Question 1

Which of the following statements is correct? I.The Fed can periodically and without warning examine member commercial banks to ensure that they are conforming to current banking standards.
II.The Fed helps the government collect certain tax revenues and aids in the purchase and sale of government securities.

Accepted Answer

A)  I only
B)  II only
C)  Both I and II
D)  Neither I nor IIE) B) and C)
F) A) and C)

Question 2

Which of the following is NOT a benefit of money when used as a medium of exchange?

Accepted Answer

A)  Allowing individuals to specialize
B)  Allowing individuals to pay off debts
C)  Allowing for some economic efficiencies
D)  Providing economic growthE) A) and D)
F) None of the above

Question 3

A measure by which prices are expressed is a(n)

Accepted Answer

A)  medium of exchange.
B)  unit of accounting.
C)  store of value.
D)  standard of deferred payment.E) A) and D)
F) B) and D)

Question 4

When money serves as a standard for comparing values of different things,it is functioning as a

Accepted Answer

A)  store of value.
B)  hedge against inflation.
C)  standard of deferred payment.
D)  unit of accounting.E) A) and B)
F) A) and C)

Question 5

The reserve ratio is 20 percent.A check for $1 million is deposited in Bank A,written on an account from Bank B.After the check clears what are the new excess reserves at Bank A,and by how much does the money supply change if all banks make loans so that they have zero excess reserves?

Accepted Answer

A)  $200,000;$800,000
B)  $800,000;$1 million
C)  $800,000;$800,000
D)  $800,000;0E) B) and D)
F) B) and C)

Question 6

Which of the following is true of the Federal Reserve System? I.It was established in the early 1980s.
II.It serves as the central bank of the United States.

Accepted Answer

A)  I only
B)  II only
C)  Both I and II
D)  Neither I nor IIE) None of the above
F) C) and D)

Question 7

Checkable deposit account balances are

Accepted Answer

A)  counted in the calculation of the money supply.
B)  part of M2 but not part of M1.
C)  considered credit,but not money.
D)  only a small component of the money supply.E) C) and D)
F) B) and C)

Question 8

Suppose you pay $490.00 for a new iPad.This is an example of

Accepted Answer

A)  money as a medium of exchange.
B)  money as a store of value.
C)  barter.
D)  money as a standard of deferred payment.E) A) and B)
F) All of the above

Question 9

A medium of exchange is

Accepted Answer

A)  any asset that sellers will accept as payment.
B)  a measure by which prices are expressed.
C)  an asset that is used to settle future debts.
D)  the thing traded when barter takes place.E) A) and B)
F) A) and C)

Question 10

The Federal Reserve will engage in open market operations when

Accepted Answer

A)  it wants to punish private banks because they are not keeping the required level of reserves.
B)  it wants to change the money supply.
C)  it wants to change the reserve ratio.
D)  it wants to increase the total amount of reserves since government securities are considered a reserve.E) B) and C)
F) A) and C)

Question 11

As far as reserves and deposits are concerned,describe the assets and liabilities of a bank.

Accepted Answer

The major liabilities of a bank are the ...

Question 12

The M1 definition of the money supply includes all of the following EXCEPT

Accepted Answer

A)  currency.
B)  transaction deposits.
C)  savings accounts.
D)  travelers checks.E) C) and D)
F) A) and D)

Question 13

Suppose a person deposits a paycheck in a bank.The transaction deposits are money,so has the money supply increased? Explain.

Accepted Answer

No.The check was drawn on the ...

Question 14

All of the following are examples of financial intermediaries EXCEPT

Accepted Answer

A)  credit unions.
B)  insurance companies.
C)  retirement funds.
D)  stock exchanges.E) A) and D)
F) All of the above

Question 15

In the United States,where do depository institutions hold their reserves?

Accepted Answer

A)  In their own vaults in the form of precious metals such as gold and silver
B)  In accounts with the U.S.Department of the Treasury
C)  Either as vault cash or on reserve with Federal Reserve district banks
D)  All reserves must be held at a Federal Reserve district bankE) C) and D)
F) A) and D)

Question 16

When comparing the price of a plasma TV with the price of an LED TV,Amanda discovered the LED was more expensive.This is an example of using money as

Accepted Answer

A)  a store of value.
B)  a medium of exchange.
C)  a unit of accounting.
D)  a standard of deferred payment.E) B) and C)
F) A) and D)

Question 17

Which one of the following is a function of the Federal Reserve System?

Accepted Answer

A)  providing the economy with currency
B)  providing a system for check clearing
C)  serving as a lender of last resort
D)  all of the aboveE) A) and C)
F) None of the above

Question 18

Which of the following is the most liquid?

Accepted Answer

A)  certificate of deposit
B)  cash
C)  checkable and debitable account
D)  stocks and bondsE) A) and C)
F) None of the above

Question 19

Fractional reserve banking began

Accepted Answer

A)  in the early twentieth century.
B)  in the early nineteenth century.
C)  in the Middle Ages.
D)  in ancient Greece.E) A) and B)
F) C) and D)

Question 20

If the FDIC eliminated its insurance program for deposits,then

Accepted Answer

A)  the banking system would probably fail.
B)  individual depositors would have more incentive to ascertain the soundness and solvency of the bank.
C)  banks would probably hold fewer reserves.
D)  moral hazard would be increased.E) All of the above
F) A) and D)

Exam 15: Money, banking, and Central Banking

Suppose you pay $490.00 for a new iPad.This is an example of

Correct Answer
verified

The M1 definition of the money supply includes all of the following EXCEPT

Correct Answer
verified

The reserve ratio is 20 percent.A check for $1 million is deposited in Bank A,written on an account from Bank B.After the check clears what are the new excess reserves at Bank A,and by how much does the money supply change if all banks make loans so that they have zero excess reserves?

Correct Answer
verified

Checkable deposit account balances are

Correct Answer
verified

A measure by which prices are expressed is a(n)

Correct Answer
verified

All of the following are examples of financial intermediaries EXCEPT

Correct Answer
verified

Which one of the following is a function of the Federal Reserve System?

Correct Answer
verified

In the United States,where do depository institutions hold their reserves?

Correct Answer
verified

Which of the following is true of the Federal Reserve System? I.It was established in the early 1980s. II.It serves as the central bank of the United States.

Correct Answer
verified

When money serves as a standard for comparing values of different things,it is functioning as a

Correct Answer
verified

When comparing the price of a plasma TV with the price of an LED TV,Amanda discovered the LED was more expensive.This is an example of using money as

Correct Answer
verified

Correct Answer
verified

The Federal Reserve will engage in open market operations when

Correct Answer
verified

If the FDIC eliminated its insurance program for deposits,then

Correct Answer
verified

Fractional reserve banking began

Correct Answer
verified

Which of the following is NOT a benefit of money when used as a medium of exchange?

Correct Answer
verified

As far as reserves and deposits are concerned,describe the assets and liabilities of a bank.

Correct Answer
verified
The major liabilities of a bank are the ...
View Answer

Suppose a person deposits a paycheck in a bank.The transaction deposits are money,so has the money supply increased? Explain.

Correct Answer
verified
No.The check was drawn on the ...
View Answer

A medium of exchange is

Correct Answer
verified

Which of the following is the most liquid?

Correct Answer
verified

Exam 15: Money, banking, and Central Banking

Suppose you pay $490.00 for a new iPad.This is an example of

Correct AnswerverifiedShow Answer

The M1 definition of the money supply includes all of the following EXCEPT

Correct AnswerverifiedShow Answer

The reserve ratio is 20 percent.A check for $1 million is deposited in Bank A,written on an account from Bank B.After the check clears what are the new excess reserves at Bank A,and by how much does the money supply change if all banks make loans so that they have zero excess reserves?

Correct AnswerverifiedShow Answer

Checkable deposit account balances are

Correct AnswerverifiedShow Answer

A measure by which prices are expressed is a(n)

Correct AnswerverifiedShow Answer

All of the following are examples of financial intermediaries EXCEPT

Correct AnswerverifiedShow Answer

Which one of the following is a function of the Federal Reserve System?

Correct AnswerverifiedShow Answer

In the United States,where do depository institutions hold their reserves?

Correct AnswerverifiedShow Answer

Which of the following is true of the Federal Reserve System? I.It was established in the early 1980s. II.It serves as the central bank of the United States.

Correct AnswerverifiedShow Answer

When money serves as a standard for comparing values of different things,it is functioning as a

Correct AnswerverifiedShow Answer

When comparing the price of a plasma TV with the price of an LED TV,Amanda discovered the LED was more expensive.This is an example of using money as

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Federal Reserve will engage in open market operations when

Correct AnswerverifiedShow Answer

If the FDIC eliminated its insurance program for deposits,then

Correct AnswerverifiedShow Answer

Fractional reserve banking began

Correct AnswerverifiedShow Answer

Which of the following is NOT a benefit of money when used as a medium of exchange?

Correct AnswerverifiedShow Answer

As far as reserves and deposits are concerned,describe the assets and liabilities of a bank.

Correct AnswerverifiedThe major liabilities of a bank are the ...View AnswerShow Answer

Suppose a person deposits a paycheck in a bank.The transaction deposits are money,so has the money supply increased? Explain.

Correct AnswerverifiedNo.The check was drawn on the ...View AnswerShow Answer

A medium of exchange is

Correct AnswerverifiedShow Answer

Which of the following is the most liquid?

Correct AnswerverifiedShow 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

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 major liabilities of a bank are the ...
View Answer

Correct Answer
verified
No.The check was drawn on the ...
View Answer

Correct Answer
verified

Correct Answer
verified