Test #9, Chapters 10 & 11

Answer the questions below and then click "submit" to send your answers.

  1. U.S. prisoners of war during World War II used cigarettes as a medium of exchange.

    2. Your answer:
    True False

  2. Part of the appeal of gold as a medium exchange is that it is indivisible.

    3. Your answer:
    True False

  3. Fiat money is backed by gold.

    4. Your answer:
    True False

  4. A bank can only loan out its excess reserves.

    5. Your answer:
    True False

  5. If the legal reserve requirement is decreased, the money multiplier is decreased

    6. Your answer:
    True False

  6. According to the Keynesian view, as interest rates fall

    7. Your answer:
    People will hold more money
    People will hold less money
    People will increase interest-yielding asset holdings
    The quantity demanded of investment goods will fall
    The economy’s aggregate demand will contract

  7. The exchange of one good for another, without the use of money, is known as

    8. Your answer:
    currency
    acquisitive exchange
    liquidity
    volatility
    barter

  8. The equation of exchange is written as

    9. Your answer:
    MQ=P
    MQ=PV
    M-QVP
    V=PQM
    MV=PQ

  9. An individual bank can lend out at most its

    10. Your answer:
    Legal reserves
    Demand deposits
    Actual reserves
    Excess reserves
    Fractional reserves

  10. If the legal reserve requirement decreases, the

    11. Your answer:
    Money multiplier stays the same
    Amount of excess reserves the bank has decreases
    Money multiplier increases
    Money multiplier decreases
    Amount of excess reserves stays the same

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