Question

1.The revenue a government gains from issuing money is

Select one:

A. interest.

B. the inflation tax.

C. seignorage.

D. rent.

E. the national dividend.

2.The interest rate the Fed charges banks borrowing from the Fed is the

Select one:

A. prime rate.

B. federal funds rate.

C. discount rate.

D. Treasury bill rate.

E. mortgage rate.

3.

The four players in the money supply process include

Select one:

A. banks, depositors, the central bank, and borrowers.

B. banks, depositors, borrowers, and the U.S. Treasury.

C. banks, borrowers, the central bank, and the U.S. Treasury.

D. banks, depositors, the central bank, and the U.S. Treasury.

4.

The _____ describes the combinations of interest rates and aggregate output for which the quantity of money demanded equals the quantity of money supplied.

Select one:

A. consumption function

B. investment schedule

C. IS curve

D. LM curve

5.

Which of the following is listed on the asset side of central bank balance sheet?

Select one:

A. banknotes.

B. deposits of depository institutions

C. capital accounts.

D. cash items in the process of collection.

Answer 1

1.Seignorage is the process of printing currencies which can provide government revenue without tax collection. Hence the answer will be:

C.seignorage

2.The interest rate the Fed charges banks borrowing from the Fed is the:

C.discount rate

3. The four players in the money supply process include:

A. banks, depositors, central bank and borrowers.

4. The combinations of interest rates and aggregate output for which money market is at equilibrium is represented by the LM curve. Hence the answer will be:

D.LM curve

5. Asset side of Central bank's balance sheet includes;

B. deposits of depository institutions.