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Flashcards in Chapter 13 Deck (24):
1

The concept of the liquidity trap was formulated by

John Maynard Keynes

2

Which is true?

M1 is not part of M2 is part of M3

3

People tend to hold more money as

The price level rises and credit availability falls

4

The opportunity cost of holding money

Varies directly with the interest rate

5

John Maynard Keynes said that people have three motives for holding money. Each of the following is a Keynesian motive except

Inflation

6

The S and L debacle will ultimately cost American taxpayers

About 200 billion

7

Which statement is true?

M2+large denomination time deposits =M3

8

The most narrow definition of the money stock developed by the Federal Reserve System in the U.S. is

M1

9

In the early 1980s the savings and loan associations started making ------ loans and paying their shareholders ----- interest rates.

Riskier and higher

10

Which is NOT considered money?

Credit Cards

11

The transaction motive for holding money

Are used to make expected expenditures

12

All large financial institutions have to hold a reserve of almost-----% of their demand deposits.

10

13

As interest rate declines the amount of money the public wishes to hold

Rises

14

The demand for money schedule shows that the quantity of money that people want to hold

falls as the interest rate rises

15

Coins in the hands of the public are

Included in both M1 and in M2

16

Back in the Middle Ages, the only safe place to put your money was

In goldsmiths safes

17

Which of the following is most unlike the others?

Passbook savings account

18

Banking began in

Medieval times

19

Each of the owing hurt the savings and loan industry in the 1980's except

Falling interest rates

20

Which one of the following is not money?

Gold

21

Which statement is true?

Citigroup is the largest American bank.

22

What led to the bankruptcy of the many goldsmiths?

They had a reserve ratio that was too high.

23

If a person writes a check on a Tulsa bank to purchase a new Oldsmobile, he is employing money as:

A medium of exchange

24

Supposed goldsmith Banker had a certain number of gold coins in his safe and he kept writing more and more Goldsmith receipts for people who came in to borrow money. What would be happening to his reserve ratio

It would be failing.