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Thank you. 1. Which of the following is NOT part of M1? A. Savings deposits B. Checkable deposits C. Coins D. Travelers checks E. Currency

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1. Which of the following is NOT part of M1? A. Savings deposits B. Checkable deposits C. Coins D. Travelers checks E. Currency 2. Which if the following is true for the money market graph? A. The demand for money is vertical because of autonomous spending B. The supply of money is downward sloping C. There is no relationship between the nominal interest rate and the quantity of money demanded in the long- run D. There is an inverse relationship between the nominal interest rate and the quantity of money demanded E. An increase in the nominal interest rate will shift the money supply to the right 3. Fractional reserve banking means that banks are required to A. Charge the same interest rate on all their loans B. Expand the money supply when requested by the central bank C. Insure their deposits against losses and bank runs D. Pay a fraction of their interest income in taxes E. Keep part of their demand deposits as reserves 4. When an economy is below full employment, an expansionary monetary policy will lead to A. Lower interest rates and more investment B. Lower interest rates and less investment C. Higher interest rates and lower prices D. Higher interest rates and higher prices E. Higher interest rates and lower price levels 5 5. If the Federal Reserve raises interest rates, how are the money supply and real GDP affected? Money Supply / Real GDP A. Decrease / Decrease B. Increase / Increase C. Decrease / Increase D. Increase / Decrease E. Decrease / No change 6 6. To eliminate an inflationary gap, the Federal Reserve might A. Increase personal income taxes B. Increase in the money supply C. Decrease the federal funds rate

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