". VdoTips: Economic Practice Test 4

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Economic Practice Test 4

16. Which of the following is the most liquid?
A. a savings account
B. a 6 month CD
C. a home
D. water


17. The monetary base is composed of:
A. gold and silver
B. currency only
C. currency and reserves
D. currency and checkable deposits


18. 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. $100
B. $1,000
C. $5,000
D. $10,000


19. If the Federal Reserve wishes to increase the money supply, it should:
A. raise the reserve requirement
B. raise the discount rate
C. buy Treasury securities in the open market
D. all of the above


20. An increase in the money supply will cause interest rates to
A. rise
B. fall
C. remain unchanged


Answers: D C C A C A C D C B