Exam 12: Money and the Banking System

Most bank deposits in the United States are insured by the Federal Deposit Insurance Corporation (FDIC).

Currently in the United States,money is backed by

The government regulates the banking industry by

Fractional reserve banking began as a result of the search for additional profits.

The distinction between M1 and M2 is based on

Bankers must always trade off

In what sense can it be said that money is a social invention? How does a barter system of trade compare to the invention of money?

To a bank,an asset is an obligation that it owes to someone else.

The most common form of trading goods for goods is

The primary benefit of a monetary system of exchange compared to a barter system is the increased

Which of the following is a bank liability?

On the Micronesian island of Yap,the money that is primarily used as currency is

On the Micronesian island of Yap,it is easier to make purchases with stone wheel currency than it is to make purchases with paper currency including the U.S.dollar.

If people begin to hold more cash,the money multiplier process will

Explain the "too big to fail" doctrine.

A banker motivated by profit maximization may make decisions that destabilize the banking system.

The type of currency in circulation in the modern U.S.economy is almost entirely

If you have a checking account at a local bank,your bank account there is a(n)

Banks that are managed in a very safe and conservative manner can be expected to earn

The increase in bank supervision in the U.S.in the 1980s and early 1990s was due to an increase in bank