Exam 14: Money and the Financial System

A) were more liquid
B) were less risky
C) paid higher interest rates
D) were guaranteed for a larger amount
E) were more liquid and paid higher interest rates

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A) issued by the government
B) issued by banks
C) declared to be money
D) generally acceptable
E) made of something valuable

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A) eliminated interest-rate competition among banks
B) guaranteed them high profits
C) guaranteed them a minimum profit
D) enabled them to expand into other lines of commerce
E) allowed them to hold corporate stock

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A) individuals who have other debts outstanding
B) individuals who do not have a positive net worth
C) banks that are not members of the Federal Reserve System
D) fractional reserve system banks experiencing runs on their deposits
E) Federal Reserve System member banks experiencing runs on their deposits

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A) to act as a medium of exchange
B) to act as a unit of account
C) to act as a store of value
D) to facilitate trade
E) to provide a double coincidence of wants

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A) the less likely it is that a double coincidence of wants will exist, and the less likely it is that monetary exchange will develop
B) the less likely it is that a double coincidence of wants will exist, and the more likely it is that monetary exchange will develop
C) the more likely it is that a double coincidence of wants will exist, and the less likely it is that monetary exchange will develop
D) the more likely it is that a double coincidence of wants will exist, and the more likely it is that monetary exchange will develop
E) the more likely it is that individuals are producing only goods they want to consume

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A) an individual offers one good or service to get another good or service
B) an individual offers money to get a good or service
C) an individual offers a good or service to get money
D) different kinds of money are exchanged for each other
E) individuals are self-sufficient

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A) Federal Reserve member banks to nonmember banks
B) Federal Reserve nonmember banks to member banks
C) Federal Reserve member banks to all U.S. banks
D) Federal Reserve nonmember banks to all U.S. banks
E) a bank's reserves to its total deposits

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A) coins
B) barter
C) commodity money
D) fiduciary money
E) fiat money

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A) Businesses failed, so loans were not repaid.
B) As the public grew concerned about the safety of its deposits, people withdrew more of their cash from banks.
C) Banks sold more securities.
D) The value of banks' assets declined.
E) The Fed loaned too many reserves to member banks.

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A) seven elected members
B) seven members appointed by the president
C) a representative from each of the 12 district banks
D) 12 elected members
E) 12 members appointed by the president

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A) a mortgage in which the borrower gets an interest rate below the prime rate
B) a mortgage in which the interest rate is adjustable
C) a mortgage for which the home is valued below its true market value
D) a mortgage in which the borrower has a poor credit rating
E) a mortgage for a home that was in foreclosure

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A) the easier it is to discover a double coincidence of wants
B) the more feasible a barter system is
C) the less likely it is that monetary exchange will develop
D) the harder it is to negotiate an exchange rate between all pairs of goods
E) the more likely it is that individual consumers are self-sufficient

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A) one of them must be commodity money
B) one of them must be fiat money
C) one of them must be paper money
D) the poorer quality one will be offered by purchasers of goods and the better one will be hoarded
E) the better quality one will be offered by purchasers of goods and the poorer one will be hoarded

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A) token money
B) commodity money
C) coins
D) backed by gold
E) fiat money

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A) people's belief that it is worth something
B) the amount of precious metal that the government holds to back the money
C) the money's market value as a commodity
D) the rate of interest, which is the price paid to borrow money
E) its ability to function as a unit of account

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A) the discount rate
B) deposit insurance
C) the reserve requirement
D) open market operations
E) the Federal Reserve note

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