Question 1

The Federal Reserve System of the United States is the country's

Accepted Answer

A)   ﬁnancial adviser.
B)   comptroller or accountant.
C)   central bank.
D)   deposit insurance provider.

Question 2

The reason for the Fed being set up as an independent agency of government is to

Accepted Answer

A)   protect it from political pressure.
B)   allow it to earn proﬁts like private ﬁrms.
C)   make it be managed and controlled by member banks.
D)   let it be able to compete with other ﬁnancial institutions.

Question 3

(Consider This)  Credit cards are

Accepted Answer

A)   the fastest-growing component of the M1 money supply.
B)   near monies that are part of the M2 money supply but not the M1 money supply.
C)   not money, as oﬃcially deﬁned.
D)   also known as time deposits.

Question 4

Deﬁne liquidity. Provide an example of a highly liquid and highly illiquid asset.

Accepted Answer

Liquidity is the ease with which an asse...

Question 5

Checkable deposits held in savings and loan institutions, mutual savings banks, and credit unions are part of the M1
deﬁnition of the money supply.

Accepted Answer

A) True 
 B)False

Question 6

The members of the Federal Reserve Board

Accepted Answer

A)   serve seven-year terms.
B)   are appointed by the American Economic Association.
C)   are elected by votes of the 12 presidents of the Federal Reserve Banks.
D)   are appointed for 14-year terms.

Question 7

If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as

Accepted Answer

A)   a medium of exchange.
B)   a store of value.
C)   a unit of account.
D)   an economic investment.

Question 8

The TARP loans and the Fed's lender-of-last-resort actions that bailed out large, failing ﬁnancial institutions helped
reduce the moral-hazard problem in ﬁnancial management.

Accepted Answer

A) True 
 B)False

Question 9

What are the seven functions of the Federal Reserve System? Which one is most important?

Accepted Answer

1. Issuing currency. 2. Setting reserve ...

Question 10

In deﬁning money as M1, economists exclude time deposits because

Accepted Answer

A)   the intrinsic value of time deposits is nil.
B)   the purchasing power of time deposits is much less stable than that of checkable deposits and currency.
C)   they are not directly or immediately a medium of exchange.
D)   they are not recognized by the federal government as legal tender.

Question 11

When the Fed acts as a "lender of last resort," as it did in the ﬁnancial crisis of 2007-2008, it is performing its role of

Accepted Answer

A)   controlling the money supply.
B)   setting the reserve requirements.
C)   being a bankers' bank.
D)   providing for check clearing and collection.

Question 12

An important routine function of the Federal Reserve Bank is to

Accepted Answer

A)   supervise the liquidation of the assets of bankrupt state banks.
B)   help large commercial banks develop correspondent relationships with smaller commercial banks.
C)   advise commercial banks as to the most proﬁtable ways of reinvesting proﬁts.
D)   provide facilities by which commercial banks and thrift institutions may collect checks.

Question 13

Paper money (currency)  in the United States is issued by the

Accepted Answer

A)   U.S. Mint.
B)   Federal Reserve Banks.
C)   U.S. Treasury.
D)   national banks.

Question 14

If product prices were stated in terms of marbles, then marbles would be functioning primarily as

Accepted Answer

A)   ﬁat money.
B)   legal tender.
C)   a store of value.
D)   a unit of account.

Question 15

The Federal Reserve System performs the following functions except

Accepted Answer

A)   issuing the paper currency in the economy.
B)   providing banking services to the general public.
C)   providing ﬁnancial services to the federal government.
D)   lending money to banks and thrifts.

Question 16

How do long terms for appointments beneﬁt the Federal Reserve's Board of Governors?

Accepted Answer

The long-term appointments pro...

Question 17

Money Market Mutual Fund Balances Held by Businesses $100 Money Market Mutual Fund Balances Held by Individuals 230 Currency in Banks 10 Currency in Circulation 60 Savings Deposits, Including Money Market Deposit Accounts 60 Large-denominated ($100,000 or more)  Time Deposits 180 Small-denominated ( $100,000 or less)  Time Deposits 90 Checkable Deposits 70\begin{array} { | l | c | } \hline 	ext { Money Market Mutual Fund Balances Held by Businesses } & \$ 100 \\hline 	ext { Money Market Mutual Fund Balances Held by Individuals } & 230 \\hline 	ext { Currency in Banks } & 10 \\hline 	ext { Currency in Circulation } & 60 \\hline 	ext { Savings Deposits, Including Money Market Deposit Accounts } & 60 \\hline 	ext { Large-denominated (\$100,000 or more)  Time Deposits } & 180 \\hline 	ext { Small-denominated ( } \$ 100,000 	ext { or less)  Time Deposits } & 90 \\hline 	ext { Checkable Deposits } & 70\\hline\end{array} Money Market Mutual Fund Balances Held by Businesses  Money Market Mutual Fund Balances Held by Individuals  Currency in Banks  Currency in Circulation  Savings Deposits, Including Money Market Deposit Accounts  Large-denominated ($100,000 or more)  Time Deposits  Small-denominated ( $100,000 or less)  Time Deposits  Checkable Deposits ​$1002301060601809070​​  Refer to the table. The value of the near monies that are part of M2 is

Accepted Answer

A)   $380.
B)   $230.
C)   $60.
D)   $390.

Question 18

When economists say that money serves as a store of value, they mean that it is

Accepted Answer

A)   a way to keep wealth in a readily spendable form for future use.
B)   a means of payment.
C)   a monetary unit for measuring and comparing the relative values of goods.
D)   declared as legal tender by the government.

Question 19

Refer to the given list of assets. 1. Large-denominated ($100,000 and over)  time deposits
2)  Savings deposits
3)  Currency (coins and paper money)  in circulation
4)  Small-denominated (under $100,000)  time deposits
5)  Stock certiﬁcates
6)  Checkable deposits
7)  Money market deposit accounts
8)  Money market mutual fund balances held by individuals
9)  Money market mutual fund balances held by businesses
10)  Currency held in bank vaults
The M1 deﬁnition of money includes item(s)

Accepted Answer

A)   6 only.
B)   3, 4, and 6.
C)   3 and 6.
D)   3, 6, and 10.

Question 20

One major advantage of money serving as a medium of exchange is that it allows society to

Accepted Answer

A)   transfer purchasing power from the present to the future.
B)   measure the relative worth of products.
C)   escape the complications of barter.
D)   use credit cards instead of currency.

Exam 14: Money, Banking, and Financial Institutions

Deﬁne liquidity. Provide an example of a highly liquid and highly illiquid asset.

Correct Answer
verified
Liquidity is the ease with which an asse...
View Answer

If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as

Correct Answer
verified

The Federal Reserve System of the United States is the country's

Correct Answer
verified

An important routine function of the Federal Reserve Bank is to

Correct Answer
verified

The TARP loans and the Fed's lender-of-last-resort actions that bailed out large, failing ﬁnancial institutions helped reduce the moral-hazard problem in ﬁnancial management.

Correct Answer
verified

If product prices were stated in terms of marbles, then marbles would be functioning primarily as

Correct Answer
verified

One major advantage of money serving as a medium of exchange is that it allows society to

Correct Answer
verified

When economists say that money serves as a store of value, they mean that it is

Correct Answer
verified

When the Fed acts as a "lender of last resort," as it did in the ﬁnancial crisis of 2007-2008, it is performing its role of

Correct Answer
verified

How do long terms for appointments beneﬁt the Federal Reserve's Board of Governors?

Correct Answer
verified
The long-term appointments pro...
View Answer

Paper money (currency) in the United States is issued by the

Correct Answer
verified

Checkable deposits held in savings and loan institutions, mutual savings banks, and credit unions are part of the M1 deﬁnition of the money supply.

Correct Answer
verified

The reason for the Fed being set up as an independent agency of government is to

Correct Answer
verified

(Consider This) Credit cards are

Correct Answer
verified

In deﬁning money as M1, economists exclude time deposits because

Correct Answer
verified

The Federal Reserve System performs the following functions except

Correct Answer
verified

The members of the Federal Reserve Board

Correct Answer
verified

Correct Answer
verified

What are the seven functions of the Federal Reserve System? Which one is most important?

Correct Answer
verified
1. Issuing currency. 2. Setting reserve ...
View Answer

Correct Answer
verified

Exam 14: Money, Banking, and Financial Institutions

Deﬁne liquidity. Provide an example of a highly liquid and highly illiquid asset.

Correct AnswerverifiedLiquidity is the ease with which an asse...View AnswerShow Answer

If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as

Correct AnswerverifiedShow Answer

The Federal Reserve System of the United States is the country's

Correct AnswerverifiedShow Answer

An important routine function of the Federal Reserve Bank is to

Correct AnswerverifiedShow Answer

The TARP loans and the Fed's lender-of-last-resort actions that bailed out large, failing ﬁnancial institutions helped reduce the moral-hazard problem in ﬁnancial management.

Correct AnswerverifiedShow Answer

If product prices were stated in terms of marbles, then marbles would be functioning primarily as

Correct AnswerverifiedShow Answer

One major advantage of money serving as a medium of exchange is that it allows society to

Correct AnswerverifiedShow Answer

When economists say that money serves as a store of value, they mean that it is

Correct AnswerverifiedShow Answer

When the Fed acts as a "lender of last resort," as it did in the ﬁnancial crisis of 2007-2008, it is performing its role of

Correct AnswerverifiedShow Answer

How do long terms for appointments beneﬁt the Federal Reserve's Board of Governors?

Correct AnswerverifiedThe long-term appointments pro...View AnswerShow Answer

Paper money (currency) in the United States is issued by the

Correct AnswerverifiedShow Answer

Checkable deposits held in savings and loan institutions, mutual savings banks, and credit unions are part of the M1 deﬁnition of the money supply.

Correct AnswerverifiedShow Answer

The reason for the Fed being set up as an independent agency of government is to

Correct AnswerverifiedShow Answer

(Consider This) Credit cards are

Correct AnswerverifiedShow Answer

In deﬁning money as M1, economists exclude time deposits because

Correct AnswerverifiedShow Answer

The Federal Reserve System performs the following functions except

Correct AnswerverifiedShow Answer

The members of the Federal Reserve Board

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What are the seven functions of the Federal Reserve System? Which one is most important?

Correct Answerverified1. Issuing currency. 2. Setting reserve ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified
Liquidity is the ease with which an asse...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The long-term appointments pro...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
1. Issuing currency. 2. Setting reserve ...
View Answer

Correct Answer
verified