Economics Solved MCQs Test 02 Preparation Online

1. An IOU of the Federal Reserve Bank of San Francisco to Bank of America is called ?

A. collateral

B. reserves

C. discounts

D. federal funds

2. An increase in the money supply will cause interest rates to ?

A. None of these

B. remain unchanged

C. rise

D. fall

3. If the monetary base is increased by $1,000 and the reserve requirement is 10% (1/10), by how much will the money supply be increased ?

A. $1,000

B. $100

C. $5,000

D. $10,000

4. Which of the following is a component of M-1 ?

A. gold

B. savings deposits

C. check able deposits

D. credit card

5. Which of the following is a NOT component of M-2 ?

A. small time deposits

B. money market mutual funds

C. stocks

D. checkable deposits

6. Which of the following is true about the Federal Reserve System (Fed) ?

A. its Board of Governors is elected by a vote of the people

B. its main policy-making body is the FDIC

C. it accepts deposits from the public and makes loans to businesses

D. it is a system of 12 central banks

7. Which of the following IS a function of money ?

A. store of value

B. medium of exchange

C. unit of accounting

D. all of the above

8. If the Federal Reserve wishes to increase the money supply, it should ?

A. raise the reserve requirement

B. buy Treasury securities in the open market

C. raise the discount rate

D. all of the above

9. Which of the following is the most liquid ?

A. a savings account

B. a home

C. a 6 month CD

D. water

10. The monetary base is composed of ?

A. currency only

B. currency and check-able deposits

C. gold and silver

D. currency and reserves

Economics Solved MCQs Test 02 Preparation Online

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