6Federal Reserve Notes:

Select one:

a.constitute almost all of the U.S. paper money in circulation.

b.are not part of the M1 money supply because they are U.S. government securities.

c.represent the smallest component of the money supply.

d.have been created by the U. S. Treasury as a means of trading Federal Reserve bonds for cash.

7Generally speaking, from 1980 through 2010, the velocity of money:

Select one:

a.has remained fairly stable at about 7.2.

b.frequently fluctuated up and down over a wide range.

c.was fairly stable at about 7.0 up to the late 1990s, and then increased to 9.0 and over since 2000.

d.dropped almost every year until 1995, and then grew almost every year from 1995 through 2010.

8If an economy experienced chronic and severe inflation where prices were adjusted upward on a daily basis:

Select one:

a.people would want to save more of their incomes than previously.

b.money's ability to serve as a method for accumulating wealth would not be affected.

c.lenders would be less willing to make loans since the value of money would be lower when the loans were repaid.

d.all of these answers are correct.

9Loans and deposits are:

Select one:

a.both assets of a bank.

b.both liabilities of a bank.

c.respectively, assets and liabilities of a bank.

d.respectively, liabilities and assets of a bank.

11A decrease in the equilibrium interest rate and an increase in the equilibrium quantity of loans made would result from:

Select one:

a.a decrease in excess reserves.

b.an increase in excess reserves.

c.a decrease in the demand for loans.

d.an increase in the demand for loans.