includes all but which one of the following?

Correct!

bank CDs

coins

traveler’s checks

currency

checkable deposits

The answer can be found in Section 11.2 BANKS AND MONEY in Macroeconomics

Question 3

0 / 1 pts

If the Fed sells government bonds on the open market, which of the following will NOT occur?

the amount of investment spending will decrease.

Correct Answer

the interest rate will fall.

You Answered

the yield on government bonds will increase.

the yield on corporate bonds will increase.

the money supply will contract.

The answer can be found in Section 14.1 HOW MONETARY POLICY AFFECTS AGGREGATE DEMAND in Macroeconomics

Question 4

1 / 1 pts

The most important monetary tool of the Federal Reserve System is

Correct!

open market operations.

loans to the public.

loans to banks.

changes in legal reserve requirements.

changes in the discount rate.

The answer can be found in Section 12.5 THE FED AND THE MONEY SUPPLY in Macroeconomics

Question 5

1 / 1 pts

The fact that money is legal tender increases its

portability.

divisibility.

Correct!

acceptability.

durability. 

recognizability.

The answer can be found in Section 11.1 WHAT IS MONEY? in Macroeconomics

Question 6

1 / 1 pts

Checkable deposits are

money, but a very small part of the supply.

bank paper money.

not stores of wealth.

Correct!

deposits at bank that are redeemed by writing checks.

not money.

The answer can be found in Section 11.2 BANKS AND MONEY in Macroeconomics

Question 7

1 / 1 pts

All but which one of the following are roles of the Fed?

check-clearer for banks

supervisor of banks

Correct!

banker to the public

controller of the money supply

lender of last resort

The answer can be found in Section 12.4 STRUCTURE AND FUNCTIONS OF THE FEDERAL RESERVE SYSTEM in Macroeconomics

Question 8

1 / 1 pts

In the classical model, the money supply affects the economy

through deficit spending. 

along an AD curve.

Correct!

directly through spending changes.

by shifting the AS curve.

indirectly through the interest rate.

The answer can be found in Section 14.1 HOW MONETARY POLICY AFFECTS AGGREGATE DEMAND in Macroeconomics

Question 9

1 / 1 pts

The medium of exchange function of money refers to money as

a representation of a commodity such as gold. 

a measure of value.

Correct!

a means of payment.

a common denominator.

a form of wealth.

The answer can be found in Section 11.1 WHAT IS MONEY? in Macroeconomics

Question 10

1 / 1 pts

The lender of last resort function refers to

purchasing government bonds when no one else wishes to purchase them.

Correct!

preventing bank panics.

loaning money to the public

regulating banks.

controlling the money supply.

The answer can be found in Section 12.3 CENTRAL BANKING IN THE UNITED STATES in Macroeconomics

Quiz Score: 9 out of 10

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