Question 1

M1 refers to:

Accepted Answer

A)  the most narrowly defined money supply definition. 
B)  currency held by the public plus checking account balances. 
C)  the smallest of the money-supply definitions. 
D)  all of the above. 
A)  the most narrowly defined money supply definition. 
B)  currency held by the public plus checking account balances. 
C)  the smallest of the money-supply definitions. 
D)  all of the above.

Question 2

Which of the following types of financial institutions is required to belong to the Federal Reserve System?

Accepted Answer

A)  National banks. 
B)  State-chartered banks. 
C)  Savings and loan institutions. 
D)  Credit unions. 
A)  National banks. 
B)  State-chartered banks. 
C)  Savings and loan institutions. 
D)  Credit unions.

Question 3

With respect to controlling the money supply, the law requires the Fed to take orders from:

Accepted Answer

A)  the President. 
B)  the Speaker of the House. 
C)  the Secretary of the Treasury. 
D)  no one-the Fed is an independent agency. 
A)  the President. 
B)  the Speaker of the House. 
C)  the Secretary of the Treasury. 
D)  no one-the Fed is an independent agency.

Question 4

The use of a dollar bill to buy a concert ticket represents the function of money as a:

Accepted Answer

A)  medium of exchange. 
B)  unit of account. 
C)  store of value. 
D)  all of the above. 
A)  medium of exchange. 
B)  unit of account. 
C)  store of value. 
D)  all of the above.

Question 5

The Federal Reserve System was created by an act of Congress in 1933 in an effort to end a wave of bank failures brought on the Great Depression.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not a store of value?

Accepted Answer

A)  Dollar bills. 
B)  Credit card. 
C)  Coins. 
D)  Gold. 
A)  Dollar bills. 
B)  Credit card. 
C)  Coins. 
D)  Gold.

Question 7

Which of the following correctly describes the difference between commodity money and fiat money? ​

Accepted Answer

A)  ​Fiat money is only used in Italy, and is issued by a major Italian automobile manufacturer to support Italian schools. 
B)  Commodity money is either made out of a valuable commodity like silver or gold, or is redeemable for a valuable commodity. Fiat money is not.​ 
C)  ​Commodity money can only be used to buy commodities such as grains or lumber, while fiat money can be used to buy anything. 
D)  ​Fiat money is used during times of emergency, such as hurricanes or war, when the existing stock of commodity money is inadequate to purchase needed goods and services. 
A)  ​Fiat money is only used in Italy, and is issued by a major Italian automobile manufacturer to support Italian schools. 
B)  Commodity money is either made out of a valuable commodity like silver or gold, or is redeemable for a valuable commodity. Fiat money is not.​ 
C)  ​Commodity money can only be used to buy commodities such as grains or lumber, while fiat money can be used to buy anything. 
D)  ​Fiat money is used during times of emergency, such as hurricanes or war, when the existing stock of commodity money is inadequate to purchase needed goods and services.

Question 8

The term "near monies" refers to which of the following? ​

Accepted Answer

A)  ​ Savings and small time deposits, which (unlike currency and checkable deposits) are not immediately available as money in a transaction. 
B)  ​Mexican pesos and Canadian dollars - the money used by our nearest neighbors. 
C)  ​ Counterfeit money that closely approximates the appearance of real money. 
D)  ​None of the answers above are correct. 
A)  ​ Savings and small time deposits, which (unlike currency and checkable deposits) are not immediately available as money in a transaction. 
B)  ​Mexican pesos and Canadian dollars - the money used by our nearest neighbors. 
C)  ​ Counterfeit money that closely approximates the appearance of real money. 
D)  ​None of the answers above are correct.

Question 9

The primary functions of money are:

Accepted Answer

A)  velocity, liquidity, and transactions. 
B)  speculative demand, measure of value, and precautionary demand. 
C)  a medium of exchange, a unit of account, and a store of value. 
D)  a store of value, heterogeneity, and a medium of exchange. 
E)  currency value, fiat value, and accepted value. 
A)  velocity, liquidity, and transactions. 
B)  speculative demand, measure of value, and precautionary demand. 
C)  a medium of exchange, a unit of account, and a store of value. 
D)  a store of value, heterogeneity, and a medium of exchange. 
E)  currency value, fiat value, and accepted value.

Question 10

All banks are required to join the Fed.

Accepted Answer

A) True 
 B)False

Question 11

Barter requires:

Accepted Answer

A)  that the exchanged goods be portable. 
B)  that the exchanged goods be durable. 
C)  a coincidence of wants. 
D)  that the exchange medium be divisible. 
E)  an effective middleman. 
A)  that the exchanged goods be portable. 
B)  that the exchanged goods be durable. 
C)  a coincidence of wants. 
D)  that the exchange medium be divisible. 
E)  an effective middleman.

Question 12

Comparing how many dollars it takes to attend college each year to annual earnings on a job represents the use of money as a:

Accepted Answer

A)  medium of exchange. 
B)  unit of account. 
C)  store of value. 
D)  store of coincidence. 
A)  medium of exchange. 
B)  unit of account. 
C)  store of value. 
D)  store of coincidence.

Question 13

The Fed's principal decision-making body, which directs buying and selling U. S. government securities, is known as the:

Accepted Answer

A)  Federal Deposit Insurance Corporation. 
B)  District Board of Governors. 
C)  Federal Open Market Committee. 
D)  Reserve Requirement Regulation Conference. 
A)  Federal Deposit Insurance Corporation. 
B)  District Board of Governors. 
C)  Federal Open Market Committee. 
D)  Reserve Requirement Regulation Conference.

Question 14

The Federal Deposit Insurance Corporation:

Accepted Answer

A)  has eliminated bank failures. 
B)  insures all demand deposits without limit. 
C)  insures all demand deposits up to $250,000. 
D)  insures all demand deposits up to $10,000. 
A)  has eliminated bank failures. 
B)  insures all demand deposits without limit. 
C)  insures all demand deposits up to $250,000. 
D)  insures all demand deposits up to $10,000.

Question 15

Which of the following items does not provide a store of value?

Accepted Answer

A)  Currency. 
B)  Checkable deposits. 
C)  Credit cards. 
D)  All of the above are correct. 
A)  Currency. 
B)  Checkable deposits. 
C)  Credit cards. 
D)  All of the above are correct.

Question 16

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

Question 17

Fiat money is money:

Accepted Answer

A)  accepted by law regardless of its intrinsic value. 
B)  that is not included as part of the M1 money supply. 
C)  that is backed by gold or silver held on reserve by the government. 
D)  such as coins that are made from metal. 
A)  accepted by law regardless of its intrinsic value. 
B)  that is not included as part of the M1 money supply. 
C)  that is backed by gold or silver held on reserve by the government. 
D)  such as coins that are made from metal.

Question 18

Which of the following is not a store of value?

Accepted Answer

A)  Federal Reserve notes. 
B)  Credit card. 
C)  Debit card. 
D)  Passbook savings deposit. 
A)  Federal Reserve notes. 
B)  Credit card. 
C)  Debit card. 
D)  Passbook savings deposit.

Question 19

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.

Exam 18: Money and the Federal Reserve System

M1 refers to:

Which of the following types of financial institutions is required to belong to the Federal Reserve System?

With respect to controlling the money supply, the law requires the Fed to take orders from:

The use of a dollar bill to buy a concert ticket represents the function of money as a:

The Federal Reserve System was created by an act of Congress in 1933 in an effort to end a wave of bank failures brought on the Great Depression.

Which of the following is not a store of value?

Which of the following correctly describes the difference between commodity money and fiat money? ​

The term "near monies" refers to which of the following? ​

The primary functions of money are:

All banks are required to join the Fed.

Barter requires:

Comparing how many dollars it takes to attend college each year to annual earnings on a job represents the use of money as a:

The Fed's principal decision-making body, which directs buying and selling U. S. government securities, is known as the:

The Federal Deposit Insurance Corporation:

Which of the following items does not provide a store of value?

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

Fiat money is money:

Which of the following is not a store of value?

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

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money Creation

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

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters

Which of the following correctly describes the difference between commodity money and fiat money?

The term "near monies" refers to which of the following?