Question 1

Who runs the Federal Reserve System? Describe the organizational structure of the Fed.

Accepted Answer

The Fed is run by the Board of Governors...

Question 2

The characteristics that money should have include:

Accepted Answer

A)   portability, durability, and flexibility.
B)   durability, flexibility and stability.
C)   durability, portability, and non-homogeneity.
D)   scarcity, portability, and divisibility.E) B) and D)
F) A) and C)

Question 3

For barter to occur, traders must have a:

Accepted Answer

A)   unit of account.
B)   coincidence of wants.
C)   medium of exchange.
D)   central banking facility.E) B) and D)
F) A) and D)

Question 4

The M1 money supply is defined to be the sum of currency, and

Accepted Answer

A)   checkable deposits.
B)   Treasury bonds.
C)   savings accounts.
D)   large time deposits.E) All of the above
F) A) and B)

Question 5

Which of the following forms of money is the least liquid?

Accepted Answer

A)   dollars
B)   checking account deposits
C)   passbook savings
D)   certificates of depositE) All of the above
F) A) and C)

Question 6

Which of the following is not one of the functions of the Federal Reserve?

Accepted Answer

A)   clearing checks
B)   printing currency
C)   supervising and regulating banks
D)   controlling the money supplyE) All of the above
F) A) and B)

Question 7

The major protection against sudden mass attempt to withdraw cash from banks is the:

Accepted Answer

A)   Federal Reserve.
B)   Consumer Protection Act.
C)   deposit insurance provided by the FDIC.
D)   gold and silver backing the dollar.E) A) and C)
F) All of the above

Question 8

Which of the following assets is most liquid?

Accepted Answer

A)   funds in a checking account
B)   a car
C)   a home
D)   a municipal bondE) None of the above
F) C) and D)

Question 9

The difference between M1 and M2 is given by which of the following?

Accepted Answer

A)   M1 includes currency, coins, gold and silver, whereas M2 does not contain gold and silver.
B)   M1 is made up of currency and money in checkable accounts, whereas M2 contains M1 plus savings deposits and time deposits.
C)   M1 is limited to currency, whereas M2 contains M1 plus money in checkable accounts.
D)   M1 includes currency, whereas M2 contains M1 plus money in checking accounts.E) B) and C)
F) A) and D)

Question 10

A direct exchange of fish for corn is an example of:

Accepted Answer

A)   storing value.
B)   a modern exchange method.
C)   barter.
D)   a non-coincidence of wants.E) A) and B)
F) A) and C)

Question 11

Suppose you transfer $1,000 from your checking account to your savings account. How does this action affect the M1 and M2 money supplies?

Accepted Answer

A)   M1 and M2 are both unchanged.
B)   M1 falls by $1,000, and M2 rises by $1,000.
C)   M1 is unchanged, and M2 rises by $1,000.
D)   M1 falls by $1,000, and M2 is unchanged.E) None of the above
F) B) and D)

Question 12

Though many assets can be used as a store of value, money is a particularly attractive method to store value because:

Accepted Answer

A)   it increases in value as prices rise.
B)   its purchasing power does not decline when prices rise.
C)   it is the most liquid of all assets.
D)   it is backed by gold.E) A) and D)
F) A) and C)

Question 13

A barter economy is one in which:

Accepted Answer

A)   money serves as a medium of exchange.
B)   only precious metals are accepted as money.
C)   goods are traded directly for other goods.
D)   paper money is backed by gold.E) A) and C)
F) None of the above

Question 14

Which of the following is not part of the Federal Reserve System?

Accepted Answer

A)   Council of Economic Advisors
B)   Board of Governors
C)   Federal Open Market Committee
D)   12 Federal Reserve District BanksE) A) and D)
F) None of the above

Question 15

When M1 is expanded to M2, the money supply:

Accepted Answer

A)   almost doubles.
B)   more than triples.
C)   goes up tenfold in size.
D)   changes very little.E) A) and C)
F) B) and D)

Question 16

Which of the following compose the M2 money supply?

Accepted Answer

A)   currency only
B)   currency, checkable deposits, and traveler's checks
C)   M1 plus large denomination time deposits and Eurodollar deposits
D)   M1 plus savings deposits and small-denomination time depositsE) None of the above
F) A) and D)

Question 17

The statement that ABC Co.'s profits totaled $500 million last year represents the use of money as a:

Accepted Answer

A)   medium of exchange.
B)   store of value.
C)   unit of account.
D)   means of coincidence.E) All of the above
F) C) and D)

Question 18

Which of the following is responsible for controlling the money supply in the United States?

Accepted Answer

A)   U.S. Congress
B)   Board of Governors of the Federal Reserve System
C)   U.S. Treasury
D)   Council of Economic AdvisorsE) B) and C)
F) A) and D)

Question 19

The Fed is often considered the bankers' bank because it:

Accepted Answer

A)   demands much more currency than it has available.
B)   no longer has a monopoly on printing paper currency.
C)   lowers the discount rate in order to restrict the money supply.
D)   holds bankers reserves, provides banks with currency and loans, and clears their checks.E) All of the above
F) B) and C)

Question 20

Prior to the 1980s, financial institutions called thrifts:

Accepted Answer

A)   included commercial banks.
B)   were permitted to offer checking accounts and accept savings deposits, and could pay interest on both.
C)   could not pay interest on checkable deposits.
D)   were permitted to accept only savings deposits with no checking privileges.E) B) and D)
F) B) and C)

Exam 18: Money and the Federal Reserve System

Which of the following is not one of the functions of the Federal Reserve?

Correct AnswerverifiedShow Answer

Which of the following forms of money is the least liquid?

Correct AnswerverifiedShow Answer

Which of the following is responsible for controlling the money supply in the United States?

Correct AnswerverifiedShow Answer

Who runs the Federal Reserve System? Describe the organizational structure of the Fed.

Correct AnswerverifiedThe Fed is run by the Board of Governors...View AnswerShow Answer

The major protection against sudden mass attempt to withdraw cash from banks is the:

Correct AnswerverifiedShow Answer

For barter to occur, traders must have a:

Correct AnswerverifiedShow Answer

A direct exchange of fish for corn is an example of:

Correct AnswerverifiedShow Answer

The difference between M1 and M2 is given by which of the following?

Correct AnswerverifiedShow Answer

A barter economy is one in which:

Correct AnswerverifiedShow Answer

Which of the following compose the M2 money supply?

Correct AnswerverifiedShow Answer

When M1 is expanded to M2, the money supply:

Correct AnswerverifiedShow Answer

The M1 money supply is defined to be the sum of currency, and

Correct AnswerverifiedShow Answer

Prior to the 1980s, financial institutions called thrifts:

Correct AnswerverifiedShow Answer

Which of the following is not part of the Federal Reserve System?

Correct AnswerverifiedShow Answer

The Fed is often considered the bankers' bank because it:

Correct AnswerverifiedShow Answer

Though many assets can be used as a store of value, money is a particularly attractive method to store value because:

Correct AnswerverifiedShow Answer

Suppose you transfer $1,000 from your checking account to your savings account. How does this action affect the M1 and M2 money supplies?

Correct AnswerverifiedShow Answer

Which of the following assets is most liquid?

Correct AnswerverifiedShow Answer

The characteristics that money should have include:

Correct AnswerverifiedShow Answer

The statement that ABC Co.'s profits totaled $500 million last year represents the use of money as a:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The Fed is run by the Board of Governors...
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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified