Exam 25: Money,banks,and the Federal Reserve

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A) Supervising the banking system.
B) Deciding the maximum interest rates banks can charge for loans.
C) Clearing checks.
D) Acting as a bank for banks.
E) Dealing with financial crises.

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A) US dollars
B) Gold
C) Diamonds
D) Silver
E) Fur

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A) The money supply will increase by $2,000.
B) The money supply will decrease by $2,000.
C) The money supply will increase by $100.
D) The money supply will decrease by $100.
E) The money supply will decrease by $200.

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A) information about the riskiness of its loans
B) the amount of money loaned to each individual borrower
C) the amount of cash in the hands of the public
D) the number of checking accounts it maintains
E) the bank's assets and liabilities

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A) the Federal Reserve was created
B) the federal government started insuring banking deposits
C) the Federal Reserve increased the required reserve ratio
D) the Federal Reserve started using open market operations
E) the Federal Reserve decided to take a less active role in controlling the money supply

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A) Decrease the salaries of government employees.
B) Sell government bonds.
C) Buy government bonds.
D) Raise taxes.
E) Sell corporate bonds.

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A) may be required to provide cash to customers who are withdrawing their funds
B) wants to earn more interest income
C) wants to offer more loans
D) may need to make transactions with other banks
E) may need to pay more interest on its savings accounts

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A) the Department of Commerce
B) the Council of Economic Advisers
C) the U.S.Mint
D) the Federal Reserve System
E) the Department of the Treasury

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A) The U.S.Treasury deals in newly issued bonds and the Fed deals in previously issued (second-hand) bonds.
B) The U.S.Treasury deals in previously issued bonds and the Fed deals in newly issued bonds.
C) The U.S.Treasury deals in only newly issued bonds and the Fed deals in both new and second-hand bonds.
D) The U.S.Treasury deals in both new and second-hand bonds and the Fed only deals in second-hand bonds.
E) Both the U.S.Treasury and the Fed deal in both new and second-hand bonds.

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A) call in all its loans
B) stop paying interest on its saving accounts
C) borrow money from the government
D) call in a loan or reduce new lending
E) increase the number of loans it makes

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A) $20 million
B) $315 million
C) $0.05 million
D) $285 million
E) $585 million.

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A) About 500
B) About 2,000
C) Fewer than 150
D) More than 5,000
E) Fewer than 1,000

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A) are considered money because they are a means of payment
B) are not considered money and thus are not of importance to the monetary authority
C) are not considered money but are important because they may affect how much people hold in M1 and M2
D) are counted in the money supply as part of M3
E) are considered money when held by the public

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A) is backed by gold
B) is fiat money
C) is accepted by others in exchange for goods and services
D) is commodity money
E) has a fixed value established by the Federal Reserve.

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