Macroeconomics
ECON 2301
Spring 2011
Marilyn Spencer, Ph.D.
Professor of Economics
Chapters 15 & 16 Review
3rd Exam: 100 points possible
Miller’s Chapters 15 & 16
ii
Wednesday, April 27
 Section 003 – 20 (Setion 004 – 25) multiple choice
questions, worth 5 (4) points each (100 points
total) + 3 extra credit questions
 You may select among resources you’ll use, as
with previous exams.
 I’ll provide the Scantron sheets.
Test Resources Used
Please check any applicable box concerning "fees" for test
resources you plan to use DURING the exam:
 3x5 card with notes, 5 test points
 textbook and notebook, 15 test points
 information from others, 100 test points

Will NOT use additional resources*
* Two (2) points will be added to your score if you choose to
NOT use any of these test resources.
Name (please print):____________________
ID #: ______________________ (some portion of ID#)
Signature: ___________________________
Chapter 15 Exam Question Topics:

Four major functions of money

For something to act as money, the properties it must have

Commodity money v. fiduciary money

Importance and major role of financial intermediaries

Federal Reserve System (Fed)

Major components

Major responsibilities

Reserves: legal, required & excess reserves

Federal Deposit Insurance Corporation

Asymmetric information, adverse selection & moral hazard in
the context of financial intermediaries
Chapter 16 Exam Question Topics:

Fractional reserve banking




The effect of a new deposit (or withdrawal) on a single bank’s
ability to make loans
The effect of a new deposit from outside the banking system
on the amount of money in the banking system
Formula for the maximum money (deposit expansion)
multiplier – and how to use that formula

Three tools of monetary policy & how/why the Fed conducts
expansionary (or contractionary) monetary policy
Federal Funds Market/Federal Funds Rate

Fed as “lender of last resort”

Relationship between bond price & bond yield (% interest
Assignment for our next regular class:
Be ready to review for the final exam!!!
If you plan to take the final exam, you must email me
to tell me by noon:
 Section 003 (10 a.m. class): Thurs., May 5
 Section 004 (5:30 p.m. class): Monday, May 9