EMILLECT 2024/2025 ACADEMIC YEAR ©2024 EMILLECT. ALL RIGHTS RESERVED. FIRST PUBLISH OCTOBER 2024.
Section 5 WS AP Macroeconomics Study
Guide with Complete Solutions
A share in the ownership of a company held by a shareholder is considered a - Answer✔✔-stock
Which of the following would accurately characterize the portion of a firm's profit paid to the owner of
one share of its stock? - Answer✔✔-dividend
A bond is - Answer✔✔-an IOU that pays interest
When a household makes a loan to a firm with the firm providing interest to the household, this is
known as: - Answer✔✔-a bond
Which of the following is considered investment spending in macroeconomics? - Answer✔✔-GM builds a
new plant to manufacture automobiles
In a simple economy, all investment spending must come from: - Answer✔✔-saving
From the standpoint of economic growth, banks are important to: - Answer✔✔-channel investment into
savings
The term "liquid asset" means - Answer✔✔-asset that is readily converted to cash
A mutual fund: - Answer✔✔-owns a diversified portfolio
The primary difference between M1 and M2 is that: - Answer✔✔-M2 includes savings deposits and time
deposits, but M1 does not
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, EMILLECT 2024/2025 ACADEMIC YEAR ©2024 EMILLECT. ALL RIGHTS RESERVED. FIRST PUBLISH OCTOBER 2024.
Debit cards are: - Answer✔✔-considered a part of the money supply since they allow access to a part of
the money supply
Currency in circulation plus bank reserves: - Answer✔✔-form in monetary base
The reserve ratio is the: - Answer✔✔-fraction of deposits the banks hold in their vaults
A bank run occurs when: - Answer✔✔-many bank depositors are trying to withdraw their funds from the
bank
Banks create money when they: - Answer✔✔-make loans
Suppose a bank already has excess reserves of $800 and the reserve ratio is 20%. If Andy deposits $1,000
of cash into his checking account and the bank lends $600 to Melanie, that bank can lend an additional: -
Answer✔✔-1,000
If banks were required to keep 100% of deposits in reserves, they could: - Answer✔✔-make no loans
The ________ multiplier is equal to ________ - Answer✔✔-money; 1 divided by the required reserve
ratio
Suppose the required reserve ratio was 10% and then it increases to 20%, this would: - Answer✔✔-
results in a drop in the money multiplier from 10 to 5
In the U.S, the institution that is charged with determining the size of the monetary base and with
regulating the banking system is the: - Answer✔✔-Federal Reserve
All of the following are responsibilities of the Fed EXCEPT: - Answer✔✔-mint bills and coins
The major tools of monetary policy available to the Federal Reserve system include: - Answer✔✔-
reserve requirements, open market operations, and the discount rate
Page 2/6
Section 5 WS AP Macroeconomics Study
Guide with Complete Solutions
A share in the ownership of a company held by a shareholder is considered a - Answer✔✔-stock
Which of the following would accurately characterize the portion of a firm's profit paid to the owner of
one share of its stock? - Answer✔✔-dividend
A bond is - Answer✔✔-an IOU that pays interest
When a household makes a loan to a firm with the firm providing interest to the household, this is
known as: - Answer✔✔-a bond
Which of the following is considered investment spending in macroeconomics? - Answer✔✔-GM builds a
new plant to manufacture automobiles
In a simple economy, all investment spending must come from: - Answer✔✔-saving
From the standpoint of economic growth, banks are important to: - Answer✔✔-channel investment into
savings
The term "liquid asset" means - Answer✔✔-asset that is readily converted to cash
A mutual fund: - Answer✔✔-owns a diversified portfolio
The primary difference between M1 and M2 is that: - Answer✔✔-M2 includes savings deposits and time
deposits, but M1 does not
Page 1/6
, EMILLECT 2024/2025 ACADEMIC YEAR ©2024 EMILLECT. ALL RIGHTS RESERVED. FIRST PUBLISH OCTOBER 2024.
Debit cards are: - Answer✔✔-considered a part of the money supply since they allow access to a part of
the money supply
Currency in circulation plus bank reserves: - Answer✔✔-form in monetary base
The reserve ratio is the: - Answer✔✔-fraction of deposits the banks hold in their vaults
A bank run occurs when: - Answer✔✔-many bank depositors are trying to withdraw their funds from the
bank
Banks create money when they: - Answer✔✔-make loans
Suppose a bank already has excess reserves of $800 and the reserve ratio is 20%. If Andy deposits $1,000
of cash into his checking account and the bank lends $600 to Melanie, that bank can lend an additional: -
Answer✔✔-1,000
If banks were required to keep 100% of deposits in reserves, they could: - Answer✔✔-make no loans
The ________ multiplier is equal to ________ - Answer✔✔-money; 1 divided by the required reserve
ratio
Suppose the required reserve ratio was 10% and then it increases to 20%, this would: - Answer✔✔-
results in a drop in the money multiplier from 10 to 5
In the U.S, the institution that is charged with determining the size of the monetary base and with
regulating the banking system is the: - Answer✔✔-Federal Reserve
All of the following are responsibilities of the Fed EXCEPT: - Answer✔✔-mint bills and coins
The major tools of monetary policy available to the Federal Reserve system include: - Answer✔✔-
reserve requirements, open market operations, and the discount rate
Page 2/6
