1. M1 includes:a. cash and travelers' checks.b. cash, checking account balances, and travelers' checks.c. cash, travelers checks', and bank depositsd. cash, checking account balances, and saving accountbalances.e. cash, bank deposits, and money market accounts.2. Money almost always serves as the standard unit for quotingprices. This is another way of saying money serves as a:a. medium of exchange.b. store of value.c. standard of value.d. commodity itself.e. all of the above are correct.3. Which of the following is the best definition of money?a. anything generally accepted as a payment for goods or repaymentof debtb. anything that is a liability of the federal governmentc. anything that is a liability of a commercial bankd. coins and currency in the hands of the public4. A gold standard is:a. a measurement of the importance of a good; it indicates highquality.b. the basis for monetary exchange internationally.c. an internationally recognized means for defining currencyexchange rates.d. a system where currency (e.g., the dollar) was defined asequivalent in value to a certainamount of gold.5. With the invention of banking, one important aspect of money wasthat:a. individuals have no discretion over the money supply.b. government lost all control over the money supply.c. banks have some discretion over the money supply.d. banks have full control over the money supply.e. money was out of control.6. Fractional reserve banking takes its name from the factthat:a. banks hold only a fraction of their reserves at the bankitself.b. banks keep only a fraction of total deposits on reserve.c. banks lend only a fraction of their total reserves tocustomers.d. banks reserve only a fraction of their activity for lending.e. banks reserve only a fraction of their cash for tellerusage.

Money is an economic unit that functions as a by and large perceived medium of exchange for…

MI includes: a. cash and travelers' checks. b. cash, checking account balances, and travelers' checks. c. cash, travelers checks', and bank deposits d. cash, checking account balances, and saving accountbalances. e. cash, bank deposits, and money market accounts.

MI includes: a. cash and travelers' checks. b. cash, checking account balances, and travelers' checks. c. cash, travelers checks', and bank deposits d. cash, checking account balances, and saving accountbalances. e. cash, bank deposits, and money market accounts.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Monetary System

Section: Chapter Questions

Problem 12PA

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Concept explainers

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.

Question

1. M1 includes:
a. cash and travelers' checks.
b. cash, checking account balances, and travelers' checks.
c. cash, travelers checks', and bank deposits
d. cash, checking account balances, and saving accountbalances.
e. cash, bank deposits, and money market accounts.
2. Money almost always serves as the standard unit for quotingprices. This is another way of saying money serves as a:
a. medium of exchange.
b. store of value.
c. standard of value.
d. commodity itself.
e. all of the above are correct.
3. Which of the following is the best definition of money?
a. anything generally accepted as a payment for goods or repaymentof debt
b. anything that is a liability of the federal government
c. anything that is a liability of a commercial bank
d. coins and currency in the hands of the public
4. A gold standard is:
a. a measurement of the importance of a good; it indicates highquality.
b. the basis for monetary exchange internationally.
c. an internationally recognized means for defining currencyexchange rates.
d. a system where currency (e.g., the dollar) was defined asequivalent in value to a certain
amount of gold.
5. With the invention of banking, one important aspect of money wasthat:
a. individuals have no discretion over the money supply.
b. government lost all control over the money supply.
c. banks have some discretion over the money supply.
d. banks have full control over the money supply.
e. money was out of control.
6. Fractional reserve banking takes its name from the factthat:
a. banks hold only a fraction of their reserves at the bankitself.
b. banks keep only a fraction of total deposits on reserve.
c. banks lend only a fraction of their total reserves tocustomers.
d. banks reserve only a fraction of their activity for lending.
e. banks reserve only a fraction of their cash for tellerusage.

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33. Which of the following is a function of money? a. a unit of account b. medium of exchange c. a store of value d. All of the above are correct.
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Pls help with below homework.
2. Consider the following data (all values are in billions of dollars): (b) Currency Transactional deposits Bank reserves June 1930 June 1931 June 1932 $ 3.681 3.995 4.959 21.612 19.888 15.490 3.227 3.307 2.829 (a) Calculate the values for each period for the currency-deposit ratio, the ratio of total reserves to deposits, the monetary base, M1, and the money multiplier. Can you explain why the currency-deposit ratio and the ratio of total reserves to deposits moved as they did between 1930 and 1932(Great depression era)?
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