Question 1

30) Jaime transfers $2,500 from his checking account to his savings account. This transaction
will

Accepted Answer

decrease M1 and not change M2.

Question 2

Ruby transfers $700 from her saving account to her checking account. This transaction will

Accepted Answer

increase M1 and not change M2.

Question 3

Teddy transfers $175 from his money market fund to his checking account. This transaction
will

Accepted Answer

increase M1, but leave M2 unchanged.

Question 4

Which of the following would not be counted as part of M1?

Accepted Answer

money market accounts

Question 5

Saving account balances are included in

Accepted Answer

M2.

Question 6

Which of the following would not be included in M2?

Accepted Answer

Treasury bonds

Question 7

Included in M2 are

Accepted Answer

demand deposits.

Question 8

Refer to Table 10.2. First Commercial Bank's excess reserves equal

Accepted Answer

$600,000.

Question 9

Refer to Table 10.2. The required reserve ratio

Accepted Answer

is 10%.

Question 10

Refer to Table 10.2. First Commercial Bank's total loans equal

Accepted Answer

$1,700,000.

Question 11

Refer to Table 10.3. The net worth of People's Bank is

Accepted Answer

$300,000.

Question 12

Refer to Table 10.3. The required reserve ratio is

Accepted Answer

20%.

Question 13

Refer to Table 10.3. People's Bank excess reserves are

Accepted Answer

$200,000.

Question 14

Refer to Table 10.3. Total loans of People's Bank equal

Accepted Answer

$500,000

Question 15

Crescent City Bank has $200 million in deposits. Crescent City Bank is meeting its reserve
requirement and has no excess reserves. It has $40 million in reserves. Crescent City Bank faces
a required reserve ratio of

Accepted Answer

20%.

Question 16

Narnia National Bank has $750 million in deposits. The required reserve ratio is 30%. Narnia
National Bank must keep ________ in reserves.

Accepted Answer

$225 million

Question 17

Neon Bank has $300 million in deposits. The required reserve ratio is 25%. Neon Bank must
keep ________ in reserves.

Accepted Answer

$75 million

Question 18

The Intracoastal Bank has $5 million in deposits and $500,000 in reserves. If the required
reserve ratio is 5%, excess reserves are equal to

Accepted Answer

$250,000.

Question 19

The Bank of Arugula has $9 million in deposits and $900,000 in reserves. If the required
reserve ratio is 10%, excess reserves are equal to

Accepted Answer

zero.

Question 20

The graph that shows the relationship between the aggregate quantity of output supplied by all
the firms in an economy and the overall price level is

Accepted Answer

the aggregate supply curve.

Question 21

The quantity of output supplied at different price levels is represented by the

Accepted Answer

aggregate supply curve.

Question 22

The aggregate supply curve

Accepted Answer

relates output with the price level.

Question 23

Refer to Figure 11.1. Between the output levels of $500 billion and $1,000 billion, the
relationship between the price level and output is

Accepted Answer

positive.

Question 24

Refer to Figure 11.1. This economy reaches capacity at

Accepted Answer

$1,500 billion.

Question 25

Refer to Figure 11.1. At aggregate output levels below $500 billion, this economy is most
likely experiencing

Accepted Answer

excess capacity.

Question 26

Refer to Figure 11.1. At aggregate output levels above $1,500 billion, firms in this economy
are most likely experiencing

Accepted Answer

costs increasing as fast as output prices.

Question 27

Refer to Figure 11.1. Between the output levels of $1,000 billion and $1,500 billion, the
relationship between the price level and output is

Accepted Answer

positive.

Question 28

Refer to Figure 11.1. At $1,500 billion, this economy

Accepted Answer

reaches its capacity.

Question 29

Refer to Figure 11.1. This economy is most likely experiencing excess capacity at aggregate
output levels

Accepted Answer

below $500 billion.

Question 30

When the interest rate is high, planned investment is ________ so output is ________.

Accepted Answer

low; low

Question 31

The slope of the IS curve is ________ and the slope of the Fed rule is ________.

Accepted Answer

negative; positive

Question 32

Refer to Figure 11.5. An increase in government spending shifts the ________ to the

Accepted Answer

IS curve; right

Question 33

Refer to Figure 11.5. An increase in the price level shifts the ________ to the ________.

Accepted Answer

Fed rule; left

Question 34

Refer to Figure 11.5. As a result of ________, the equilibrium interest rate increases and the
equilibrium output level increases.

Accepted Answer

an increase in government spending

Question 35

Refer to Figure 11.5. As a result of ________, the equilibrium interest rate increases and the
equilibrium output level decreases.

Accepted Answer

an increase in the price level

Question 36

Refer to Figure 11.5. Which of the following combinations would definitely increase the
equilibrium interest rate?

Accepted Answer

government spending increases and the price level increases

Question 37

Refer to Figure 11.5. An increase in the Z factors shifts the ________ to the ________.

Accepted Answer

Fed rule; left

Question 38

Refer to Figure 11.5. A decrease in government spending shifts the ________ to the
________.

Accepted Answer

IS curve; left

Question 39

Refer to Figure 11.5. A decrease in the price level shifts the ________ to the ________.

Accepted Answer

Fed rule; right

Econ Final Exam

Slides for Econ Final

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