1.Suppose we observe the following prices:eggs - $1/dozen, butter - $2/pound, shoes - $50/pair, MP3 player - $100. Which of the following is true about the purchasing power of $1?

a. 1 dozen eggs.

b. pound of butter.

c.1/50 pair of shoes.

d.All of the above.

e.None of the above.

2.In the "market" for money, an increase in supply will create ___ and lead to a ___.

a. a shortage; rise in the PPM

b. a shortage; fall in the PPM

c. a surplus; rise in the PPM

d. a surplus; fall in the PPM

3.In the "market" for money, a decrease in supply will create ___ and lead to a ___.

a. a shortage; rise in the PPM

b. a shortage; fall in the PPM

c. a surplus; rise in the PPM

d. a surplus; fall in the PPM

4.In the "market" for money, an increase in demand will create ___ and lead to a ___.

a. a shortage; rise in the PPM

b. a shortage; fall in the PPM

c. a surplus; rise in the PPM

d. a surplus; fall in the PPM

5.In the "market" for money, a decrease in demand will create ___ and lead to a ___.

a. a shortage; rise in the PPM

b. a shortage; fall in the PPM

c. a surplus; rise in the PPM

d. a surplus; fall in the PPM

6.Details of the various types of financial assets that goes into the differing measures of money are summarized in the Federal Reserve's:

a.Regulation A.

b.Regulation B.

c.Regulation C.

d.Regulation D.

e.Regulation X.

7.This account has no maturity date, may be transferred to another account and cannot be held by a business:

a.Demand deposit account.

b.Negotiable order of withdrawal.

c.Time deposit.

d.Savings deposit.

e.Money market deposit account.

8. Before 2021, which of the following was not included in M1?

a. Currency.

b. Traveler's checks.

c.Transaction deposits.

d.Savings deposits.

e. Checking accounts.

9. Monetary aggregates are groupings of financial assets that are combined based on their degree of liquidity. Which of the following is most liquid?

a. M1

b. M2

c. M3

d. MZM

e. Gold

10. Which of the following is the least liquid financial asset?

a. Currency in your pocket.

b. A savings deposit.

c. Diamonds.

d. Traveler's checks.

e. A U.S. Savings Bond.

11. Which of the following is part of the monetary base?

a. Federal Reserve notes.

b. Bonds.

c. Discount loans.

d. Gold certificates.

e. None of the above

12.Liquidity is defined as how ___ an asset can be converted into ___ at its ___ .

a.fast; store of value; discounted present value

b.slow; gold; discretion

c.fast; a medium of exchange; full market value

d.slow; a unit of account; fixed exchange rate

e.fast; gold; nominal rate of interest

13.Before 2021, if Jack takes $1000 out of his checking account at an ATM machine (i.e., he receives cash). Which of the following is/are true?

a.M1 will rise; M2 will rise.

b.M1 will remain the same; M2 will rise.

c.M1 will fall; M2 will remain the same.

d.M1 will rise; M2 will fall.

e.M1 and M2 will remain the same.

14.It can be said that the Federal Reserve has perfect control over the size of the value of:

a. M1.

b. M2.

c. MZM.

d. MB.

e.All of the above.

15. The monetary base is equal to:

a. C+R.

b. c*D.

c. C+D.

c. rr*D.

e. c*D + rr*D + e*D.

16. After 2021, Katie decides to take $2000 in cash that she had been holding onto for a while and take this money to her bank and buy a 6 month certificate of deposit (i.e., a small time deposit). As a result we can say that:

a.M1 has risen and M2 has risen.

b.M1 has risen and M2 had remained constant.

c.M1 has remained constant and M2 has risen.

d.M1 has fallen and M2 has remained constant.

e.M1 has remained constant and M2 has remained constant.

17. Before 2021, Carmen had $2000 in cash that she had been holding onto for a while and then decided to deposit this money into her checking account. As a result we can say that:

a.M1 has risen and M2 has risen.

b.M1 has risen and M2 had remained constant.

c.M1 has remained constant and M2 has risen.

d.M1 has fallen and M2 has remained constant.

e.M1 has remained constant and M2 has remained constant.

18.If the government wants to increase its spending, it can:

a.collect more taxes.

b.sell more bonds to the public.

c.increase the monetary base.

d.All of the above.

e.Only A and B of the above.

19.After 1980, the definition of M1 was changed to:

a.include checkable accounts at credit unions.

b.include savings accounts at commercial banks.

c.small time deposits at depository institutions.

d.All of the above.

e.Only A and B of the above.

20.Beginning in 2021, the definition of M1 was changed to:

a.exclude checkable accounts at credit unions.

b.include savings accounts at commercial banks.

c.exclude small time deposits at depository institutions.

d.All of the above.

e.Only A and B of the above.

21.When the definition of M1 was changed in 2021, the reported value of M1 in May of 2020:

a.rose by about $2 trillion.

b.rose by a bit more than $10 trillion.

c.rose by almost $40 trillion.

d.fell by a bit less than $10 trillion.

e.fell by about $4 trillion.

22.After February of 2021, what is included in the measured M2 that is not in M1?

a.Small savings deposits.

b.Large savings deposits.

c.Individual money market mutual fund accounts.

d.Small time deposits.

e.Large time deposits.

23.As of November of 2021, M2 is about ___ greater than M1.

a.$13 trillion

b.$2.1 trillion

c.$1.3 trillion

d.$560 billion

e.$140 billion

24.Which of the following data series have been discontinued by the Federal Reserve?

a.Travelers checks.

b.Institutional money market demand accounts.

c.M3

d.MZM

e.All of the above have been discontinued.

25.Over which of the following time periods did the Federal Reserve increase the monetary base by the greatest amount, in dollar terms?

a.Fall of 1999 to spring of 2000.

b.Over the fall of 2001.

c.From July of 2008 to January of 2009.

d.From June of 2011 to August of 2014.

e.From February of 2020 to May of 2020.