Money Supply and Monetary Aggregates Quiz
Explore monetary aggregates, money multiplier, central bank tools, and more. Test your understanding of money supply in this comprehensive quiz!
#1
Which of the following is considered a measure of money supply?
GDP
Inflation rate
M1
Unemployment rate
#2
Which of the following is not a function of money?
Medium of exchange
Store of value
Unit of labor
Unit of account
#3
What is the main reason for holding money as an asset according to the transactions demand for money?
To earn interest
To facilitate transactions
To hedge against inflation
To speculate on currency exchange rates
#4
What does M1 include?
Currency in circulation and demand deposits
Savings deposits and time deposits
Foreign currency deposits
Treasury bills
#5
Which of the following is an example of near money?
Coins
Currency in circulation
Savings deposits
Demand deposits
#6
Which of the following is not included in M2?
Savings deposits
Small time deposits
Money market mutual funds
Currency in circulation
#7
What is the primary tool used by central banks to control the money supply?
Open market operations
Discount rate
Reserve requirements
Federal funds rate
#8
Which of the following is a characteristic of fiat money?
Backed by a commodity such as gold
Value determined by supply and demand in the market
Not legally recognized as a medium of exchange
Only used for online transactions
#9
What is the significance of the term 'velocity of money'?
It refers to the speed at which new money is printed
It indicates how quickly money changes hands in an economy
It measures the amount of money exchanged for goods and services
It represents the ratio of money supply to GDP
#10
What is the formula to calculate the money multiplier?
1 / Reserve ratio
Reserve ratio + Currency ratio
1 + Reserve ratio
Reserve ratio / Currency ratio
#11
If the Fed buys government securities, what happens to the money supply?
Increases
Decreases
Remains unchanged
It depends on other factors
#12
What happens to the money supply when commercial banks decrease their excess reserves?
Increases
Decreases
Remains unchanged
It depends on other factors
#13
Which of the following is a component of the monetary base?
Reserve deposits
Savings deposits
Treasury bonds
Corporate bonds
#14
What is the relationship between money supply and the price level according to the quantity theory of money?
Inverse relationship
No relationship
Direct relationship
Indirect relationship
#15
Which of the following is a component of M3 but not M2?
Large time deposits
Savings deposits
Money market mutual funds
Small-denomination time deposits
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