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Econ 103 Final Exam Practice

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ECON 103 Quiz on Econ 103 Final Exam Practice, created by Natalie Balzert on 12/12/2016.
Natalie Balzert
Quiz by Natalie Balzert, updated more than 1 year ago
Natalie Balzert
Created by Natalie Balzert over 7 years ago
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Resource summary

Question 1

Question
To use monetary policy to lessen the effects of a recession, the Federal Reserve would:
Answer
  • increase the money supply and increase interest rates
  • decrease the money supply and increase interest rates
  • increase the money supply and decrease interest rates
  • decrease the money supply and decrease interest rates

Question 2

Question
Federal Reserve Notes in the Us are:
Answer
  • commodity money
  • fiat money
  • specie money
  • regulated money

Question 3

Question
When the USA was founded, the official monetary system was based on:
Answer
  • gold and silver
  • silver only
  • gold only
  • gold, silver, and/or paper as determined by Congress

Question 4

Question
Prior to the Civil War, US banks could print paper money, the government could not.
Answer
  • True
  • False

Question 5

Question
Some countries in Central America, South America, and Africa use the US dollar their currency and no longer print their own,
Answer
  • True
  • False

Question 6

Question
It is called a [blank_start]Currency Board[blank_end] if a country issues its money backed by dollars or yen.
Answer
  • Currency Board

Question 7

Question
Which of the following is not one of the functions of money?
Answer
  • medium of exchange
  • insurer of commodities
  • store of value
  • unit of account

Question 8

Question
When David Hume said that money was the oil of trade, he meant which function of money?
Answer
  • Medium of exchange
  • Insurer of commodities
  • Store of valie
  • Unite of Account

Question 9

Question
An economic system without money is a [blank_start]Barter[blank_end] system.
Answer
  • Barter

Question 10

Question
In the book the Wonderful Wizard of Oz, the author supports:
Answer
  • bimetallism
  • the gold standard
  • fiat money
  • reserve currencies

Question 11

Question
Which of the following is false about the Wonderful Wizard of Oz?
Answer
  • The yellow brick road is the gold standard
  • The scarecrow represents farmers
  • Dorothy's slippers are made of silver in the original story
  • The tin woodsman represents Wall Street

Question 12

Question
The Wonderful Wizard of Oz is about the presidential election of 1896.
Answer
  • True
  • False

Question 13

Question
In the Wonderful Wizard of Oz the wizard is the president of the US.
Answer
  • True
  • False

Question 14

Question
In a fractional reserve banking system, banks must keep:
Answer
  • a % of their of their loans on reserve in the bank
  • a % of their deposits on reserve in the bank
  • a set dollar amount on reserve in the bank, based on their size
  • a percentage of their average daily transactions on reserve in the bank

Question 15

Question
The 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.
Answer
  • True
  • False

Question 16

Question
The Fed is divided into Districts because:
Answer
  • it is more efficient to issue currency that way due to the size of the country
  • separate districts can better adapt to local economic conditions
  • too many states wanted the Fed located there, so having 12 was a political compromise
  • Katniss Everdeen decided

Question 17

Question
In today's financial system, the value of our money depends only on our [blank_start]faith[blank_end] in it, according to your professor.
Answer
  • faith

Question 18

Question
The Fed decreases the money supply by [blank_start]selling[blank_end] bonds.
Answer
  • selling

Question 19

Question
The Federal Reserve is intended to be independent of the President and Congress.
Answer
  • True
  • False

Question 20

Question
When the Fed increases the money supply, interest rates should:
Answer
  • fall
  • rise
  • remain inchanged

Question 21

Question
The [blank_start]discount[blank_end] rate is what the Fed charges banks when they borrow from it.
Answer
  • discount

Question 22

Question
The [blank_start]Federal Fund[blank_end] rate is what US banks are charged for overnight loans.
Answer
  • Federal Funds

Question 23

Question
The [blank_start]LIBOR[blank_end] is the European version of the previous question.
Answer
  • LIBOR

Question 24

Question
Most of the money in the world is:
Answer
  • cash printed by the government
  • created by banks when they make loans
  • created through printing bonds
  • created by banks taking deposits

Question 25

Question
A credit default swap is actually an insurance policy on a financial asset.
Answer
  • True
  • False

Question 26

Question
M1 is mainly:
Answer
  • cash and coins
  • currency and checking accounts
  • currency, checking accounts, and small savings and time deposits
  • a freeway in London

Question 27

Question
If 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.
Answer
  • True
  • False

Question 28

Question
When the interest rate rises, investment should do what?
Answer
  • rise
  • fall
  • be unchanged

Question 29

Question
The modern theory of economic growth is based on _____ as the key to growth.
Answer
  • savings
  • ideas and innovations
  • infrastructure investment
  • banking reform

Question 30

Question
The size of a country's _____ relative to its population tells us how rich it is.
Answer
  • bank reserves
  • capital stock
  • financial markets
  • exports

Question 31

Question
According to the United Nations, what is the biggest obstacle to economic development for poor nations in the world today?
Answer
  • too much debt
  • treatment of women
  • child labor
  • poor transportation systems

Question 32

Question
Despite 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.
Answer
  • True
  • False

Question 33

Question
When the government uses its taxing and spending powers to affect the economy, it is called:
Answer
  • monetary policy
  • congressional policy
  • financial policy
  • fiscal policy

Question 34

Question
Open Market operations are
Answer
  • the buying and selling of government bonds by the Federal Reserve
  • the means by which the Federal Reserve acts as the government's banker
  • the buying and selling of Federal Reserve Notes in the open market
  • the buying and selling of government bonds by the Treasury

Question 35

Question
When the government of Japan targeted its automobile companies as a way to make the economy grow, this was called _____ policy.
Answer
  • fiscal
  • regional
  • industrial
  • referntial

Question 36

Question
In the current economic crisis, a Classical economist would have done what with the failing banks and insurance companies?
Answer
  • let them go bankrupt, regardless of effect on anything else
  • let them go bankrupt, with the Fed protecting other financial institutions affected by it
  • forced another financial institution to buy them, with help from the Fed
  • exactly what the Fed did, buy billions in their stock to increase their reserves

Question 37

Question
Keynesians believe that the best way to end a recession is:
Answer
  • increase the money supply and lower interest rates
  • increase government spending and make tax cuts
  • raise interest rates and cut taxes
  • do nothing

Question 38

Question
When lowering interest rates dows not affect the economy, economists say we are in a(n):
Answer
  • functional deficit
  • liquidity trap
  • crowding out
  • transitional lag

Question 39

Question
Correctly measured the US national debt:
Answer
  • is larger than it has ever been
  • has increased under every president since 1900, except Clinton
  • is smaller than Japan's
  • b and c only
  • a,b, and c are all correct

Question 40

Question
The last US president who did not have a budget deficit was:
Answer
  • Reagan
  • Kennedy
  • Jackson
  • Clinton

Question 41

Question
Almost all money in the world today is _____ money
Answer
  • commodity
  • fiat
  • industrial
  • contractual

Question 42

Question
An economic system without money is a(n) [blank_start]Barter[blank_end] system.
Answer
  • Barter

Question 43

Question
The central bank increases the money supply by [blank_start]buying[blank_end] bonds.
Answer
  • buying

Question 44

Question
The Fed is divided into 12 districts which are supposed to:
Answer
  • simplify the Fed's accounting
  • each contain 1/12 of the population, creating a monetary "congress"
  • represent the unique economic interests of different parts of the country
  • all members of congress to appoint those who their local economy

Question 45

Question
Most of the money is the world is:
Answer
  • cash printed by the government
  • created by banks when they make loans
  • created through printing bonds
  • created by banks taking deposits

Question 46

Question
The entity intended to be the central bank for the world is the:
Answer
  • ECB
  • IMF
  • World Bank
  • Wynn Resorts

Question 47

Question
When the entity in the previous question make a loan to a country, it requires a(n) _____ program in exchange
Answer
  • re-invigoration
  • austerity
  • spending

Question 48

Question
The changes made to US currency have been made to:
Answer
  • lengthen the time the money is used in circulation
  • prevent couterfeiting
  • lower the costs of printing
  • b and c

Question 49

Question
M2 consists of the [blank_start]sum of M1[blank_end], [blank_start]saving accounts[blank_end], and [blank_start]small time deposits[blank_end].
Answer
  • sum of M1
  • savings account
  • small time deposits

Question 50

Question
The [blank_start]Glass-Steagal[blank_end] Act separated banking and stock brokers. It has since been repealed.
Answer
  • Glass-Steagal

Question 51

Question
Congress in 1999 passed a law which prohibited the government from creating rules that regulated mortgage backed securities.
Answer
  • True
  • False

Question 52

Question
When lowering interest rates does not affect the economy, economists say that we are in a(n) [blank_start]liquidity trap[blank_end].
Answer
  • liquidity trap

Question 53

Question
It 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.
Answer
  • crowding out

Question 54

Question
Data tell us that changing taxes has the strongest effect on the economy when times are good, and less effect as times go bad.
Answer
  • True
  • False

Question 55

Question
Banks in the US in the 1800s were generally allowed to print their own money.
Answer
  • True
  • False

Question 56

Question
The approval that a bank must have to be allowed to operate is called a(n) [blank_start]charter[blank_end].
Answer
  • charter

Question 57

Question
Bill's Bank has $5,000 in cash, $10,000 in loans, and $40,000 in deposits. Its actual reserves are:
Answer
  • $10,000
  • $4,000
  • $40,000
  • $5,000

Question 58

Question
Bill's Bank has $5,000 in cash, $10,000 in loans, and $40,000 in deposits. It requires reserves, assuming 10% reserve requirement, are:
Answer
  • $4,000
  • $1,000
  • $10,000

Question 59

Question
Bill's Bank has $5,000 in cash, $10,000 in loans, and $40,000 in deposits. Its excess reserves, assuming 10% reserve requirement, are:
Answer
  • $0
  • $2,000
  • $1,000

Question 60

Question
Bill'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.
Answer
  • True
  • False
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