Economics MCQ Exam: Trivia Quiz!
(146).jpg "Economics MCQ Exam: Trivia Quiz!")
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- 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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