Question 1

What is token money in the United States?

Accepted Answer

A)  all coins 
B)  some of the paper money in circulation 
C)  25-cent coins 
D)  gold bars 
E)  some coins and all paper money now in circulation 
A)  all coins 
B)  some of the paper money in circulation 
C)  25-cent coins 
D)  gold bars 
E)  some coins and all paper money now in circulation

Question 2

The more specialized labor becomes, the _____

Accepted Answer

A)  less likely it is that a double coincidence of wants will exist, and the less likely it is that monetary exchange will develop. 
B)  less likely it is that a double coincidence of wants will exist, and the more likely it is that monetary exchange will develop. 
C)  more likely it is that a double coincidence of wants will exist, and the less likely it is that monetary exchange will develop. 
D)  more likely it is that a double coincidence of wants will exist, and the more likely it is that monetary exchange will develop. 
E)  more likely it is that the individual is producing only what he or she wants to consume. 
A)  less likely it is that a double coincidence of wants will exist, and the less likely it is that monetary exchange will develop. 
B)  less likely it is that a double coincidence of wants will exist, and the more likely it is that monetary exchange will develop. 
C)  more likely it is that a double coincidence of wants will exist, and the less likely it is that monetary exchange will develop. 
D)  more likely it is that a double coincidence of wants will exist, and the more likely it is that monetary exchange will develop. 
E)  more likely it is that the individual is producing only what he or she wants to consume.

Question 3

Money that is acceptable because the government requires that it be accepted in payment of debt is _____

Accepted Answer

A)  legal tender. 
B)  commodity money. 
C)  bad money. 
D)  broad money. 
E)  representative money. 
A)  legal tender. 
B)  commodity money. 
C)  bad money. 
D)  broad money. 
E)  representative money.

Question 4

Money is legal tender if _____

Accepted Answer

A)  people willingly accept it in payment of debts. 
B)  it is backed by gold or silver. 
C)  it is commodity money. 
D)  the government says it is. 
E)  it is in a bank account. 
A)  people willingly accept it in payment of debts. 
B)  it is backed by gold or silver. 
C)  it is commodity money. 
D)  the government says it is. 
E)  it is in a bank account.

Question 5

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 6

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 7

Each member of the Board of Governors of the Fed serves _____

Accepted Answer

A)  a four-year term that begins at the same time as that of the newly elected president. 
B)  a four-year term that does not coincide with the term of the current president. 
C)  until a new president is elected. 
D)  a fourteen-year term. 
E)  a six-year term. 
A)  a four-year term that begins at the same time as that of the newly elected president. 
B)  a four-year term that does not coincide with the term of the current president. 
C)  until a new president is elected. 
D)  a fourteen-year term. 
E)  a six-year term.

Question 8

If the price index was 100, the purchasing power of a dollar measured in terms of the base year was _____

Accepted Answer

A)  $2.38. 
B)  $0.24. 
C)  $0.41. 
D)  $4.10. 
E)  $1.00. 
A)  $2.38. 
B)  $0.24. 
C)  $0.41. 
D)  $4.10. 
E)  $1.00.

Question 9

Which quality best defines money that does not tie up otherwise valuable resources?

Accepted Answer

A)  durable 
B)  portable 
C)  divisible 
D)  uniform quality 
E)  low opportunity cost 
A)  durable 
B)  portable 
C)  divisible 
D)  uniform quality 
E)  low opportunity cost

Question 10

Identify the correct statement regarding a fractional reserve banking system.

Accepted Answer

A)  Only a fraction of the banks in the system are allowed to create money. 
B)  Only a fraction of the banks in the system have reserves. 
C)  The claims outstanding against the bank are only a fraction of the bank's total reserves. 
D)  Each bank must deposit a fraction of its reserves with the Federal Reserve Bank. 
E)  Bank reserves represent only a fraction of bank deposits. 
A)  Only a fraction of the banks in the system are allowed to create money. 
B)  Only a fraction of the banks in the system have reserves. 
C)  The claims outstanding against the bank are only a fraction of the bank's total reserves. 
D)  Each bank must deposit a fraction of its reserves with the Federal Reserve Bank. 
E)  Bank reserves represent only a fraction of bank deposits.

Question 11

The main source of profit for financial institutions is _____

Accepted Answer

A)  their ownership of stocks in commercial corporations. 
B)  their ownership of real assets received in foreclosures on loans to households. 
C)  the fees charged for holding and servicing checking accounts. 
D)  the difference between interest paid on deposits and interest received on loans. 
E)  the difference between the cost of creating new money and the interest paid on loans. 
A)  their ownership of stocks in commercial corporations. 
B)  their ownership of real assets received in foreclosures on loans to households. 
C)  the fees charged for holding and servicing checking accounts. 
D)  the difference between interest paid on deposits and interest received on loans. 
E)  the difference between the cost of creating new money and the interest paid on loans.

Question 12

Money does not solve the double coincidence of wants problem unless it is generally acceptable.

Accepted Answer

A) True 
 B)False

Question 13

What did coinage determine?

Accepted Answer

A)  the amount that had to be weighed 
B)  which scales to use 
C)  the quality of the metal with each exchange 
D)  which cheaper metals were mixed in 
E)  both the quantity and the quality of the metal 
A)  the amount that had to be weighed 
B)  which scales to use 
C)  the quality of the metal with each exchange 
D)  which cheaper metals were mixed in 
E)  both the quantity and the quality of the metal

Question 14

Under a fractional reserve banking system, banks have reserves of only a fraction of their total deposits.

Accepted Answer

A) True 
 B)False

Question 15

Financial institutions are known as financial intermediaries because they serve as go-betweens, which link _____ and _____.

Accepted Answer

A)  the government; the taxpayers through IRAs 
B)  savers; borrowers 
C)  employers; employees 
D)  firms; the government 
E)  firms; consumers 
A)  the government; the taxpayers through IRAs 
B)  savers; borrowers 
C)  employers; employees 
D)  firms; the government 
E)  firms; consumers

Question 16

A mortgage-backed security is a bundle of hundreds of mortgages which represents a claim on the monthly payments made on those mortgages.

Accepted Answer

A) True 
 B)False

Question 17

Which act created a new system of federally chartered banks called national banks?

Accepted Answer

A)  the Gramm-Leach-Bliley Act of 1999 
B)  the Dodd-Frank Act of 2010 
C)  the Garn-St. Germain Act of 1982 
D)  the Sarbanes-Oxley Act of 2002 
E)  the National Banking Act of 1863 
A)  the Gramm-Leach-Bliley Act of 1999 
B)  the Dodd-Frank Act of 2010 
C)  the Garn-St. Germain Act of 1982 
D)  the Sarbanes-Oxley Act of 2002 
E)  the National Banking Act of 1863

Question 18

In order for something to be used as money, it must be _____

Accepted Answer

A)  made of paper. 
B)  issued by banks. 
C)  declared to be money. 
D)  generally acceptable. 
E)  made of something valuable. 
A)  made of paper. 
B)  issued by banks. 
C)  declared to be money. 
D)  generally acceptable. 
E)  made of something valuable.

Question 19

Which quality best defines money that easily divisible into smaller units?

Accepted Answer

A)  durable 
B)  portable 
C)  divisible 
D)  uniform quality 
E)  low opportunity cost 
A)  durable 
B)  portable 
C)  divisible 
D)  uniform quality 
E)  low opportunity cost

Question 20

To measure the purchasing power of the dollar in a particular year _____

Accepted Answer

A)  compute the price index for that year and then divide 100 by that price index. 
B)  compute the price index for that year and then multiply 100 by that price index. 
C)  compute the price index for that year and then add 100 to that price index. 
D)  compute the price index for that year and then subtract 100 from that price index. 
E)  compute the price index for that year. 
A)  compute the price index for that year and then divide 100 by that price index. 
B)  compute the price index for that year and then multiply 100 by that price index. 
C)  compute the price index for that year and then add 100 to that price index. 
D)  compute the price index for that year and then subtract 100 from that price index. 
E)  compute the price index for that year.

What is token money in the United States?

The more specialized labor becomes, the _____

Money that is acceptable because the government requires that it be accepted in payment of debt is _____

Money is legal tender if _____

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

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 _____

Each member of the Board of Governors of the Fed serves _____

If the price index was 100, the purchasing power of a dollar measured in terms of the base year was _____

Which quality best defines money that does not tie up otherwise valuable resources?

Identify the correct statement regarding a fractional reserve banking system.

The main source of profit for financial institutions is _____

Money does not solve the double coincidence of wants problem unless it is generally acceptable.

What did coinage determine?

Under a fractional reserve banking system, banks have reserves of only a fraction of their total deposits.

Financial institutions are known as financial intermediaries because they serve as go-betweens, which link _ and _.

A mortgage-backed security is a bundle of hundreds of mortgages which represents a claim on the monthly payments made on those mortgages.

Which act created a new system of federally chartered banks called national banks?

In order for something to be used as money, it must be _____

Which quality best defines money that easily divisible into smaller units?

To measure the purchasing power of the dollar in a particular year _____

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.

What is token money in the United States?

The more specialized labor becomes, the _____

Money that is acceptable because the government requires that it be accepted in payment of debt is _____

Money is legal tender if _____

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

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 _____

Each member of the Board of Governors of the Fed serves _____

If the price index was 100, the purchasing power of a dollar measured in terms of the base year was _____

Which quality best defines money that does not tie up otherwise valuable resources?

Identify the correct statement regarding a fractional reserve banking system.

The main source of profit for financial institutions is _____

Money does not solve the double coincidence of wants problem unless it is generally acceptable.

What did coinage determine?

Under a fractional reserve banking system, banks have reserves of only a fraction of their total deposits.

Financial institutions are known as financial intermediaries because they serve as go-betweens, which link _____ and _____.

A mortgage-backed security is a bundle of hundreds of mortgages which represents a claim on the monthly payments made on those mortgages.

Which act created a new system of federally chartered banks called national banks?

In order for something to be used as money, it must be _____

Which quality best defines money that easily divisible into smaller units?

To measure the purchasing power of the dollar in a particular year _____

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

Financial institutions are known as financial intermediaries because they serve as go-betweens, which link _ and _.