1.

(04.01 LC) Bonds, stocks, and mutual funds are examples of ________ assets, while land, buildings, and vehicles are examples of ________ assets. (2 points)

	real; fixed
	real; current
	financial; real
	current; financial
	fixed; financial

2.

(04.01 MC) How does an increase in interest rates affect the opportunity cost of holding money and the repayment to creditors? (2 points)

Opportunity cost of holding money	Repayment to creditors
Increase	Increase

Opportunity cost of holding money	Repayment to creditors
Remain unaffected	Increase

Opportunity cost of holding money	Repayment to creditors
Decrease	Remain unaffected

Opportunity cost of holding money	Repayment to creditors
Increase	Remain unaffected

Opportunity cost of holding money	Repayment to creditors
Decrease	Increase

3.

(04.02 MC) Several major natural disasters disrupt supply lines and increase the expected inflation rate from 3% to 5%. If previously the real interest rate had been 6%, what is the new nominal interest rate? (2 points)

	1%
	10%
	8%
	11%
	14%

4.

(04.02 LC) In what situation would the expected real interest rate be negative? (2 points)

	The nominal interest rate is less than the expected inflation rate.
	The nominal interest rate is greater than the real interest rate.
	The expected inflation rate is greater than the actual inflation rate.
	The expected real interest is greater than the expected inflation rate.
	The actual inflation rate is greater than the nominal interest rate.

5.

(04.03 MC) If a household consumer withdraws $5,000 from their savings account, initially, M1 will ________ and M2 will ________. (2 points)

	decrease; decrease
	decrease; increase
	increase; be constant
	increase; decrease
	increase; increase

6.

(04.03 MC) Which of the following statement shows the difference between the monetary aggregates M1 and M2? (2 points)

	M1 includes the monetary base, travelers' checks, and demand deposits, while M2 only includes the money in circulation.
	M1 includes only the money in circulation, while M2 is composed of savings accounts.
	M1 includes the monetary base and travelers' checks, while M2 includes savings deposits.
	M1 includes the monetary base, travelers' checks, and demand deposits, while M2 includes M1, time deposits, and savings deposits.
	M1 includes only travelers' checks, while M2 includes M1, market shares, and savings deposits.

7.

(04.04 MC) Assume that a bank has a total deposit of $55,000 and the reserve ratio is 20%. What are the amounts of money that the bank will keep for itself and it will give out as loans? (2 points)

	The bank's fractional reserve is equal to $11,000, and the excess reserve is equal to $44,000.
	The bank's fractional reserve is equal to $11,000, and the excess reserve is equal to $55,000.
	The bank's fractional reserve is equal to $44,000, and the excess reserve is equal to $11,000.
	The bank's fractional reserve is equal to $55,000, and the excess reserve is equal to $66,000.
	The bank's fractional reserve is equal to $55,000, and the excess reserve is equal to $44,000.

8.

(04.04 MC) Use the data table to answer the following question.

Assets (billion $)	Liabilities (billion $)
Total reserves 3,000	Deposits 18,000
Loan 15,000
Total 18,000	Total 18,000

Assume the required reserve ratio to be 10%. Is the bank holding any excess reserve? If so, then what is the magnitude of the excess reserve? (2 points)

	No, the bank is not holding any excess reserve.
	Yes, the bank is holding an excess reserve of $1,200 billion.
	Yes, the bank is holding an excess reserve of $1,260 billion.
	Yes, the bank is holding an excess reserve of $1,800 billion.
	Yes, the bank is holding an excess reserve of $1,860 billion

9.

(04.05 MC) Which of the following statements is correct about the demand for money, supply of money, and the nominal interest rates? (2 points)

	The demand for money is inversely related to the nominal interest rates, and the supply of money is positively related to the nominal interest rates.
	The demand for money is positively related to the nominal interest rates, and the supply of money is inversely related to the nominal interest rates.
	The demand for money independent of the nominal interest rates, and the supply of money is positively related to the nominal interest rates.
	The demand for money is inversely related to the nominal interest rates, and the supply of money is independent of the nominal interest rates.
	The demand for money is positively related to the nominal interest rates, and the supply of money is independent of the nominal interest rates.

10.

\fNominal MS1 MS MS2 interest rate JE A MD1 B MD D C MD2 Quantity of money