Question 1

The conduct of monetary policy is the responsibility of:

Accepted Answer

A) commercial banks. 
B) the U.S. Treasury. 
C) the Federal Reserve System. 
D) the Congress and the president. 
A) commercial banks. 
B) the U.S. Treasury. 
C) the Federal Reserve System. 
D) the Congress and the president.

Question 2

For barter exchange to take place,

Accepted Answer

A) there has to be a coincidence of wants. 
B) the products in question have to be divisible. 
C) money has to be used to put a value on the transaction. 
D) there has to be a single coincidence of wants. 
E) gold has to be one of the goods traded. 
A) there has to be a coincidence of wants. 
B) the products in question have to be divisible. 
C) money has to be used to put a value on the transaction. 
D) there has to be a single coincidence of wants. 
E) gold has to be one of the goods traded.

Question 3

If something is a unit of account, then it:

Accepted Answer

A) serves as a yardstick for measuring the relative value of other goods 
B) is a means of holding wealth for the future 
C) is fairly stable 
D) is durable and portable 
E) is accepted as payment for any purchase 
A) serves as a yardstick for measuring the relative value of other goods 
B) is a means of holding wealth for the future 
C) is fairly stable 
D) is durable and portable 
E) is accepted as payment for any purchase

Question 4

Which of the following is considered part of M2?

Accepted Answer

A) Savings deposits. 
B) Money market mutual fund shares. 
C) Small time deposits of less than $100,000. 
D) All of these. 
A) Savings deposits. 
B) Money market mutual fund shares. 
C) Small time deposits of less than $100,000. 
D) All of these.

Question 5

Which of the following is not considered part of M2?

Accepted Answer

A) Small time deposits of less than $100,000. 
B) Money market mutual fund shares. 
C) Savings deposits. 
D) Large time deposits of more than $100,000. 
A) Small time deposits of less than $100,000. 
B) Money market mutual fund shares. 
C) Savings deposits. 
D) Large time deposits of more than $100,000.

Question 6

A majority of the commercial banks in the United States are members of the Fed.

Accepted Answer

A) True 
 B)False

Question 7

Coins and dollar bills are money in the form of:

Accepted Answer

A) barter. 
B) currency. 
C) capital stock. 
D) investment. 
A) barter. 
B) currency. 
C) capital stock. 
D) investment.

Question 8

M2 money includes all but which one of the following?

Accepted Answer

A) Checkable deposits. 
B) Savings accounts. 
C) Large denomination time deposits. 
D) Money market deposit accounts. 
E) Money market mutual accounts. 
A) Checkable deposits. 
B) Savings accounts. 
C) Large denomination time deposits. 
D) Money market deposit accounts. 
E) Money market mutual accounts.

Question 9

The chairman of its Board of Governors is appointed by the president; the Fed operates without independence from the executive branch of the government.

Accepted Answer

A) True 
 B)False

Question 10

The largest component of the M1 definition of the money supply is:

Accepted Answer

A) traveler's checks. 
B) savings accounts. 
C) money market accounts. 
D) checkable deposits 
A) traveler's checks. 
B) savings accounts. 
C) money market accounts. 
D) checkable deposits

Question 11

Which of the following statements is true ?

Accepted Answer

A) Money must be relatively "scarce" if it is to have value. 
B) Money must be divisible and portable. 
C) M1 is the narrowest definition of money. 
D) All of these. 
A) Money must be relatively "scarce" if it is to have value. 
B) Money must be divisible and portable. 
C) M1 is the narrowest definition of money. 
D) All of these.

Question 12

The M1 definition of the money supply includes:

Accepted Answer

A) coins and currency in circulation. 
B) coins and currency in circulation and checkable deposits. 
C) Federal Reserve notes, gold certificates, and checkable deposits. 
D) Federal Reserve notes and bank loans. 
A) coins and currency in circulation. 
B) coins and currency in circulation and checkable deposits. 
C) Federal Reserve notes, gold certificates, and checkable deposits. 
D) Federal Reserve notes and bank loans.

Question 13

Which one of the following is the largest component of the money supply (M1)in the United States?

Accepted Answer

A) Checkable deposits. 
B) Gold certificates. 
C) Credit cards and traveler's checks. 
D) Federal Reserve notes. 
A) Checkable deposits. 
B) Gold certificates. 
C) Credit cards and traveler's checks. 
D) Federal Reserve notes.

Question 14

Which of the following assets is the most liquid?

Accepted Answer

A) Money market mutual fund shares. 
B) Certificates of deposit. 
C) Dollars. 
D) Passbook savings deposits. 
A) Money market mutual fund shares. 
B) Certificates of deposit. 
C) Dollars. 
D) Passbook savings deposits.

Question 15

The Federal Reserve System is divided into:

Accepted Answer

A) 2 districts. 
B) 12 districts. 
C) 26 districts. 
D) 50 districts. 
E) 1 district. 
A) 2 districts. 
B) 12 districts. 
C) 26 districts. 
D) 50 districts. 
E) 1 district.

Question 16

Who owns the Fed?

Accepted Answer

A) The federal government. 
B) The states. 
C) The District Federal Reserve Banks. 
D) All banks. 
E) Member banks. 
A) The federal government. 
B) The states. 
C) The District Federal Reserve Banks. 
D) All banks. 
E) Member banks.

Question 17

The seven members of the Board of Governors serve 14-year terms to:

Accepted Answer

A) reduce political influence. 
B) provide steady employment. 
C) inhibit independent decisions. 
D) prevent illegal appointments. 
A) reduce political influence. 
B) provide steady employment. 
C) inhibit independent decisions. 
D) prevent illegal appointments.

Question 18

Which one of the following is part of the official money supply in the United States?

Accepted Answer

A) Federal Reserve Notes. 
B) Gold bars. 
C) Common stock. 
D) Silver coins. 
A) Federal Reserve Notes. 
B) Gold bars. 
C) Common stock. 
D) Silver coins.

Question 19

The Monetary Control Act of 1980:

Accepted Answer

A) created less competition among various financial institutions. 
B) allowed fewer institutions to offer checking account services. 
C) restricted savings and loan associations to long-term loans. 
D) all of the above. 
E) none of the above. 
A) created less competition among various financial institutions. 
B) allowed fewer institutions to offer checking account services. 
C) restricted savings and loan associations to long-term loans. 
D) all of the above. 
E) none of the above.

Question 20

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 Banks. 
E) Federal Advisory Council. 
A) Council of Economic Advisors. 
B) Board of Governors. 
C) Federal Open Market Committee. 
D) 12 Federal Reserve District Banks. 
E) Federal Advisory Council.

Exam 14: Money and the Federal Reserve System

The conduct of monetary policy is the responsibility of:

For barter exchange to take place,

If something is a unit of account, then it:

Which of the following is considered part of M2?

Which of the following is not considered part of M2?

A majority of the commercial banks in the United States are members of the Fed.

Coins and dollar bills are money in the form of:

M2 money includes all but which one of the following?

The chairman of its Board of Governors is appointed by the president; the Fed operates without independence from the executive branch of the government.

The largest component of the M1 definition of the money supply is:

Which of the following statements is true ?

The M1 definition of the money supply includes:

Which one of the following is the largest component of the money supply (M1)in the United States?

Which of the following assets is the most liquid?

The Federal Reserve System is divided into:

Who owns the Fed?

The seven members of the Board of Governors serve 14-year terms to:

Which one of the following is part of the official money supply in the United States?

The Monetary Control Act of 1980:

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

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Applying Graphs to Economics

Consumer Surplus, Producer Surplus, and Market Efficiency

the Self-Correcting Aggregate Demand and Supply Model

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

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