Question 1

The emergence of the subprime mortgage market following the recession of 2001 set off a boom in the housing industry.

Accepted Answer

A) True 
 B)False

Question 2

Fiat money:

Accepted Answer

A) has value because people accept it. 
B) has a high intrinsic value. 
C) is backed by commodity reserves. 
D) is money because of its metallic content. 
E) is frequently clipped. 
A) has value because people accept it. 
B) has a high intrinsic value. 
C) is backed by commodity reserves. 
D) is money because of its metallic content. 
E) is frequently clipped.

Question 3

The discount rate is the interest rate that:

Accepted Answer

A) banks charge on large loans. 
B) banks charge on loans to other banks. 
C) the Fed charges on loans to branches of the U.S.government. 
D) the Fed charges on loans to depository institutions. 
E) the Fed charges on loans to the public. 
A) banks charge on large loans. 
B) banks charge on loans to other banks. 
C) the Fed charges on loans to branches of the U.S.government. 
D) the Fed charges on loans to depository institutions. 
E) the Fed charges on loans to the public.

Question 4

The wide acceptance of fiat money is determined by:

Accepted Answer

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. 
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.

Question 5

The only money that can be used as a standard of value is fiat money.

Accepted Answer

A) True 
 B)False

Question 6

Barter is the exchange of goods and services without the use of money.

Accepted Answer

A) True 
 B)False

Question 7

The chair of the Board of Governors of the Fed is appointed by the president.

Accepted Answer

A) True 
 B)False

Question 8

Before the 1970s,bankers were happy with interest-rate ceilings because those ceilings:

Accepted Answer

A) reduced interest-rate competition for deposits 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. 
A) reduced interest-rate competition for deposits 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.

Question 9

The twelve district banks of the Federal Reserve System were created to decentralize power and to respond to the public's fears of the monopoly power of a single central bank such as the Bank of England or the Bank of Japan.

Accepted Answer

A) True 
 B)False

Question 10

Goldsmiths are considered to be the forerunners of modern banks because they:

Accepted Answer

A) had safes to keep gold secure. 
B) issued gold coins. 
C) created money by lending out gold reserves. 
D) created legal tender. 
E) verified the quality of money. 
A) had safes to keep gold secure. 
B) issued gold coins. 
C) created money by lending out gold reserves. 
D) created legal tender. 
E) verified the quality of money.

Question 11

The deregulation of U.S.banking in the 1980s led to:

Accepted Answer

A) increased profits at all banks. 
B) no change in banks' conduct. 
C) more bank failures than in the 1930s. 
D) the insolvency and collapse of many banks as they began to hold riskier assets. 
E) the end of FDIC insurance for banks that held risky assets. 
A) increased profits at all banks. 
B) no change in banks' conduct. 
C) more bank failures than in the 1930s. 
D) the insolvency and collapse of many banks as they began to hold riskier assets. 
E) the end of FDIC insurance for banks that held risky assets.

Question 12

One advantage of a money market mutual fund account is that:

Accepted Answer

A) it is guaranteed for a larger amount than are FDIC-insured deposits. 
B) it is a riskless asset. 
C) its holders typically earn more interest than they can with a regular bank account. 
D) it earns high interest and is liquid. 
E) it is completely liquid and riskless. 
A) it is guaranteed for a larger amount than are FDIC-insured deposits. 
B) it is a riskless asset. 
C) its holders typically earn more interest than they can with a regular bank account. 
D) it earns high interest and is liquid. 
E) it is completely liquid and riskless.

Question 13

Which of the following is not a power of the Federal Reserve System?

Accepted Answer

A) Setting the prime interest rate 
B) Issuing Federal Reserve notes 
C) Buying and selling U.S.government securities 
D) Extending loans to member banks 
E) Clearing checks 
A) Setting the prime interest rate 
B) Issuing Federal Reserve notes 
C) Buying and selling U.S.government securities 
D) Extending loans to member banks 
E) Clearing checks

Question 14

Interest rate ceilings resulted in great profitability for banks in the 1970s.

Accepted Answer

A) True 
 B)False

Question 15

Coins were minted with serrated edges:

Accepted Answer

A) to make it obvious that they were made of cheap alloys. 
B) so that cheaper metals did not have to be used. 
C) to allow words to be printed on the border. 
D) to prevent the coins from being clipped. 
E) to make them jingle less when they rub together. 
A) to make it obvious that they were made of cheap alloys. 
B) so that cheaper metals did not have to be used. 
C) to allow words to be printed on the border. 
D) to prevent the coins from being clipped. 
E) to make them jingle less when they rub together.

Question 16

In the 1970s,U.S.consumers transferred their deposits from accounts in banks and thrifts to money market mutual funds because money market mutual funds:

Accepted Answer

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. 
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.

Question 17

Which of the following is most critical for the maintenance of an efficient and productive economy?

Accepted Answer

A) Money backed by gold or silver 
B) Steadily rising prices 
C) An unlimited and unregulated supply of money 
D) A properly functioning monetary system 
E) A well-organized barter system 
A) Money backed by gold or silver 
B) Steadily rising prices 
C) An unlimited and unregulated supply of money 
D) A properly functioning monetary system 
E) A well-organized barter system

Question 18

Barter works best when:

Accepted Answer

A) there is an absence of a double coincidence of wants. 
B) many different products are available in the economy. 
C) money is readily available to establish relative prices. 
D) each trader has what the other wants and wants what the other has. 
E) highly developed economies achieve extensive specialization of labor. 
A) there is an absence of a double coincidence of wants. 
B) many different products are available in the economy. 
C) money is readily available to establish relative prices. 
D) each trader has what the other wants and wants what the other has. 
E) highly developed economies achieve extensive specialization of labor.

Question 19

Specialization of labor means that:

Accepted Answer

A) production requires a special kind of labor. 
B) the overall skill level of labor is increasing. 
C) individuals produce goods other than those they want to consume. 
D) individuals achieve self-sufficiency in production. 
E) exchange within an economy consists of trading in services. 
A) production requires a special kind of labor. 
B) the overall skill level of labor is increasing. 
C) individuals produce goods other than those they want to consume. 
D) individuals achieve self-sufficiency in production. 
E) exchange within an economy consists of trading in services.

Question 20

The actions of the Fed:

Accepted Answer

A) must be approved by the president and Congress. 
B) must be approved by the president alone. 
C) must be approved by Congress alone. 
D) are not subject to approval by any branch of government. 
E) are subject to the approval of the electorate. 
A) must be approved by the president and Congress. 
B) must be approved by the president alone. 
C) must be approved by Congress alone. 
D) are not subject to approval by any branch of government. 
E) are subject to the approval of the electorate.

The emergence of the subprime mortgage market following the recession of 2001 set off a boom in the housing industry.

Fiat money:

The discount rate is the interest rate that:

The wide acceptance of fiat money is determined by:

The only money that can be used as a standard of value is fiat money.

Barter is the exchange of goods and services without the use of money.

The chair of the Board of Governors of the Fed is appointed by the president.

Before the 1970s,bankers were happy with interest-rate ceilings because those ceilings:

The twelve district banks of the Federal Reserve System were created to decentralize power and to respond to the public's fears of the monopoly power of a single central bank such as the Bank of England or the Bank of Japan.

Goldsmiths are considered to be the forerunners of modern banks because they:

The deregulation of U.S.banking in the 1980s led to:

One advantage of a money market mutual fund account is that:

Which of the following is not a power of the Federal Reserve System?

Interest rate ceilings resulted in great profitability for banks in the 1970s.

Coins were minted with serrated edges:

In the 1970s,U.S.consumers transferred their deposits from accounts in banks and thrifts to money market mutual funds because money market mutual funds:

Which of the following is most critical for the maintenance of an efficient and productive economy?

Barter works best when:

Specialization of labor means that:

The actions of 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

The emergence of the subprime mortgage market following the recession of 2001 set off a boom in the housing industry.

Fiat money:

The discount rate is the interest rate that:

The wide acceptance of fiat money is determined by:

The only money that can be used as a standard of value is fiat money.

Barter is the exchange of goods and services without the use of money.

The chair of the Board of Governors of the Fed is appointed by the president.

Before the 1970s,bankers were happy with interest-rate ceilings because those ceilings:

The twelve district banks of the Federal Reserve System were created to decentralize power and to respond to the public's fears of the monopoly power of a single central bank such as the Bank of England or the Bank of Japan.

Goldsmiths are considered to be the forerunners of modern banks because they:

The deregulation of U.S.banking in the 1980s led to:

One advantage of a money market mutual fund account is that:

Which of the following is not a power of the Federal Reserve System?

Interest rate ceilings resulted in great profitability for banks in the 1970s.

Coins were minted with serrated edges:

In the 1970s,U.S.consumers transferred their deposits from accounts in banks and thrifts to money market mutual funds because money market mutual funds:

Which of the following is most critical for the maintenance of an efficient and productive economy?

Barter works best when:

Specialization of labor means that:

The actions of 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