Economics MCQ Exam: Trivia Quiz!

38 Questions | Total Attempts: 47

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Economics MCQ Exam: Trivia Quiz!

Do you think you can pass the economics exam? This quiz can assist you with your studies. Corresponding to the examination, you can get an idea of what questions will be on the exam. You should figure out how money is created in the economy and the money banks keep with every deposit and the required reserve. This economics quiz was designed to help you prepare for the exam.


Questions and Answers
  • 1. 
    How is money created in our economy?
    • A. 

      Printing press

    • B. 

      Banks giving out loans

    • C. 

      The Fed buying bonds

    • D. 

      China providing dollars

  • 2. 
    What term is used to describe the money that the banks must keep from every deposit?
    • A. 

      Excess reserves

    • B. 

      Money multiplier

    • C. 

      Required reserves

    • D. 

      Deposit

  • 3. 
    What is the Required Reserve?
    • A. 

      The amount of a deposit the bank may loan out. They CAN give the money out.

    • B. 

      The amount of a deposit the bank must keep in its vault. They may not loan this money out.

  • 4. 
    What is Excess Reserve?
    • A. 

      The amount of a deposit the bank may loan out. They CAN give the money out.

    • B. 

      The amount of a deposit the bank must keep in its vault. They may not loan this money out.

  • 5. 
    How do we calculate the money multiplier?
    • A. 

      1 / Reserve Requirement

    • B. 

      Excess reserves / required reserves

    • C. 

      Required reserves / reserve requirement

    • D. 

      1 / excess reserves

  • 6. 
    Initial Deposit = $100 Reserve Requirement = 10% What is the money multiplier?
    • A. 

      1

    • B. 

      10

    • C. 

      100

    • D. 

      10%

  • 7. 
    Initial Deposit = $100 Reserve Requirement = 10% What is the amount of excess reserves?
    • A. 

      $10

    • B. 

      $100

    • C. 

      $90

    • D. 

      $9

  • 8. 
    Initial Deposit = $100 Reserve Requirement = 10% How much money will be created from this initial deposit?
    • A. 

      $990

    • B. 

      $1000

    • C. 

      $9000

    • D. 

      $900

  • 9. 
    The equation for the excess reserve is:
    • A. 

      2 x Reserve requirement

    • B. 

      Total deposit - required reserve

    • C. 

      1 / total deposit

  • 10. 
    The equation for finding out the total amount of money created is:
    • A. 

      Multiplier x excess reserve

    • B. 

      Required reserve / 10%

    • C. 

      .1 / multiplier

  • 11. 
    Which of those is not an option the Federal Reserve has to control the economy?
    • A. 

      Discount rate

    • B. 

      Reserve requirement

    • C. 

      Stock options

    • D. 

      Open market operations

  • 12. 
    What happens to the money supply when the Fed sells government securities?
    • A. 

      Increases

    • B. 

      Decreases

    • C. 

      Same

  • 13. 
    What happens to the money supply when the Fed lowers the reserve requirements?
    • A. 

      Increases

    • B. 

      Decreases

    • C. 

      Same

  • 14. 
    What happens to the money supply when the Fed raises the discount rate?
    • A. 

      Increases

    • B. 

      Decreases

    • C. 

      Same

  • 15. 
    When would the Fed decide to increase the money supply?
    • A. 

      Recession

    • B. 

      Inflation

    • C. 

      Normal Economy

  • 16. 
    When would the Fed decide to increase the interest rates?
    • A. 

      Downturn

    • B. 

      Normal Economy

    • C. 

      Hot Economy

    • D. 

      Never

  • 17. 
    Unemployment: 6.2% GDP Growth: -0.3% Inflation: 1.7% What is the major problem confronting this economy?
    • A. 

      Recession

    • B. 

      Inflation

  • 18. 
    Unemployment: 6.2% GDP Growth: -0.3% Inflation: 1.7% What type of monetary policy is needed?
    • A. 

      Easy Money

    • B. 

      Tight Money

  • 19. 
    What is Lag Time?
    • A. 

      The time it takes for a policy change to take effect

    • B. 

      The desired results happening too quickly

    • C. 

      Out of date Fed technology

    • D. 

      Not knowing accurate data

  • 20. 
    Easy money =
    • A. 

      High reserve requirement

    • B. 

      High Discount rate

    • C. 

      Low Reserve Requirement

    • D. 

      Low Discount Rate

    • E. 

      Sell Bonds

    • F. 

      Buy Bonds

  • 21. 
    Tight money =
    • A. 

      High reserve requirement

    • B. 

      High Discount rate

    • C. 

      Low Reserve Requirement

    • D. 

      Low Discount Rate

    • E. 

      Sell Bonds

    • F. 

      Buy Bonds

  • 22. 
    Unemployment: 6.2% GDP Growth: -0.3% Inflation: 1.7% What combination of actions by the Fed would achieve all the desired effects? (HINT: easy money = ____)
    • A. 

      Raise Discount Rate, Lower reserve requirement, sell bonds

    • B. 

      Raise discount rate, raise reserve requirement, sell bonds

    • C. 

      Lower discount rate, lower reserve requirement, buy bonds

    • D. 

      Lower discount rate, raise reserve requirement, sell bonds

  • 23. 
    The Fed senses that people are not saving enough.
    • A. 

      Easy Money

    • B. 

      Tight Money

    • C. 

      Moral Persuasion

  • 24. 
    GDP has dipped from 3% to 1% in the last year.
    • A. 

      Easy Money

    • B. 

      Tight Money

    • C. 

      Moral Persuasion

  • 25. 
    The USA is experiencing both high inflation and high unemployment.
    • A. 

      Easy Money

    • B. 

      Tight Money

    • C. 

      Moral Persuasion

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