Question 1

Which of the following has served as money in many federal prisons in the United States since 2004?

Accepted Answer

A)  postage stamps 
B)  energy bars 
C)  plastic-and-foil pouches of mackerel 
D)  cans of tuna 
E)  cigarettes 
A)  postage stamps 
B)  energy bars 
C)  plastic-and-foil pouches of mackerel 
D)  cans of tuna 
E)  cigarettes

Question 2

Many banks in the United States failed in the 1930s, not because they were poorly managed, but because they could not survive the panicky withdrawal of funds by their depositors.

Accepted Answer

A) True 
 B)False

Question 3

What gave rise to money exchanges?

Accepted Answer

A)  self-sufficiency 
B)  the high transaction costs of barter 
C)  the existence of a double coincidence of wants 
D)  the development of fiat money 
E)  token money 
A)  self-sufficiency 
B)  the high transaction costs of barter 
C)  the existence of a double coincidence of wants 
D)  the development of fiat money 
E)  token money

Question 4

While deposit insurance was designed to make the banking industry more stable, it contributed to the banking crisis of the 1980s because _____

Accepted Answer

A)  the FDIC only insured commercial banks. 
B)  the ceiling on insured deposits was too low. 
C)  too many banks were insufficiently insured. 
D)  depositors became too complacent about the risks that the banks were taking. 
E)  unsafe banks were "kicked out" of the deposit insurance system. 
A)  the FDIC only insured commercial banks. 
B)  the ceiling on insured deposits was too low. 
C)  too many banks were insufficiently insured. 
D)  depositors became too complacent about the risks that the banks were taking. 
E)  unsafe banks were "kicked out" of the deposit insurance system.

Question 5

The Fed can make loans to the general public at the discount rate.

Accepted Answer

A) True 
 B)False

Question 6

Insurance that protects individuals from the loss of their bank deposits _____

Accepted Answer

A)  makes bank officials especially careful about the loans and investments they make. 
B)  makes it virtually impossible for a bank to fail. 
C)  is so costly that few banks can afford it. 
D)  makes depositors less concerned about the safety of their money than the interest rate it is earning. 
E)  was introduced as a direct result of the financial problems of the 1970s and 1980s. 
A)  makes bank officials especially careful about the loans and investments they make. 
B)  makes it virtually impossible for a bank to fail. 
C)  is so costly that few banks can afford it. 
D)  makes depositors less concerned about the safety of their money than the interest rate it is earning. 
E)  was introduced as a direct result of the financial problems of the 1970s and 1980s.

Question 7

Interest-rate ceilings on deposits _____

Accepted Answer

A)  meant banks were guaranteed "cheap money" from depositors. 
B)  were imposed because without them, as was the case in the 1970s, banks couldn't be profitable. 
C)  led to banks losing deposits whenever market rates went above the ceiling rates. 
D)  are only effective when market rates are below the ceiling rates. 
E)  were developed by money market mutual funds as a marketing device. 
A)  meant banks were guaranteed "cheap money" from depositors. 
B)  were imposed because without them, as was the case in the 1970s, banks couldn't be profitable. 
C)  led to banks losing deposits whenever market rates went above the ceiling rates. 
D)  are only effective when market rates are below the ceiling rates. 
E)  were developed by money market mutual funds as a marketing device.

Question 8

Which type of money has the lowest opportunity cost?

Accepted Answer

A)  silver coins 
B)  gold coins 
C)  commodity money 
D)  diamonds 
E)  fiat money 
A)  silver coins 
B)  gold coins 
C)  commodity money 
D)  diamonds 
E)  fiat money

Question 9

The unit of account function of money _____

Accepted Answer

A)  means that money should be durable. 
B)  means that money is used to measure the value of all goods. 
C)  requires that money be made of something valuable. 
D)  means that money can be used to save up purchasing power. 
E)  means that money is more easily counted than goods. 
A)  means that money should be durable. 
B)  means that money is used to measure the value of all goods. 
C)  requires that money be made of something valuable. 
D)  means that money can be used to save up purchasing power. 
E)  means that money is more easily counted than goods.

Question 10

Which of the following is legal tender?

Accepted Answer

A)  a check 
B)  a Federal Reserve note 
C)  a banknote issued by a foreign bank 
D)  a credit card 
E)  a traveler's check 
A)  a check 
B)  a Federal Reserve note 
C)  a banknote issued by a foreign bank 
D)  a credit card 
E)  a traveler's check

Question 11

The discount rate is the interest rate that _____

Accepted Answer

A)  banks charge on large loans. 
B)  banks charge on loans to other banks. 
C)  the Fed charges on loans to branches of the U.S. government. 
D)  the Fed charges on loans to depository institutions. 
E)  the Fed charges on loans to the public. 
A)  banks charge on large loans. 
B)  banks charge on loans to other banks. 
C)  the Fed charges on loans to branches of the U.S. government. 
D)  the Fed charges on loans to depository institutions. 
E)  the Fed charges on loans to the public.

Question 12

A bank holding company is _____

Accepted Answer

A)  a conglomerate that owns a bank to service the other businesses it owns. 
B)  a loose federation of private banks that holds assets in common. 
C)  a corporation that owns one or more banks. 
D)  a bank that is owned by the depositors. 
E)  a subsidiary of a major corporation. 
A)  a conglomerate that owns a bank to service the other businesses it owns. 
B)  a loose federation of private banks that holds assets in common. 
C)  a corporation that owns one or more banks. 
D)  a bank that is owned by the depositors. 
E)  a subsidiary of a major corporation.

Question 13

Fractional reserve banking occurs when _____

Accepted Answer

A)  a bank has reserves that exceed its deposits. 
B)  a bank has reserves that are equal to its deposits. 
C)  a bank has reserves that are less than its deposits. 
D)  some depositors lose their deposits through poor bank management. 
E)  some lenders fail to repay their loans. 
A)  a bank has reserves that exceed its deposits. 
B)  a bank has reserves that are equal to its deposits. 
C)  a bank has reserves that are less than its deposits. 
D)  some depositors lose their deposits through poor bank management. 
E)  some lenders fail to repay their loans.

Question 14

The emergence of mortgage-backed securities provided mortgage brokers with an incentive to seek out only the most creditworthy borrowers.

Accepted Answer

A) True 
 B)False

Question 15

_____ were among the first bankers.

Accepted Answer

A)  Seigniors 
B)  Governments 
C)  Savings-and-loan institutions 
D)  Farmers 
E)  Goldsmiths 
A)  Seigniors 
B)  Governments 
C)  Savings-and-loan institutions 
D)  Farmers 
E)  Goldsmiths

Question 16

Between 1930 and 1933, many banks in the United States failed because _____

Accepted Answer

A)  the FDIC moved too slowly to prevent the bank failures. 
B)  most bankers were either corrupt or incompetent. 
C)  of excessive regulation by the federal government. 
D)  people shifted their funds to take advantage of rising stock market prices. 
E)  people lost confidence in them. 
A)  the FDIC moved too slowly to prevent the bank failures. 
B)  most bankers were either corrupt or incompetent. 
C)  of excessive regulation by the federal government. 
D)  people shifted their funds to take advantage of rising stock market prices. 
E)  people lost confidence in them.

Question 17

Thousands of U.S. banks failed in the 1930s because the Fed loaned too many reserves to member banks.

Accepted Answer

A) True 
 B)False

Question 18

During the global financial panic in September 2008, the collapse of which bank signaled that other financial institutions could soon follow?

Accepted Answer

A)  JPMorgan Chase 
B)  Wells Fargo 
C)  Bank of America 
D)  Citibank 
E)  Lehman Brothers 
A)  JPMorgan Chase 
B)  Wells Fargo 
C)  Bank of America 
D)  Citibank 
E)  Lehman Brothers

Question 19

Specialization of labor means that _____

Accepted Answer

A)  production requires a special kind of labor. 
B)  the overall skill level of labor is increasing. 
C)  individuals produce goods other than those they want to consume. 
D)  individuals achieve self-sufficiency in production. 
E)  exchange within an economy consists of trading services. 
A)  production requires a special kind of labor. 
B)  the overall skill level of labor is increasing. 
C)  individuals produce goods other than those they want to consume. 
D)  individuals achieve self-sufficiency in production. 
E)  exchange within an economy consists of trading services.

Question 20

Interest rate ceilings resulted in great profitability for banks in the 1970s.

Accepted Answer

A) True 
 B)False

Which of the following has served as money in many federal prisons in the United States since 2004?

Many banks in the United States failed in the 1930s, not because they were poorly managed, but because they could not survive the panicky withdrawal of funds by their depositors.

What gave rise to money exchanges?

While deposit insurance was designed to make the banking industry more stable, it contributed to the banking crisis of the 1980s because _____

The Fed can make loans to the general public at the discount rate.

Insurance that protects individuals from the loss of their bank deposits _____

Interest-rate ceilings on deposits _____

Which type of money has the lowest opportunity cost?

The unit of account function of money _____

Which of the following is legal tender?

The discount rate is the interest rate that _____

A bank holding company is _____

Fractional reserve banking occurs when _____

The emergence of mortgage-backed securities provided mortgage brokers with an incentive to seek out only the most creditworthy borrowers.

_____ were among the first bankers.

Between 1930 and 1933, many banks in the United States failed because _____

Thousands of U.S. banks failed in the 1930s because the Fed loaned too many reserves to member banks.

During the global financial panic in September 2008, the collapse of which bank signaled that other financial institutions could soon follow?

Specialization of labor means that _____

Interest rate ceilings resulted in great profitability for banks in the 1970s.

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.

Which of the following has served as money in many federal prisons in the United States since 2004?

Many banks in the United States failed in the 1930s, not because they were poorly managed, but because they could not survive the panicky withdrawal of funds by their depositors.

What gave rise to money exchanges?

While deposit insurance was designed to make the banking industry more stable, it contributed to the banking crisis of the 1980s because _____

The Fed can make loans to the general public at the discount rate.

Insurance that protects individuals from the loss of their bank deposits _____

Interest-rate ceilings on deposits _____

Which type of money has the lowest opportunity cost?

The unit of account function of money _____

Which of the following is legal tender?

The discount rate is the interest rate that _____

A bank holding company is _____

Fractional reserve banking occurs when _____

The emergence of mortgage-backed securities provided mortgage brokers with an incentive to seek out only the most creditworthy borrowers.

_____ were among the first bankers.

Between 1930 and 1933, many banks in the United States failed because _____

Thousands of U.S. banks failed in the 1930s because the Fed loaned too many reserves to member banks.

During the global financial panic in September 2008, the collapse of which bank signaled that other financial institutions could soon follow?

Specialization of labor means that _____

Interest rate ceilings resulted in great profitability for banks in the 1970s.

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