Economics MCQ Exam: Trivia Quiz!

38 Questions | Total Attempts: 47

SettingsSettingsSettings
Please wait...
Economics MCQ Exam: Trivia Quiz!

.


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