Quiz
Econ 103 Final Exam Practice
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Questions in this quiz (60)
1To use monetary policy to lessen the effects of a recession, the Federal Reserve would:
- Aincrease the money supply and increase interest rates
- Bdecrease the money supply and increase interest rates
- Cincrease the money supply and decrease interest rates
- Ddecrease the money supply and decrease interest rates
2Federal Reserve Notes in the Us are:
- Acommodity money
- Bfiat money
- Cspecie money
- Dregulated money
3When the USA was founded, the official monetary system was based on:
- Agold and silver
- Bsilver only
- Cgold only
- Dgold, silver, and/or paper as determined by Congress
4Prior to the Civil War, US banks could print paper money, the government could not.
- ATrue
- BFalse
5Some countries in Central America, South America, and Africa use the US dollar their currency and no longer print their own,
- ATrue
- BFalse
6It is called a [blank_start]Currency Board[blank_end] if a country issues its money backed by dollars or yen.
- ACurrency Board
7Which of the following is not one of the functions of money?
- Amedium of exchange
- Binsurer of commodities
- Cstore of value
- Dunit of account
8When David Hume said that money was the oil of trade, he meant which function of money?
- AMedium of exchange
- BInsurer of commodities
- CStore of valie
- DUnite of Account
9An economic system without money is a [blank_start]Barter[blank_end] system.
- ABarter
10In the book the Wonderful Wizard of Oz, the author supports:
- Abimetallism
- Bthe gold standard
- Cfiat money
- Dreserve currencies
11Which of the following is false about the Wonderful Wizard of Oz?
- AThe yellow brick road is the gold standard
- BThe scarecrow represents farmers
- CDorothy's slippers are made of silver in the original story
- DThe tin woodsman represents Wall Street
12The Wonderful Wizard of Oz is about the presidential election of 1896.
- ATrue
- BFalse
13In the Wonderful Wizard of Oz the wizard is the president of the US.
- ATrue
- BFalse
14In a fractional reserve banking system, banks must keep:
- Aa % of their of their loans on reserve in the bank
- Ba % of their deposits on reserve in the bank
- Ca set dollar amount on reserve in the bank, based on their size
- Da percentage of their average daily transactions on reserve in the bank
15The Federal Reserve was founded in 1913. It is the first central bank the US has ever had, while most of the central banks in Europe are hundreds of years old.
- ATrue
- BFalse
16The Fed is divided into Districts because:
- Ait is more efficient to issue currency that way due to the size of the country
- Bseparate districts can better adapt to local economic conditions
- Ctoo many states wanted the Fed located there, so having 12 was a political compromise
- DKatniss Everdeen decided
17In today's financial system, the value of our money depends only on our [blank_start]faith[blank_end] in it, according to your professor.
- Afaith
18The Fed decreases the money supply by [blank_start]selling[blank_end] bonds.
- Aselling
19The Federal Reserve is intended to be independent of the President and Congress.
- ATrue
- BFalse
20When the Fed increases the money supply, interest rates should:
- Afall
- Brise
- Cremain inchanged
21The [blank_start]discount[blank_end] rate is what the Fed charges banks when they borrow from it.
- Adiscount
22The [blank_start]Federal Fund[blank_end] rate is what US banks are charged for overnight loans.
- AFederal Funds
23The [blank_start]LIBOR[blank_end] is the European version of the previous question.
- ALIBOR
24Most of the money in the world is:
- Acash printed by the government
- Bcreated by banks when they make loans
- Ccreated through printing bonds
- Dcreated by banks taking deposits
25A credit default swap is actually an insurance policy on a financial asset.
- ATrue
- BFalse
26M1 is mainly:
- Acash and coins
- Bcurrency and checking accounts
- Ccurrency, checking accounts, and small savings and time deposits
- Da freeway in London
27If Bill's bank is the only bank, it can legally make a loan of $50000. That is, it's accounts will still balance legally after the loan is made.
- ATrue
- BFalse
28When the interest rate rises, investment should do what?
- Arise
- Bfall
- Cbe unchanged
29The modern theory of economic growth is based on _____ as the key to growth.
- Asavings
- Bideas and innovations
- Cinfrastructure investment
- Dbanking reform
30The size of a country's _____ relative to its population tells us how rich it is.
- Abank reserves
- Bcapital stock
- Cfinancial markets
- Dexports
31According to the United Nations, what is the biggest obstacle to economic development for poor nations in the world today?
- Atoo much debt
- Btreatment of women
- Cchild labor
- Dpoor transportation systems
32Despite the theories, the quantity of natural resources a country has turns out to be the most important factor to its economic growth in the real world.
- ATrue
- BFalse
33When the government uses its taxing and spending powers to affect the economy, it is called:
- Amonetary policy
- Bcongressional policy
- Cfinancial policy
- Dfiscal policy
34Open Market operations are
- Athe buying and selling of government bonds by the Federal Reserve
- Bthe means by which the Federal Reserve acts as the government's banker
- Cthe buying and selling of Federal Reserve Notes in the open market
- Dthe buying and selling of government bonds by the Treasury
35When the government of Japan targeted its automobile companies as a way to make the economy grow, this was called _____ policy.
- Afiscal
- Bregional
- Cindustrial
- Dreferntial
36In the current economic crisis, a Classical economist would have done what with the failing banks and insurance companies?
- Alet them go bankrupt, regardless of effect on anything else
- Blet them go bankrupt, with the Fed protecting other financial institutions affected by it
- Cforced another financial institution to buy them, with help from the Fed
- Dexactly what the Fed did, buy billions in their stock to increase their reserves
37Keynesians believe that the best way to end a recession is:
- Aincrease the money supply and lower interest rates
- Bincrease government spending and make tax cuts
- Craise interest rates and cut taxes
- Ddo nothing
38When lowering interest rates dows not affect the economy, economists say we are in a(n):
- Afunctional deficit
- Bliquidity trap
- Ccrowding out
- Dtransitional lag
39Correctly measured the US national debt:
- Ais larger than it has ever been
- Bhas increased under every president since 1900, except Clinton
- Cis smaller than Japan's
- Db and c only
- Ea,b, and c are all correct
40The last US president who did not have a budget deficit was:
- AReagan
- BKennedy
- CJackson
- DClinton
41Almost all money in the world today is _____ money
- Acommodity
- Bfiat
- Cindustrial
- Dcontractual
42An economic system without money is a(n) [blank_start]Barter[blank_end] system.
- ABarter
43The central bank increases the money supply by [blank_start]buying[blank_end] bonds.
- Abuying
44The Fed is divided into 12 districts which are supposed to:
- Asimplify the Fed's accounting
- Beach contain 1/12 of the population, creating a monetary "congress"
- Crepresent the unique economic interests of different parts of the country
- Dall members of congress to appoint those who their local economy
45Most of the money is the world is:
- Acash printed by the government
- Bcreated by banks when they make loans
- Ccreated through printing bonds
- Dcreated by banks taking deposits
46The entity intended to be the central bank for the world is the:
- AECB
- BIMF
- CWorld Bank
- DWynn Resorts
47When the entity in the previous question make a loan to a country, it requires a(n) _____ program in exchange
- Are-invigoration
- Bausterity
- Cspending
48The changes made to US currency have been made to:
- Alengthen the time the money is used in circulation
- Bprevent couterfeiting
- Clower the costs of printing
- Db and c
49M2 consists of the [blank_start]sum of M1[blank_end], [blank_start]saving accounts[blank_end], and [blank_start]small time deposits[blank_end].
- Asum of M1
- Bsavings account
- Csmall time deposits
50The [blank_start]Glass-Steagal[blank_end] Act separated banking and stock brokers. It has since been repealed.
- AGlass-Steagal
51Congress in 1999 passed a law which prohibited the government from creating rules that regulated mortgage backed securities.
- ATrue
- BFalse
52When lowering interest rates does not affect the economy, economists say that we are in a(n) [blank_start]liquidity trap[blank_end].
- Aliquidity trap
53It is called [blank_start]crowding out[blank_end] when the government's borrowing to pay for something like the stimulus package makes interest rates go up, and lessons private borrowing.
- Acrowding out
54Data tell us that changing taxes has the strongest effect on the economy when times are good, and less effect as times go bad.
- ATrue
- BFalse
55Banks in the US in the 1800s were generally allowed to print their own money.
- ATrue
- BFalse
56The approval that a bank must have to be allowed to operate is called a(n) [blank_start]charter[blank_end].
- Acharter
57Bill's Bank has $5,000 in cash, $10,000 in loans, and $40,000 in deposits. Its actual reserves are:
- A$10,000
- B$4,000
- C$40,000
- D$5,000
58Bill's Bank has $5,000 in cash, $10,000 in loans, and $40,000 in deposits. It requires reserves, assuming 10% reserve requirement, are:
- A$4,000
- B$1,000
- C$10,000
59Bill's Bank has $5,000 in cash, $10,000 in loans, and $40,000 in deposits. Its excess reserves, assuming 10% reserve requirement, are:
- A$0
- B$2,000
- C$1,000
60Bill's Bank has $5,000 in cash, $10,000 in loans, and $40,000 in deposits. It can make a $5,000 loan and remain legal, assuming a 10% reserve requirement.
- ATrue
- BFalse
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- ECON 103 Quiz on Econ 103 Final Exam Practice, created by Natalie Balzert on 12/12/2016.
- Author
- Natalie Balzert
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- English
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- Created on 12 Dec 2016 · updated on 13 Dec 2016
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