The Fed controls the money supply in the U.S. economy largely through its ability to influence bank reserves and the money creating power of commercial banks.
a. True
b. False
Indicate whether the statement is true or false
Question 2Say that the equilibrium price of natural gas would be 5 per thousand cubic feet, but there is a price floor imposed at 7 per thousand cubic feet. That price floor is then lowered to 5 per thousand cubic feet. As a result,
a. the shortage of natural gas will get worse.
b. the shortage of natural gas will get less severe.
c. the surplus of natural gas will get worse.
d. the surplus of natural gas will be eliminated.
Question 3Near monies are:
a. included in the M1 definition of the money supply.
b. highly liquid assets that are close substitutes for money.
c. stocks, bonds, and real estate.
d. U.S. notes and Federal Reserve notes.
Question 4The Fed controls the money supply to achieve the policy goals set by the United States International Trade Commission.
a. True
b. False
Indicate whether the statement is true or false
Question 5Say that the equilibrium price of natural gas would be 5 per thousand cubic feet, but there is a price ceiling imposed at 3 per thousand cubic feet. That price ceiling is then lowered to 2 per thousand cubic feet. As a result,
a. the shortage of natural gas will get worse.
b. the shortage of natural gas will get less severe.
c. the surplus of natural gas will get worse.
d. the surplus of natural gas will get less severe.
Question 6Fiat money has value because:
a. it is backed by gold.
b. it is divisible.
c. it can be used to buy things.
d. it can be exchanged for a commodity backing it.
Question 7The Board of Governors is the body responsible for setting and implementing monetary policy targets for the Federal Reserve System.
a. True
b. False
Indicate whether the statement is true or false
Question 8Which of the below is true?
a. A price ceiling reduces the quantity exchanged on the market, but a price floor increases the quantity exchanged on the market.
b. A price ceiling increases the quantity exchanged on the market, but a price floor decreases the quantity exchanged on the market.
c. Both price floors and price ceilings reduce the quantity exchanged in the market.
d. Both price floors and price ceilings increase the quantity exchanged in the market.
Question 9One reason why gold and silver coins have historically served as money is that:
a. they are easily portable.
b. they can be made of uniform size and quality.
c. they can be divided if necessary for low prices.
d. all of the above are correct.
Question 10The monetary policy decisions made by the Federal Reserve must be approved by the Congress before they are enacted.
a. True
b. False
Indicate whether the statement is true or false
Question 11If the equilibrium price of widgets is 22, and then a price ceiling of 24 is imposed by the government, as a result,
a. there will be no effect on the widget market.
b. there will be a shortage of widgets.
c. there will be a surplus of widgets.
d. the price of widgets will increase.