Question 1

A money market mutual fund account is a(n):

Accepted Answer

A) checking account that earns interest. 
B) savings account against which one can write checks. 
C) group of stocks sold under one name. 
D) claim on a collection of interest-earning assets that is not guaranteed by the FDIC. 
E) account with which the Fed buys and sells U.S.government securities. 
A) checking account that earns interest. 
B) savings account against which one can write checks. 
C) group of stocks sold under one name. 
D) claim on a collection of interest-earning assets that is not guaranteed by the FDIC. 
E) account with which the Fed buys and sells U.S.government securities.

Question 2

The greater the number of different goods available in an economy,the:

Accepted Answer

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

Question 3

Which of the following are legal tender?

Accepted Answer

A) A check 
B) A Federal Reserve note 
C) A bank note issued by a private bank 
D) A credit card 
E) A traveler's check 
A) A check 
B) A Federal Reserve note 
C) A bank note issued by a private bank 
D) A credit card 
E) A traveler's check

Question 4

Which of the following is not a depository institution?

Accepted Answer

A) A commercial bank 
B) A thrift institution 
C) A pension fund 
D) A savings and loan institution 
E) A credit union 
A) A commercial bank 
B) A thrift institution 
C) A pension fund 
D) A savings and loan institution 
E) A credit union

Question 5

In general,the more money in existence,the better it functions as a store of value.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is true?

Accepted Answer

A) The Federal Reserve System was established by the U.S.Constitution. 
B) The Federal Reserve System was established immediately after the Civil War. 
C) The Federal Reserve System was established in 1913. 
D) The Federal Reserve System was established during the Great Depression. 
E) The Federal Reserve System was established immediately following World War II. 
A) The Federal Reserve System was established by the U.S.Constitution. 
B) The Federal Reserve System was established immediately after the Civil War. 
C) The Federal Reserve System was established in 1913. 
D) The Federal Reserve System was established during the Great Depression. 
E) The Federal Reserve System was established immediately following World War II.

Question 7

Each member of the Federal Reserve's Board of Governors is appointed for life.

Accepted Answer

A) True 
 B)False

Question 8

In the 1970s,_____.

Accepted Answer

A) the market interest rate increased above the rate that banks could offer 
B) banks and thrifts were able to borrow at low interest rates to support outstanding loans 
C) the market interest rate decreased below the rate that banks could offer 
D) banks and thrifts were forced to call in outstanding loans 
E) banks and thrifts were bailed out by the FDIC 
A) the market interest rate increased above the rate that banks could offer 
B) banks and thrifts were able to borrow at low interest rates to support outstanding loans 
C) the market interest rate decreased below the rate that banks could offer 
D) banks and thrifts were forced to call in outstanding loans 
E) banks and thrifts were bailed out by the FDIC

Question 9

Which type of money has the lowest opportunity cost?

Accepted Answer

A) Silver coins 
B) Gold coins 
C) Commodity money 
D) Diamonds 
E) Fiat money 
A) Silver coins 
B) Gold coins 
C) Commodity money 
D) Diamonds 
E) Fiat money

Question 10

Which of the following statements is true?

Accepted Answer

A) During the 1980s,better bank management resulted in the most stable U.S.banking system since the Great Depression. 
B) During the 1980s,more U.S.banks failed than in any period since the Great Depression. 
C) During the 1980s,U.S.banks became more conservative in the type of assets they held. 
D) During the 1980s,economic conditions contributed to the stability of U.S.banks. 
E) During the 1980s,there were no U.S.bank failures for the first time in U.S.history. 
A) During the 1980s,better bank management resulted in the most stable U.S.banking system since the Great Depression. 
B) During the 1980s,more U.S.banks failed than in any period since the Great Depression. 
C) During the 1980s,U.S.banks became more conservative in the type of assets they held. 
D) During the 1980s,economic conditions contributed to the stability of U.S.banks. 
E) During the 1980s,there were no U.S.bank failures for the first time in U.S.history.

Question 11

Which of the following is true of a price level increase in an economy?

Accepted Answer

A) When the price level increases,the purchasing power of money increases. 
B) When the price level increases,the purchasing power of money decreases. 
C) When the price level increases,the purchasing power of money remains unchanged. 
D) When the price level increases,the purchasing power of money either increases or decreases,depending upon the size of the national debt. 
E) When the price level increases,the purchasing power of money either increases or decreases,depending upon the level of government expenditures. 
A) When the price level increases,the purchasing power of money increases. 
B) When the price level increases,the purchasing power of money decreases. 
C) When the price level increases,the purchasing power of money remains unchanged. 
D) When the price level increases,the purchasing power of money either increases or decreases,depending upon the size of the national debt. 
E) When the price level increases,the purchasing power of money either increases or decreases,depending upon the level of government expenditures.

Question 12

Before specialization:

Accepted Answer

A) families were largely self-sufficient. 
B) families produced much more than they could each consume. 
C) there was a great need for exchange between families. 
D) families consumed much more than they could each produce. 
E) families exchanged only goods,not services. 
A) families were largely self-sufficient. 
B) families produced much more than they could each consume. 
C) there was a great need for exchange between families. 
D) families consumed much more than they could each produce. 
E) families exchanged only goods,not services.

Question 13

An important function of commercial banks is to _____.

Accepted Answer

A) print new currency 
B) issue fiat money 
C) mint coins 
D) redeem currency for precious metals 
E) make loans 
A) print new currency 
B) issue fiat money 
C) mint coins 
D) redeem currency for precious metals 
E) make loans

Question 14

Which of the following is true of depository institutions?

Accepted Answer

A) Depository institutions seek to maximize profits. 
B) Depository institutions do not seek to maximize profits. 
C) Depository institutions do not make loans. 
D) Depository institutions make loans. 
E) Depository institutions receive funds primarily through customer deposits 
A) Depository institutions seek to maximize profits. 
B) Depository institutions do not seek to maximize profits. 
C) Depository institutions do not make loans. 
D) Depository institutions make loans. 
E) Depository institutions receive funds primarily through customer deposits

Question 15

The emergence of mortgage-backed securities provided mortgage brokers with an incentive to seek out only the most creditworthy borrowers.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is true of a barter system?

Accepted Answer

A) In a barter system economy,no rates of exchange are defined. 
B) In a barter system economy,there are as many different rates of exchange as there are pairs of goods to trade. 
C) In a barter system economy,rates of exchange are expressed in goods per dollar. 
D) In a barter system economy,rates of exchange are expressed in dollars per good. 
E) In a barter system economy,rates of exchange are denominated in gold or silver. 
A) In a barter system economy,no rates of exchange are defined. 
B) In a barter system economy,there are as many different rates of exchange as there are pairs of goods to trade. 
C) In a barter system economy,rates of exchange are expressed in goods per dollar. 
D) In a barter system economy,rates of exchange are expressed in dollars per good. 
E) In a barter system economy,rates of exchange are denominated in gold or silver.

Question 17

The Federal Reserve banks could probably have prevented many of the bank failures in the early 1930s by:

Accepted Answer

A) raising the reserve requirement of the commercial banks. 
B) lending money to the commercial banks. 
C) improving the system whereby checks are cleared. 
D) helping to create a commission of experts to engage in a prolonged study of the problem. 
E) selling large amounts of government bonds. 
A) raising the reserve requirement of the commercial banks. 
B) lending money to the commercial banks. 
C) improving the system whereby checks are cleared. 
D) helping to create a commission of experts to engage in a prolonged study of the problem. 
E) selling large amounts of government bonds.

Question 18

The main source of profit for financial institutions is:

Accepted Answer

A) their ownership of stocks in commercial corporations. 
B) their ownership of real assets received in foreclosures on loans to households. 
C) the fees charged for holding and servicing checking accounts. 
D) the difference between interest paid on deposits and interest received on loans. 
E) the difference between the cost of creating new money and the interest paid on loans. 
A) their ownership of stocks in commercial corporations. 
B) their ownership of real assets received in foreclosures on loans to households. 
C) the fees charged for holding and servicing checking accounts. 
D) the difference between interest paid on deposits and interest received on loans. 
E) the difference between the cost of creating new money and the interest paid on loans.

Question 19

Which of the following best illustrates the double coincidence of wants?

Accepted Answer

A) Both Tom and Jerry would like to purchase the same good. 
B) Tom has something he's willing to trade with Jerry;Jerry has something he's not willing to trade with Tom. 
C) Tom and Jerry have very similar tastes;hence,Tom's wants coincide with Jerry's. 
D) Tom has something he's willing to trade with Jerry,who wants it;Jerry has something he's willing to trade with Tom,who wants it. 
E) Tom has something Jerry wants;Jerry has nothing Tom wants. 
A) Both Tom and Jerry would like to purchase the same good. 
B) Tom has something he's willing to trade with Jerry;Jerry has something he's not willing to trade with Tom. 
C) Tom and Jerry have very similar tastes;hence,Tom's wants coincide with Jerry's. 
D) Tom has something he's willing to trade with Jerry,who wants it;Jerry has something he's willing to trade with Tom,who wants it. 
E) Tom has something Jerry wants;Jerry has nothing Tom wants.

Question 20

Which of the following statements is correct regarding the Fed?

Accepted Answer

A) Under the Federal Reserve System,there is one Federal Reserve Bank,located in Washington D.C. 
B) Under the Federal Reserve System,there is one Federal Reserve Bank whose location changes every 14 years. 
C) Under the Federal Reserve System,there is a Federal Reserve Bank in each Congressional district. 
D) Under the Federal Reserve System,there is a Federal Reserve Bank in each state. 
E) Under the Federal Reserve System,there are 12 Federal Reserve banks,one in each of the 12 Federal Reserve districts. 
A) Under the Federal Reserve System,there is one Federal Reserve Bank,located in Washington D.C. 
B) Under the Federal Reserve System,there is one Federal Reserve Bank whose location changes every 14 years. 
C) Under the Federal Reserve System,there is a Federal Reserve Bank in each Congressional district. 
D) Under the Federal Reserve System,there is a Federal Reserve Bank in each state. 
E) Under the Federal Reserve System,there are 12 Federal Reserve banks,one in each of the 12 Federal Reserve districts.

A money market mutual fund account is a(n):

The greater the number of different goods available in an economy,the:

Which of the following are legal tender?

Which of the following is not a depository institution?

In general,the more money in existence,the better it functions as a store of value.

Which of the following statements is true?

Each member of the Federal Reserve's Board of Governors is appointed for life.

In the 1970s,_____.

Which type of money has the lowest opportunity cost?

Which of the following statements is true?

Which of the following is true of a price level increase in an economy?

Before specialization:

An important function of commercial banks is to _____.

Which of the following is true of depository institutions?

The emergence of mortgage-backed securities provided mortgage brokers with an incentive to seek out only the most creditworthy borrowers.

Which of the following statements is true of a barter system?

The Federal Reserve banks could probably have prevented many of the bank failures in the early 1930s by:

The main source of profit for financial institutions is:

Which of the following best illustrates the double coincidence of wants?

Which of the following statements is correct regarding the Fed?

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters

Exam 13: Money and the Financial System

A money market mutual fund account is a(n):

The greater the number of different goods available in an economy,the:

Which of the following are legal tender?

Which of the following is not a depository institution?

In general,the more money in existence,the better it functions as a store of value.

Which of the following statements is true?

Each member of the Federal Reserve's Board of Governors is appointed for life.

In the 1970s,_____.

Which type of money has the lowest opportunity cost?

Which of the following statements is true?

Which of the following is true of a price level increase in an economy?

Before specialization:

An important function of commercial banks is to _____.

Which of the following is true of depository institutions?

The emergence of mortgage-backed securities provided mortgage brokers with an incentive to seek out only the most creditworthy borrowers.

Which of the following statements is true of a barter system?

The Federal Reserve banks could probably have prevented many of the bank failures in the early 1930s by:

The main source of profit for financial institutions is:

Which of the following best illustrates the double coincidence of wants?

Which of the following statements is correct regarding the Fed?

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters