Question

1.when banks make loans, they create money T/F

2.Assets such as houses and cars usually viewed as more liquid than stocks and bonds T/F

3.When you compare the prices of two goods, you are using as a medium of exchange T/F

4.the money people deposit into their saving account is considered to be less liquid than the money people deposit into their checking accounts T/F

5.if the Fed wants interest rates to fall they will buy U.S. government buy T/F

6.consider the cash people carry in their wallets. this cash is part of the M1 money supply but not part of the M2 money supply T/F

7.consider the T-ccount for Bank 1 when customer deposit funds into their checking accounts, there is an increase in Bank1's assets and a decrease in its liabilities. T/F

8.if banks decide to hold a larger % of deposit on reserve then the money multiplier will increase T/F

9.All else the same, it banks choose to hold fewer excess reserves the money supply will fall T/F

10.when the Fed sells U.S government bonds, it has conducted open market sales and the money supply can be expected to rise T/F

11.If the Fed wants to increase the money supply they will buy U.S government bonds. T/F

12.All interest rate in the economy are set by Federal reserve T/F

Answer 1

Answer 1) when banks make loans, they create money - This statement is True. Banks create money during their normal operations of accepting deposits and making loans.

2) Assets such as houses and cars usually viewed as more liquid than stocks and bonds - This statement is False. Real assets have lower liquidity than financial assets, as they take longer to sell.

3) When you compare the prices of two goods, you are using as a medium of exchange - This statement is True . Money is called medium of exchange becuase money is a widely accepted token that can be used for exchangeof any good or service.  

4) the money people deposit into their saving account is considered to be less liquid than the money people deposit into their checking accounts - This statement is True. Checking accounts are very liquid, allowing for numerous deposits and withdrawals, as opposed to less-liquid savings or investment accounts.