Question

Answer ASAP PLEASE!!

1) Checkable deposit account balances are

A) part of M2 but not part of M1. B) counted in the calculation of the money supply. C) considered credit, but not money. D) only a small component of the money supply.

2)Active policy making would include all of the following EXCEPT

A) increased government spending by the Congress. B) tax increases. C) interest rate changes by the Fed. D) unemployment insurance benefits.

3)Which one of the following is a function of the Federal Reserve System?

A) providing a system for check clearing B) providing the economy with currency C) serving as a lender of last resort D) all of the above

4)) Fractional reserve banking can be thought of as a bank

A) withholding a portion of its total deposits that are not loaned out. B) loaning out all of its reserves. C) paying a fraction of its profit to depositors. D) holding deposits equal to its net worth.

Answer 1

1) checkable deposit account balances are included both in M1 and M2. It is a form of money and not credit.

Also it is included in the calculation of money supply.

So answer is option B) counted in calculation of money supply.

2) Active policy making does not include unemployment insurance benefits. The rest of the options are either monetary or fiscal policy affecting the changes in money supply or any such components.

But unemployment insurance benefits are transfer made to the public and hence is not an active policy making

So answer is option D) unemployment insurance benefits

3) All the options are the functions of federal reserve system.

Federal reserve system is the lender of last resort ie helping the banks in case of funds shortage and Crisis.

It also provides system for check clearing and prints currnecy to be circulated in the economy.

So answer is option D) all of the above

4) Frictional reserve banking refers to keeping a portion of the deposits with the bank instead of lending so that when someone comes to withdraw money, a part of it is with the bank and not completely used for lending purposes .

So answer is A) withholding a portion of total deposits from being loaned out.

(You can comment for doubts)