ECON 252 Ch. 11 Questions with Correct Answers (Grade A+)

ECON 252 Ch. 11 Questions with Correct Answers (Grade A+)

Question 1: In the United States the average household is holding about ____ in coin and currency

Answer: $3,100

Question 2: The US dollar is:
A. Fiat money with no intrinsic value
B. Fiat money with intrinsic value
C. commodity money with no intrinsic value
D. Commodity money with intrinsic value

Answer: A. Fiat money with no intrinsic value

Question 3: Suppose that in a country people lose confidence in the banking system and hold relatively
more currency and less deposits. As a result, bank reserves will...
A. Decrease and the money supply will eventually decrease.
B. Decrease and the money supply will eventually increase.
C. Increase and the money supply will eventually decrease.
D. Increase and the money supply will eventually increase

Answer: D. Decrease and the money supply will eventually decrease

Question 4: If the Fed wishes to lower its federal funds rate target it will ______ U.S. government
securities to _______ excess reserves in commercial banks.
A. buy; increase
B. sell; increase
C. sell; decrease
D. buy; decrease

Answer: A. buy; increase

Question 5: If bankers decide they want to increase the level of desired excess reserves, loans and
deposits will _______ and the supply of money will ______.
A. decrease; decrease
B. increase; decrease
C. decrease; increase
D. increase; increase

Answer: A. decrease; decrease




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