Macroeconomics
Chapter 4: Review Questions 1. What is the primary function of money as a "medium of exchange"? A. It stores value for future use. B. It serves as a standard measure of value. C. It facilitates the buying and selling of goods and services. D. It earns interest over time. 2. Which of the following components is NOTpart ofM1?
A. Currency in circulation B. Demand deposits C. Saving deposits D. Money market mutual funds 3. How do banks contribute to the creation of money?
A. By printing physical currency B. By offering high-interest savings accounts C. By lending out a portion of their deposits D. By investing in the stock market
4. Assume that commercial banks hold no excess reserves and the reserve requirement is 10%. How much money is created in new loans from all banks after a bank receives a deposit of $2,000?
A. $19,990 B. $18,000
C. $2,200 D. $1,800 5. What role do interest rates play in the fnancial sector?
A. They have no impact on fnancial decisions. B. They determine the prices of goods and services. C. They influence borrowing, lending, and investment decisions. D. They regulate taxation policies. 6. Which of the following is NOT one of the three tools of monetary policy used by central banks?
A. Open-market operations B. Reserve requirement
C. Discount rate D. Fiscal Policy
148
© 2024 ACHIEVE ULTIMATE CREDIT-BY-EXAM GUIDE|MACROECONOMICS
Made with FlippingBook - Online Brochure Maker