Economics MCQ Exam: Trivia Quiz!
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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.
- 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
Correct Answer
B. Banks giving out loans -
- 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
Correct Answer
C. Required reserves -
- 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.
Correct Answer
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.
Correct Answer
A. The amount of a deposit the bank may loan out. They CAN give the 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
Correct Answer
A. 1 / Reserve Requirement -
- 6.
Initial Deposit = $100 Reserve Requirement = 10% What is the money multiplier?
- A.
1
- B.
10
- C.
100
- D.
10%
Correct Answer
B. 10 -
- 7.
Initial Deposit = $100 Reserve Requirement = 10% What is the amount of excess reserves?
- A.
$10
- B.
$100
- C.
$90
- D.
$9
Correct Answer
C. $90 -
- 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
Correct Answer
D. $900 -
- 9.
The equation for the excess reserve is:
- A.
2 x Reserve requirement
- B.
Total deposit - required reserve
- C.
1 / total deposit
Correct Answer
B. Total deposit - required reserve -
- 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
Correct Answer
A. Multiplier x excess reserve -
- 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
Correct Answer
C. Stock options -
- 12.
What happens to the money supply when the Fed sells government securities?
- A.
Increases
- B.
Decreases
- C.
Same
Correct Answer
B. Decreases -
- 13.
What happens to the money supply when the Fed lowers the reserve requirements?
- A.
Increases
- B.
Decreases
- C.
Same
Correct Answer
A. Increases -
- 14.
What happens to the money supply when the Fed raises the discount rate?
- A.
Increases
- B.
Decreases
- C.
Same
Correct Answer
B. Decreases -
- 15.
When would the Fed decide to increase the money supply?
- A.
Recession
- B.
Inflation
- C.
Normal Economy
Correct Answer
A. Recession -
- 16.
When would the Fed decide to increase the interest rates?
- A.
Downturn
- B.
Normal Economy
- C.
Hot Economy
- D.
Never
Correct Answer
C. Hot Economy -
- 17.
Unemployment: 6.2% GDP Growth: -0.3% Inflation: 1.7% What is the major problem confronting this economy?
- A.
Recession
- B.
Inflation
Correct Answer
A. Recession -
- 18.
Unemployment: 6.2% GDP Growth: -0.3% Inflation: 1.7% What type of monetary policy is needed?
- A.
Easy Money
- B.
Tight Money
Correct Answer
A. Easy 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
Correct Answer
A. The time it takes for a policy change to take effect -
- 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
Correct Answer(s)
C. Low Reserve Requirement
D. Low Discount Rate
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
Correct Answer(s)
A. High reserve requirement
B. High Discount rate
E. Sell 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
Correct Answer
C. Lower discount rate, lower reserve requirement, buy bonds -
- 23.
The Fed senses that people are not saving enough.
- A.
Easy Money
- B.
Tight Money
- C.
Moral Persuasion
Correct Answer
C. Moral Persuasion -
- 24.
GDP has dipped from 3% to 1% in the last year.
- A.
Easy Money
- B.
Tight Money
- C.
Moral Persuasion
Correct Answer
A. Easy Money -
- 25.
The USA is experiencing both high inflation and high unemployment.
- A.
Easy Money
- B.
Tight Money
- C.
Moral Persuasion
Correct Answer
B. Tight Money -
- 26.
The consumer price index is up and housing starts are at a 15 year high.
- A.
Easy Money
- B.
Tight Money
- C.
Moral Persuasion
Correct Answer
B. Tight Money -
- 27.
Unemployment is at 11% and inflation is at 2%.
- A.
Easy Money
- B.
Tight Money
- C.
Moral Persuasion
Correct Answer
A. Easy Money -
- 28.
Prices are stable, and the GDP is growing at a 3% rate.
- A.
Easy Money
- B.
Tight Money
- C.
Moral Persuasion
Correct Answer
C. Moral Persuasion -
- 29.
Which person is the current federal reserve chairman?
- A.
Alan Greenspan
- B.
Henry Paulson
- C.
Paul Volcker
- D.
Ben Bernanke
Correct Answer
D. Ben Bernanke -
- 30.
What is the name of the 7 people who are at the top of the federal reserve structure?
- A.
District bank presidents
- B.
Board of governors
- C.
American people
- D.
Federal open market committee
Correct Answer
B. Board of governors -
- 31.
Which portion of the fed actually gets to decide on monetary policy?
- A.
District bank presidents
- B.
Board of governors
- C.
American people
- D.
Federal open market committee
Correct Answer
D. Federal open market committee -
- 32.
How long does the board of governors serve?
- A.
1 year
- B.
4 years
- C.
10 years
- D.
14 years
Correct Answer
D. 14 years -
- 33.
How long is the term of the fed chairman?
- A.
1 year
- B.
4 years
- C.
10 years
- D.
14 years
Correct Answer
B. 4 years -
- 34.
Which district bank president is allowed to always serve on the FOMC and never has to rotate?
- A.
Washington DC
- B.
Chicago
- C.
New York
- D.
San Francisco
Correct Answer
C. New York -
- 35.
Who appoints the fed chairman?
- A.
Treasury secretary
- B.
Secretary of state
- C.
President
- D.
Board of governors
Correct Answer
C. President -
- 36.
Which of these is not one of the functions of money?
- A.
Medium of exchange
- B.
Store of value
- C.
Measure of value
- D.
All are functions
Correct Answer
D. All are functions -
- 37.
What type of money is used in the USA today?
- A.
Specie
- B.
Fiat
- C.
Gold-backed
- D.
Silver-backed
Correct Answer
B. Fiat -
- 38.
Unemployment: 6.2% GDP Growth: -0.3% Inflation: 1.7% What type of monetary policy is needed?
- A.
Easy Money
- B.
Tight Money
Correct Answer
A. Easy Money -
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Current Version
-
Mar 20, 2022Quiz Edited by
ProProfs Editorial Team -
Mar 31, 2011Quiz Created by
Lillsar95
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