An increase in the price of a good could be caused by
a. An increase in supply.
b. An increase in demand.
c. A decrease in supply and an increase in demand.
d. Either b. or c.
Question 2If a person buries his money in his backyard, he is using money as a medium of exchange.
a. True
b. False
Indicate whether the statement is true or false
Question 3If the FOMC purchases government bonds priced at 5,000 from a bond dealer who banks at National Bank, and if the reserve requirement is 20 percent, then the required reserves of National Bank:
a. increase by 5,000.
b. increase by 4,000.
c. increase by 1,000.
d. decrease by 5,000.
e. decrease by 1,000.
Question 4For quantity exchanged to decrease, but the price to rise, there must have been a(n)
a. increase in demand.
b. decrease in demand.
c. increase in supply
d. decrease in supply.
Question 5Credit cards should be included in M1 because they are just like checks.
a. True
b. False
Indicate whether the statement is true or false
Question 6When the Federal Open Market Committee buys government securities:
a. the reserve requirement of banks decrease.
b. the reserve deposits of banks decrease.
c. the excess reserves of banks increase.
d. the federal funds rate increases.
e. the legal reserves of banks decrease.
Question 7Both price and quantity will increase when there is a(n)
a. increase in demand.
b. decrease in demand.
c. increase in supply
d. decrease in supply.
Question 8Money functioning as a medium of exchange results in an increase in transactions costs.
a. True
b. False
Indicate whether the statement is true or false
Question 9The buying and selling of government bonds by the FOMC constitutes:
a. an open market operation.
b. a federal funds adjustment.
c. a discount rate adjustment.
d. a change in the reserve requirement.
e. sterilization of the money supply
Question 10If the supply curve for housing has the normal positive slope, rent controls are likely to:
a. increase the quantity of available housing.
b. improve the quality of available housing
c. create a larger shortage than if the supply curve were vertical.
d. help low-income families find suitable housing.
Question 11Paper money is fiat money because it has been declared by government as a means of exchange.
a. True
b. False
Indicate whether the statement is true or false
Quick Reply
