1. The FOMC consists of ____________________________________

1. The President of the Federal Reserve Bank of ______________is always a member of the FOMC.

1. Which of the following actions of the Fed would increase the money supply?
2. The purchase of U.S. government securities
3. A reduction in the required reserve ratio
4. All of the above

1. Which of the following compose the reserves of a commercial bank?
2. Demand deposits
3. Vault cash & deposits at the Federal Reserve
4. US securities and stock equity

1. Checking account deposits are classified as money because:
2. They can be readily used for purchases
3. They are obligations of the US Treasury
4. They earn interest

1. The three main tools of monetary policy are:
2. Government expenditures, taxation and reserve requirements
3. Coin, currency and demand deposits
4. Open-market operations, reserve requirements and the discount rate
5. Fiat, commodity and deposit money

1. When both exports and imports are considered, the major advantages of international trade is that it allows us to:
2. Seclude ourselves from foreign products
3. Consume a larger, more diverse quantity of goods and services at lower prices than would otherwise prevail
4. Benefit at the expense of less-developed nations
5. Maintain jobs for workers who would otherwise have little to do

1. A depreciation in the U.S. dollar on the foreign exchange market will:
2. Make U.S. exports more expensive to foreigners
3. Make imports less expensive for U.S consumers
4. Make U.S. exports cheaper for foreign consumers
5. Encourage U.S. consumers to travel abroad

1. U.S. paper dollars are:
2. Issued by the US Treasury Department
3. Issued by the Federal Reserve
4. Backed by gold

1. All of the following are functions of money EXCEPT:
2. A medium of exchange
3. Protection from inflation
4. A unit of account
5. A store of value
   1. Store of value

Answer the next three questions for money as:

1. Unit of account
2. Medium of exchange

1. You place some of your earnings in a savings account. ______

1. You write a check to buy a used car. ________

1. A $79 price tag on a seater in a department store _________

1. Which of the following people or firms would be pleased by the depreciation of the dollar?
2. A U.S tourist traveling in Europe
3. A U.S importer of Russian Vodka
4. A Chinese importer of U.S. concrete

1. Which of the following does NOT explain what backs the money supply in the U.S.
2. It is backed by gold
3. Widely accepted in transactions
4. It is designated as "legal tender" by the federal government
5. It is relatively scarce

1. Which of the following tends to reduce bank failures by preventing bank runs by depositors?
2. FDIC
3. FOMC
4. Congress
5. IRS

1. If all banks need to keep 10% reserves, if a new customer deposits $50,000 into a checking account, the bank could extend new loans up to a maximum of: _________

1. The deposit of $50,000 is a(n) _______________on the bank's balance sheet
   1. Asset
   2. Liability
   3. Investment

1. A bank that has assets of $85 billion and a net worth of $10 billion, must have deposits (liabilities) of: ____________________

1. Commercial banks "create money" when they:
2. Collect checks
3. Make loans to the public
4. Borrow from the Federal Reserve Banks

1. When a commercial bank has excess reserves:
2. It is in position to make additional loans
3. It is charging too low of an interest rate
4. Its reserves exceed its assets

1. If a Bank A has insufficient reserves and borrows from Bank B, the interest rate that is charged is called the
2. LIBOR
3. Fed Funds Rate
4. Prime rate
5. Discount rate

1. The current Fed Funds Rate is: _____________

1. Which of the following is the best definition of money?
2. Anything generally accepted as payment for goods or repayment of debt
3. Anything that can be converted to a liquid asset
4. A national currency that is backed by gold or other precious metals.

1. The members of the Federal Reserve Board:
2. Serve 7-year terms
3. Are elected
4. Are appointed for 14-year terms
5. Appointed by the presidents of the Federal Reserve banks

1. If the Federal Reserve increases the money supply, which of the following is expected to happen
2. GDP will rise
3. GDP will fall
4. Short-term interest rates will rise

1. A study of countries with high inflation rates indicate that this increase in the inflation rate is generally
2. Caused by strong labor unions
3. Caused by supply shocks
4. The result of rapid growth in the money supply

1. If the exchange rate between the U.S. dollar and the Euro were 1.50 ( $1.50 = one Euro ), what would be the price in dollars of a German automobile that costs 40,000 euros?
2. $10,000
3. $40,000
4. $60,000
5. $200,000

1. The number of Federal Reserve Bank Districts is __________________

1. The members of the Board of Governors of the Federal Reserve are:
2. Appointed by the president with Senate confirmation
3. Appointed by Congress
4. Appointed by the Federal Reserve District Banks

1. TARP means:
2. Toxic Asset Relief Program
3. Troubled Asset Relief Program
4. Troubled Asset Recovery Program

1. If interest rates are lowered, the demand for money:
2. Increases
3. Decreases
4. Stays the same

1. Which of the following is both an economic and a financial investment?
2. Government builds a new road
3. A corporation builds a new factory
4. An individual buy GE stock

1. Which grows faster?
2. Compound interest rates
3. Simple interest rates
4. Inverse interest rates

1. Which of the following is common to all investments?
2. The payment of interest
3. Some price must be paid to acquire them
4. Owners are guaranteed future payments
5. Government insurance backs them

1. Payments to shareholders from corporate profits are:
2. Dividends
3. Capital gains
4. Interest

1. Bonds represent:
2. A claim on corporate dividends
3. Ownership of a company
4. Loans to governments and/or corporations

1. Which investment is the safest?
2. Corporate bonds
3. Corporate stocks
4. U.S. Treasury Bills
5. Foreign Bonds

1. The United States most important trading partner is___________________

1. In recent decades, the US has had a trade:
2. Surplus
3. Deficit
4. Balanced

1. In recent years the U.S. has:
2. Exported more services that it has imported
3. Had a small goods trade surplus with China
4. Had a large goods trade surplus with the rest of the world

1. Can a nation have both an absolute advantage and a comparative advantage in producing a product?
2. Yes
3. No

1. The primary gain from international trade is:
2. Increased employment in domestic goods
3. More goods that would be attainable through domestic production alone
4. Tariff revenue

1. USMCA is the _______________________

1. If the U.S. sets a limit on the number of sneakers that can be imported, this is an example of a(n):
2. Protective tariff
3. Revenue tariff
4. Import quota

1. If a U.S importer can purchase 10,000 British pounds for $20,000, the rate of exchange is:
2. $1 = 2 pounds
3. $2 = 1 pound
4. $1 = 1 pound

1. If the exchange rate changes so that more Mexican pesos are required to buy a dollar, then:
2. The peso has appreciated in value
3. Americans will buy more Mexican goods and service
4. The dollar has depreciated in value

1. U.S. exporters find it more attractive if the dollar _____ relative to the other currency:
2. Depreciated
3. Appreciated
4. Stayed the same

1. Because of large budget deficits, the United States:
2. Is the world's largest exporting nation
3. Has the world's largest external debt
4. Has the world's largest savings rate

1. This organization monitors global trade activity:
2. NAFTA
3. United Nations
4. World Trade Organization ( WTO )