Question 1

The greater the degree of specialization in the economy, the _____

Accepted Answer

A)  easier it is to discover a double coincidence of wants. 
B)  more feasible a barter system is. 
C)  less likely it is that monetary exchange will develop. 
D)  harder it is to negotiate an exchange rate between all pairs of goods. 
E)  more likely it is that individual consumers are self-sufficient. 
A)  easier it is to discover a double coincidence of wants. 
B)  more feasible a barter system is. 
C)  less likely it is that monetary exchange will develop. 
D)  harder it is to negotiate an exchange rate between all pairs of goods. 
E)  more likely it is that individual consumers are self-sufficient.

Question 2

_____ institutions obtain funds primarily by accepting customer deposits.

Accepted Answer

A)  Investment 
B)  Depository 
C)  Finance 
D)  Underwriting 
E)  Central banking 
A)  Investment 
B)  Depository 
C)  Finance 
D)  Underwriting 
E)  Central banking

Question 3

_____ is money whose face value exceeds its production cost.

Accepted Answer

A)  Seashell currency 
B)  Token money 
C)  A note 
D)  Coinage 
E)  Fiat money 
A)  Seashell currency 
B)  Token money 
C)  A note 
D)  Coinage 
E)  Fiat money

Question 4

Which of the following is a depository institution?

Accepted Answer

A)  an insurance company 
B)  a credit union 
C)  a finance company 
D)  a pension fund 
E)  a stock market 
A)  an insurance company 
B)  a credit union 
C)  a finance company 
D)  a pension fund 
E)  a stock market

Question 5

The reserve ratio is the ratio of _____

Accepted Answer

A)  Federal Reserve member banks to nonmember banks. 
B)  Federal Reserve nonmember banks to member banks. 
C)  Federal Reserve member banks to all U.S. banks. 
D)  a bank's total deposits to its reserves. 
E)  a bank's reserves to its total deposits. 
A)  Federal Reserve member banks to nonmember banks. 
B)  Federal Reserve nonmember banks to member banks. 
C)  Federal Reserve member banks to all U.S. banks. 
D)  a bank's total deposits to its reserves. 
E)  a bank's reserves to its total deposits.

Question 6

The value of fiat money is fundamentally determined by the _____

Accepted Answer

A)  reputation of the bank that holds it. 
B)  reputation of the person who holds it. 
C)  value of the gold or silver for which it can be redeemed. 
D)  value of the commodities for which it can be traded. 
E)  value of comparable stocks and bonds. 
A)  reputation of the bank that holds it. 
B)  reputation of the person who holds it. 
C)  value of the gold or silver for which it can be redeemed. 
D)  value of the commodities for which it can be traded. 
E)  value of comparable stocks and bonds.

Question 7

As the variety of goods and services increases, barter becomes _____

Accepted Answer

A)  easier because the chance of there being a double coincidence of wants increases. 
B)  harder because the chance of there being a double coincidence of wants increases. 
C)  easier because the chance of there being a double coincidence of wants decreases. 
D)  harder because the chance of there being a double coincidence of wants decreases. 
E)  easier because people have more options to choose from. 
A)  easier because the chance of there being a double coincidence of wants increases. 
B)  harder because the chance of there being a double coincidence of wants increases. 
C)  easier because the chance of there being a double coincidence of wants decreases. 
D)  harder because the chance of there being a double coincidence of wants decreases. 
E)  easier because people have more options to choose from.

Question 8

Banks earn a profit by offering loans at higher interest rates than they pay savers.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Some financial institutions are classified as depository institutions based on _____

Accepted Answer

A)  the way they acquire funds. 
B)  the number of customers they have. 
C)  the number of loans they make. 
D)  the size of the loans they make. 
E)  the amount of reserves they hold. 
A)  the way they acquire funds. 
B)  the number of customers they have. 
C)  the number of loans they make. 
D)  the size of the loans they make. 
E)  the amount of reserves they hold.

Question 11

The United States has a dual banking system consisting of state banks and national banks.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not a thrift institution?

Accepted Answer

A)  a savings-and-loan association 
B)  a commercial bank 
C)  a mutual savings bank 
D)  an employee credit union 
E)  a college credit union 
A)  a savings-and-loan association 
B)  a commercial bank 
C)  a mutual savings bank 
D)  an employee credit union 
E)  a college credit union

Question 13

If relative to the base period of 1982 through 1984, the consumer price index for 2017 was 244, then the purchasing power of a dollar in 2017, measured in 1982-1984 dollars, was

Accepted Answer

A)  $2.44. 
B)  $0.24. 
C)  $0.41. 
D)  $4.10. 
E)  $1.00. 
A)  $2.44. 
B)  $0.24. 
C)  $0.41. 
D)  $4.10. 
E)  $1.00.

Question 14

If a financial institution pays an interest rate of 1% to savers and charges borrowers 3%, they earn a profit of _____

Accepted Answer

A)  1 percent. 
B)  2 percent. 
C)  3 percent. 
D)  4 percent. 
E)  5 percent. 
A)  1 percent. 
B)  2 percent. 
C)  3 percent. 
D)  4 percent. 
E)  5 percent.

Question 15

The emergence of the subprime mortgage market following the recession of 2001 made it increasingly difficult for low-income individuals to obtain a mortgage.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is true of the unit of account function of money?

Accepted Answer

A)  It makes money durable in nature. 
B)  It makes the values of goods and services known. 
C)  It implies that money should be made of something valuable. 
D)  It implies that money can be used to save up purchasing power. 
E)  It implies that money is more easily counted than goods. 
A)  It makes money durable in nature. 
B)  It makes the values of goods and services known. 
C)  It implies that money should be made of something valuable. 
D)  It implies that money can be used to save up purchasing power. 
E)  It implies that money is more easily counted than goods.

Question 17

Any bank that uses deposits to make loans _____

Accepted Answer

A)  operates on a 100 percent reserve system. 
B)  operates on a fractional reserve system. 
C)  does not operate on a reserve system. 
D)  does not keep reserves in its vaults. 
E)  charges an interest rate determined by the reserve ratio. 
A)  operates on a 100 percent reserve system. 
B)  operates on a fractional reserve system. 
C)  does not operate on a reserve system. 
D)  does not keep reserves in its vaults. 
E)  charges an interest rate determined by the reserve ratio.

Question 18

A major reason for the development of money market mutual funds in the 1970s was that _____

Accepted Answer

A)  open-market operations were suspended. 
B)  bank deposit rates were capped at levels below market interest rates. 
C)  money-market funds offered more flexible checking privileges than banks. 
D)  they were considered to be safer than banks. 
E)  money markets did not exist until 1970. 
A)  open-market operations were suspended. 
B)  bank deposit rates were capped at levels below market interest rates. 
C)  money-market funds offered more flexible checking privileges than banks. 
D)  they were considered to be safer than banks. 
E)  money markets did not exist until 1970.

Question 19

The Federal Open Market Committee (FOMC) consists of _____

Accepted Answer

A)  the Board of Governors and the Secretary of the Treasury. 
B)  the presidents of the 12 Federal Reserve Banks. 
C)  the Board of Governors and some of the Federal Reserve Bank presidents. 
D)  the Comptroller of the Currency and seven Reserve Bank presidents. 
E)  representatives from banks throughout the United States. 
A)  the Board of Governors and the Secretary of the Treasury. 
B)  the presidents of the 12 Federal Reserve Banks. 
C)  the Board of Governors and some of the Federal Reserve Bank presidents. 
D)  the Comptroller of the Currency and seven Reserve Bank presidents. 
E)  representatives from banks throughout the United States.

Question 20

The U.S. dollar is a good example of fiat money.

Accepted Answer

A) True 
 B)False

The greater the degree of specialization in the economy, the _____

_____ institutions obtain funds primarily by accepting customer deposits.

_____ is money whose face value exceeds its production cost.

Which of the following is a depository institution?

The reserve ratio is the ratio of _____

The value of fiat money is fundamentally determined by the _____

As the variety of goods and services increases, barter becomes _____

Banks earn a profit by offering loans at higher interest rates than they pay savers.

Before specialization, _____

Some financial institutions are classified as depository institutions based on _____

The United States has a dual banking system consisting of state banks and national banks.

Which of the following is not a thrift institution?

If relative to the base period of 1982 through 1984, the consumer price index for 2017 was 244, then the purchasing power of a dollar in 2017, measured in 1982-1984 dollars, was

If a financial institution pays an interest rate of 1% to savers and charges borrowers 3%, they earn a profit of _____

The emergence of the subprime mortgage market following the recession of 2001 made it increasingly difficult for low-income individuals to obtain a mortgage.

Which of the following is true of the unit of account function of money?

Any bank that uses deposits to make loans _____

A major reason for the development of money market mutual funds in the 1970s was that _____

The Federal Open Market Committee (FOMC) consists of _____

The U.S. dollar is a good example of fiat money.

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters

Exam 13: Money and the Financial System.

The greater the degree of specialization in the economy, the _____

_____ institutions obtain funds primarily by accepting customer deposits.

_____ is money whose face value exceeds its production cost.

Which of the following is a depository institution?

The reserve ratio is the ratio of _____

The value of fiat money is fundamentally determined by the _____

As the variety of goods and services increases, barter becomes _____

Banks earn a profit by offering loans at higher interest rates than they pay savers.

Before specialization, _____

Some financial institutions are classified as depository institutions based on _____

The United States has a dual banking system consisting of state banks and national banks.

Which of the following is not a thrift institution?

If relative to the base period of 1982 through 1984, the consumer price index for 2017 was 244, then the purchasing power of a dollar in 2017, measured in 1982-1984 dollars, was

If a financial institution pays an interest rate of 1% to savers and charges borrowers 3%, they earn a profit of _____

The emergence of the subprime mortgage market following the recession of 2001 made it increasingly difficult for low-income individuals to obtain a mortgage.

Which of the following is true of the unit of account function of money?

Any bank that uses deposits to make loans _____

A major reason for the development of money market mutual funds in the 1970s was that _____

The Federal Open Market Committee (FOMC) consists of _____

The U.S. dollar is a good example of fiat money.

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters