DSST Money & Banking Practice Exam

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• What happens to demand for luxury goods when a person's income increases?
• What is the term for the market where banks lend reserve funds to each other at interest rates determined by the Federal Reserve?
• What type of economic variable is not influenced by other economic factors?
• What does the term 'currency in circulation' refer to?
• What type of inflation occurs when demand increases rapidly, causing short-term price increases due to production lag?
• What refers to the cost incurred when producing one more unit of output?
• What practice involves the Fed buying government and other securities to increase the money supply?
• Which aspect of monetary policy includes open market operations?
• What is it called when the government sets a price for a good below the market equilibrium?
• What does the classical theory of economics assume about unemployment?
• Which organization is responsible for stabilizing the housing market by providing mortgage guarantees?
• Which type of deposits constitutes part of the monetary base?
• What is the term used to describe when a person has increased purchasing power and may decide to buy additional products?
• What is the practice where large businesses set artificially low prices to eliminate competition from smaller businesses called?
• What does a strong dollar do to American goods in foreign markets?
• What does the FDIC stand for, as improved by the Deposit Monetary Control Act in 1980?
• Which type of inflation is often associated with significant economic growth and increased consumer confidence?
• When the Fed buys bonds, what happens to its reserves?
• Which of the following factors is primarily considered in the quantity theory of money?
• Which of these is a benefit of having a strong monetary base?
• When calculating gross margin, which of the following must be deducted from sales?
• Which institution is tasked with chartering new banks in the United States?
• Which of the following describes the relationship between interest rates and economic decisions according to Adaptive Expectations?
• What is the formula for calculating net sales?
• Which institution is known for addressing issues of currency devaluations and balance-of-payment problems?
• What is the key characteristic of substitutes in terms of consumer behavior?
• Which of the following describes vault cash?
• What term refers to the situation when the demand for certain goods changes significantly with minimal price alteration?
• In Keynesian economics, what role does government intervention play during economic crises?
• When the government provides monetary assistance to individuals in need, what is this termed?
• What type of market climate is symbolized by declining stock prices?
• What is the maturity period of commercial paper typically classified as?
• What type of market has significant control by a few firms and leads to higher risks for new entrants?
• What type of tax increases proportionally with an individual's income?
• What financial entity is primarily focused on encouraging individual saving and providing loans?
• What are government payments such as unemployment benefits and food stamps classified as?
• What are transaction deposits required for in banks?
• What are long-term assets used in a business, such as land and machinery, called?
• What type of money is guaranteed by the trustworthiness of the government rather than having intrinsic value?
• Which bonds are the only federal government security traded on the primary market?
• A free market strives for which economic condition that is considered rare?
• What distinguishes preferred stock from common stock?
• What is commercial paper primarily used for by corporations?
• What happens to the money supply when the Fed buys securities from banks?
• Which market has the characteristic that financial assets cannot be resold?
• Which act allowed the Federal Reserve to establish 12 regional banks?
• What is the function of the Federal Deposit Insurance Corporation (FDIC)?
• Which act established the US National Monetary Commission and created the Federal Reserve?
• Why is the monetary base critical for economic stability?
• Advocates of which economic policies argue for reduced government intervention in business?
• What kind of market is characterized by a relatively small number of sellers and high entry risks?
• Which form of money directly derives its worth from the material itself?
• Which deregulation act was established to counteract disintermediation and created the FDIC?
• According to Irving Fisher, which factor affects the velocity of money?
• What type of institution sells shares to purchase assets and is included in the M2 definition of money?
• Which category of money includes M1 as well as additional savings deposits and money market funds?
• What is the term used for forms of money such as gold and jewels, which derive their value from direct trading?
• What is the purpose of the discount rate set by the Federal Reserve?
• Which government association is known for guaranteeing high-risk mortgages?
• Which rule states that the government should adjust interest rates based on inflation levels?
• Which type of deposits can be withdrawn immediately at the discretion of the depositor?
• Which policy is likely to lead to currency appreciation when inflows exceed outflows?
• What does the velocity of money represent in economic terms?
• Which type of variable has a value that is influenced by other economic factors?
• What type of market is defined by an expectation that stock prices will increase in the future?
• What fiscal operations involve the buying and selling of bonds to influence the money supply?
• Which type of money is characterized by having no intrinsic value?
• What is analyzed to determine the optimal number of employees for production output?
• What term describes a situation where a large price change leads to a small change in sales?
• Which of the following best explains the concept of liquidity?
• What economic condition is characterized by very little growth and rising inflation?
• What effect occurs when consumers shift to alternative products due to a price increase?
• Which equation represents operating profit?
• What is a major characteristic of money that is part of the monetary base?
• What rate reflects the discount rate used by the Bank of England for loans to commercial banks?
• What does fiscal policy involve regarding government actions to influence the economy?
• What term refers to the part of the money supply that is highly liquid and easy to use?
• Which type of exchange rate does NOT take into account the prices of goods across domestic and foreign markets?
• What is the reserve requirement ratio (RRR) related to?
• What characteristic distinguishes near money from regular money?
• What economic measure compares inflation rates between two countries to determine currency valuation?
• Which policy discusses the implications of adjusting the required reserve ratio?
• What is the primary purpose of fixed assets in a business?
• What is the term for income after taxes that is available for consumers to spend?
• According to the asset demand theory, what aspect influences demand for any asset?
• What must a perfect competition market have to avoid total control over prices by one group?
• What institution aims to promote balanced global trade and minimize trade imbalances?
• What are common stockholders entitled to?
• Which terms are used to characterize essential goods and luxury goods in terms of income elasticity?
• What advisory council provides guidance to the Federal Reserve's Board of Governors?
• What type of agreement involves the Fed temporarily purchasing securities from dealers?
• Which of the following are types of thrift institutions?
• Which term refers to goods that have demand that does not change significantly with income fluctuations?
• The expectation that money will retain its value over time represents which concept?
• Which theory argues that individuals' economic decisions are based on historical data?
• Which of the following is included in the monetary base?
• What perspective do individuals hold according to the Rational Expectations theory?
• Which financial institution primarily makes consumer loans and accepts savings deposits, often owned by a group of employees?
• What term refers to the current value of an individual's anticipated lifetime earnings?
• What term refers to the flow of funds from the U.S. to other countries, including tourism and imports?
• Which type of demand is characterized by a substantial change in quantity demanded with a small price adjustment?
• What does FOREX refer to in the financial market?
• What equation represents the relationship between a business's assets, liabilities, and net worth?
• When the government raises the minimum wage above market equilibrium, what effect does it usually have on supply?
• What does GNP include in its calculation?
• According to Classical theory, what is assumed about wage flexibility?
• What type of transaction on the exchange market is executed immediately?
• Which theory relates money supply and the velocity of money to overall price levels?
• Which of the following is included in M2, but not in M1?
• Which exchange rate measures the purchasing power of each currency for domestic and foreign goods?
• Which of the following comprises the monetary base?
• Adaptive Expectations theory is based on which premise?
• What type of fiscal policy is undertaken voluntarily by the government related to changing taxation and spending?
• Which economic term is associated with the concept that the required reserve ratio can affect money creation?
• What agreement originally influenced trade and was later replaced by the WTO?
• What classification includes all of M2 along with long-term repurchase agreements?
• Which index measures inflation from the perspective of producers?
• How does the monetary base affect overall economic activity?
• What term refers to the method used to estimate the impact of changes in the money supply?
• What does the acronym 'PPP' stand for in economics?
• In monetarism, what does the theory suggest is the best indicator of economic health?
• Which rate indicates either the best interest rate offered by a bank or the worst for risky borrowers?
• During which period does stagflation typically occur?
• Which financial instrument is NOT typically found in the money market?
• Which market is involved in trading securities such as stocks?
• How does an increase in the reserve requirements ratio affect bank lending?
• Which system was established by the National Monetary Commission in 1908 to investigate the country’s monetary policy?
• What occurs when large businesses collaborate to set prices, which may lead to reduced competition?
• If adding another worker to a production line barely increases productivity, what is that an example of?
• Which economic theory suggests that government spending can benefit the economy during unemployment?
• What type of fiscal policy aims to stimulate a struggling economy by increasing spending and decreasing taxes?
• What refers to the ability of a bank deposit to be loaned out multiple times its value?
• What type of asset must be held for over one year to qualify for capital markets?
• What describes the responsiveness of demand to changes in consumer income?
• What are selling and administrative expenses typically categorized as in a profit equation?
• Which market involves the direct trading of currencies?
• What accord aimed to eliminate interest rate pegging to stabilize interest rates?
• What term describes the intentional division of a market by competitors to minimize advertising costs?
• In a bull market, what is the general trend of stock prices?
• What is the equation used to calculate gross margin?
• What economic condition results in a decrease in prices, thereby increasing the purchasing power of currency?
• Which type of goods experience a decrease in demand as income increases?
• What is the primary market that facilitates the purchase and sale of bonds?
• What type of account is a NOW account?
• What does the discount rate influence when it is adjusted?
• What term describes the indirect finance market where banks gather savings deposits?
• Which type of financial institution allows members to borrow and receive interest on deposits?
• What is the agreement established to lower trade barriers among certain European countries, which is now part of the EU?
• What is the exchange rate that compares present market values between two countries?
• Which market provides a venue for buying and selling existing stocks?
• What are the supervisory functions of the Federal Reserve based on the following roles?
• In what type of market do stock prices decline over an extended period?
• What is the revenue earned from the sale of each additional unit called?
• What does the Efficient Market Hypothesis imply about financial asset pricing?
• What commonly happens to loans when the federal discount rate is lowered?
• Which term refers to the sum of all money held by businesses and individuals, including traveler's checks and checkable deposits?
• What term is used to describe the total income earned from the production of GDP by a nation's citizens?
• What type of company allows banks greater flexibility in the services they provide, such as tax planning and investment advice?
• Which of the following is the opposite of spot transactions in the currency exchange market?
• Which mortgage association mainly purchases mortgages from banks to free up capital?
• What is the term used to estimate how much a cash deposit will increase the money supply?
• What is the primary focus of capital markets?
• What is the minimum typical sale amount for commercial paper?
• What type of companies create funds that they sell to investors?
• Which of these options is NOT part of the monetary base?
• What is the formula for calculating aggregate demand?
• What is a key characteristic of fixed assets in terms of their lifespan?
• Monetarism emphasizes controlling which of the following to manage the economy?
• What does the government use fiscal policy for in relation to the economy?
• What are the total costs involved in producing one unit of a good or service called?
• Which term is used to describe the additional revenue that comes from selling one more unit of a product?
• The monetary base is crucial for which of the following systems?
• What type of investment is considered responsible for institutions regarding commercial paper?
• What corporation utilizes global capital markets to provide support for low-cost mortgages?
• What type of tax is applied to the production and sale of specific goods like gasoline?
• What agreement established that the US would maintain a fixed price of gold relative to the dollar?
• Which term best describes an economic policy that encourages government spending during a downturn?
• Which economic indicator focuses on the return of investments for owners, complementing GDP?
• Which committee is primarily responsible for making policy decisions within the Federal Reserve?
• Which curve demonstrates how tax cuts can affect tax revenues?
• What is a primary characteristic of credit unions?
• Which policy does the Federal Reserve use to influence the money supply through various methods?
• What aspect of the monetary base contributes to its liquidity?
• In economic terms, what typically happens to imports when the dollar strengthens?
• What effect does improved technology typically have on input costs?
• Which legislation allowed financial institutions to sell various competing products, like insurance and stocks?
• What is the role of deposits at the Fed in the context of the monetary base?
• What term describes goods that are commonly consumed together, where the demand for one increases the demand for the other?
• What does GDP stand for in economics?
• Which theory suggests that people will alter their investment strategies based on changing interest rates?