Economics (McConnell), 18th Edition

Chapter 31: Money and Banking


The group responsible for setting policy on buying and selling government securities (bills, notes, and bonds) is the:
A)Securities and Exchange Commission
B)U.S. Treasury Board
C)Federal Open Market Committee
D)12 Federal Reserve Bank presidents
Other things equal, a dramatic decrease in the money supply would:
A)increase the price level
B)reduce the purchasing power of each dollar
C)increase the purchasing power of each dollar
D)have an ambiguous impact on the purchasing power of each dollar
Which of the following most accurately describes the status of the U.S. Federal Reserve System?
A)It is a publicly owned and managed agency of the federal government
B)It is privately owned but publicly managed
C)It is owned by a group of large private banks and managed for their profit
D)It is a publicly owned agency of the federal government, managed for profit by private banks
The purchasing power of the dollar:
A)increases with the rate of inflation
B)is inversely related to the price level
C)is directly related to the supply of money
D)is directly related to the price level
Which of the following is included in M2 but not M1?
A)Currency held by banks
B)Small time deposits (less than $100,000)
C)Credit card balances
D)Large time deposits (at least $100,000)
In the U.S., there are:
A)50 Federal Reserve Districts corresponding to the 50 states
B)7 Federal Reserve Districts corresponding to the 7 members of the Board of Governors
C)12 Federal Reserve Districts corresponding to the 12 Federal Reserve Banks
D)6 Federal Reserve Banks corresponding to the number of U.S. time zones
Writing a check to purchase a new computer is an example of using money primarily as a:
A)unit of account
B)standard of value
C)medium of exchange
D)store of value
Whenever the Jones family receives change from a purchase, it goes into a jar to be used in the summer as spending money for the family vacation. The primary function served by the money in the jar is:
A)standard of value
B)store of value
C)unit of account
D)medium of exchange
Use the following to answer the next question:


Billions of dollars

Checkable deposits


Currency held by the public


Currency held by banks


Small time deposits


Savings deposits and money

market deposit accounts


Money market mutual funds


Large time deposits


Refer to the table. The size of the M2 money supply is:
A)$2,950 billion
B)$4,850 billion
C)$4, 875 billion
D)$6,275 billion
The U.S. money supply is "backed" by:
C)a joint committee of the Federal Deposit Insurance Corporation and the National Credit Union Administration
D)the ability of the government to maintain its value
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