Question 1

The Federal Reserve is the nation's second largest check clearinghouse.

Accepted Answer

A) True 
 B)False  False

Question 2

When shopping for a credit card, one should be concerned about the annual percentage rate, grace period, over-limit fee, and late payment fee.

Accepted Answer

A) True 
 B)False  True

Question 3

All U.S. coins and paper money are designated as

Accepted Answer

A)  legal tender 
B)  interest-bearing 
C)  demand deposits 
D)  insured by the FDIC 
A)  legal tender 
B)  interest-bearing 
C)  demand deposits 
D)  insured by the FDIC A

Question 4

The FDIC does all of the following except

Accepted Answer

A)  conducts bank examinations and audits 
B)  insures deposits at banks 
C)  distributes currency to banks 
D)  deals with bank failures 
A)  conducts bank examinations and audits 
B)  insures deposits at banks 
C)  distributes currency to banks 
D)  deals with bank failures

Question 5

Money has all of the following functions except that it

Accepted Answer

A)  is a unit of account 
B)  is a medium of exchange 
C)  earns income for its holders 
D)  is a store of value 
A)  is a unit of account 
B)  is a medium of exchange 
C)  earns income for its holders 
D)  is a store of value

Question 6

Why does U.S. currency have serial numbers?

Accepted Answer

A)  to make it easier to count the money supply in circulation 
B)  to make it readable by scanning machines 
C)  to make it harder to counterfeit 
D)  to distinguish it from other countries' currencies 
A)  to make it easier to count the money supply in circulation 
B)  to make it readable by scanning machines 
C)  to make it harder to counterfeit 
D)  to distinguish it from other countries' currencies

Question 7

A ______ is a checking account that does not pay interest.

Accepted Answer

A)  share draft account 
B)  negotiable order of withdrawal 
C)  certificate of deposit 
D)  demand deposit 
A)  share draft account 
B)  negotiable order of withdrawal 
C)  certificate of deposit 
D)  demand deposit

Question 8

The liabilities of a bank include all of the following except

Accepted Answer

A)  borrowing from a Federal Reserve bank 
B)  savings deposits 
C)  vault cash 
D)  demand deposits 
A)  borrowing from a Federal Reserve bank 
B)  savings deposits 
C)  vault cash 
D)  demand deposits

Question 9

If Debra finds $100 on the street and then deposits it into her bank checking account, the immediate effect on the money supply is

Accepted Answer

A)  a $100 increase 
B)  a $100 decrease 
C)  a $200 increase 
D)  none 
A)  a $100 increase 
B)  a $100 decrease 
C)  a $200 increase 
D)  none

Question 10

The U.S. money supply consists of gold and silver bullion, checking account deposits, coins, and Federal Reserve notes.

Accepted Answer

A) True 
 B)False

Question 11

Suppose that Wisconsin National Bank has actual reserves of $100,000, checking account deposits of $300,000 and the required reserve ratio is 20 percent. The bank is allowed to increase its loans by

Accepted Answer

A)  $30,000 
B)  $40,000 
C)  $50,000 
D)  $60,000 
A)  $30,000 
B)  $40,000 
C)  $50,000 
D)  $60,000

Question 12

For people who do not maintain a checking account and who prefer not to make payments with cash, a ______ serves the same function as a personal check.

Accepted Answer

A)  certificate of deposit 
B)  money market deposit account 
C)  money order 
D)  passbook savings deposit 
A)  certificate of deposit 
B)  money market deposit account 
C)  money order 
D)  passbook savings deposit

Question 13

The purpose of the legal tender pledge, which applies to paper money and coins, is to

Accepted Answer

A)  ensure that banks maintain sufficient reserves to meet their depositors' needs 
B)  reinforce the general acceptability of currency 
C)  prevent the counterfeiting of coins and paper money 
D)  ensure that currency is made of the highest quality metal or paper 
A)  ensure that banks maintain sufficient reserves to meet their depositors' needs 
B)  reinforce the general acceptability of currency 
C)  prevent the counterfeiting of coins and paper money 
D)  ensure that currency is made of the highest quality metal or paper

Question 14

A commercial bank is a

Accepted Answer

A)  FDIC-owned company 
B)  government-owned entity 
C)  non-profit corporation 
D)  corporation that seeks to make a profit for its stockholders 
A)  FDIC-owned company 
B)  government-owned entity 
C)  non-profit corporation 
D)  corporation that seeks to make a profit for its stockholders

Question 15

Assume that the required reserve ratio is 20 percent and the commercial banking system initially has no excess reserves. Additional deposits of $40 million into checking accounts will permit the banking system to create a maximum of other new deposits equal to

Accepted Answer

A)  $130 million 
B)  $140 million 
C)  $160 million 
D)  $200 million 
A)  $130 million 
B)  $140 million 
C)  $160 million 
D)  $200 million

Question 16

Checking accounts that are issued by credit unions are called NOW accounts.

Accepted Answer

A) True 
 B)False

Question 17

The largest denomination of paper curency issued in the U.S. today is the ______ bill.

Accepted Answer

A)  $20 
B)  $100 
C)  $1,000 
D)  $10,000 
A)  $20 
B)  $100 
C)  $1,000 
D)  $10,000

Question 18

If you use your ______ to make a purchase, you are obtaining a short-term loan from your financial institution.

Accepted Answer

A)  checking account deposit 
B)  certificate of deposit 
C)  MasterCard or Visa 
D)  currency 
A)  checking account deposit 
B)  certificate of deposit 
C)  MasterCard or Visa 
D)  currency

Question 19

Which type of money carries the official motto of the United States, In God We Trust?

Accepted Answer

A)  checking account deposits 
B)  traveler's checks 
C)  bank credit cards 
D)  dollar bills 
A)  checking account deposits 
B)  traveler's checks 
C)  bank credit cards 
D)  dollar bills

Question 20

When the U.S. government designates coins and paper money as legal tender, it mandates their acceptance in transactions and requires that they be used in payment of taxes.

Accepted Answer

A) True 
 B)False

The Federal Reserve is the nation's second largest check clearinghouse.

When shopping for a credit card, one should be concerned about the annual percentage rate, grace period, over-limit fee, and late payment fee.

All U.S. coins and paper money are designated as

The FDIC does all of the following except

Money has all of the following functions except that it

Why does U.S. currency have serial numbers?

A ______ is a checking account that does not pay interest.

The liabilities of a bank include all of the following except

If Debra finds $100 on the street and then deposits it into her bank checking account, the immediate effect on the money supply is

The U.S. money supply consists of gold and silver bullion, checking account deposits, coins, and Federal Reserve notes.

Suppose that Wisconsin National Bank has actual reserves of $100,000, checking account deposits of $300,000 and the required reserve ratio is 20 percent. The bank is allowed to increase its loans by

For people who do not maintain a checking account and who prefer not to make payments with cash, a ______ serves the same function as a personal check.

The purpose of the legal tender pledge, which applies to paper money and coins, is to

A commercial bank is a

Assume that the required reserve ratio is 20 percent and the commercial banking system initially has no excess reserves. Additional deposits of $40 million into checking accounts will permit the banking system to create a maximum of other new deposits equal to

Checking accounts that are issued by credit unions are called NOW accounts.

The largest denomination of paper curency issued in the U.S. today is the ______ bill.

If you use your ______ to make a purchase, you are obtaining a short-term loan from your financial institution.

Which type of money carries the official motto of the United States, In God We Trust?

When the U.S. government designates coins and paper money as legal tender, it mandates their acceptance in transactions and requires that they be used in payment of taxes.

Scarcity and Choice

Market Transactions: Demand and Supply Analysis

Demand and Supply Applications

Production and the Costs of Production

Competition and Monopoly: Virtues and Vices

Imperfect Competition

Labor Markets

Government and Markets

The Mixed Economy of the United States

Gross Domestic Product and Economic Growth

The Business Cycle, Unemployment, and Inflation

Macroeconomic Instability: Aggregate Demand and Aggregate Supply

Fiscal Policy and the Federal Budget

The Federal Reserve and Monetary Policy

The United States and the Global Economy

International Finance

Economic Systems and Developing Countries

Filters

Exam 14: Money and the Banking System

The Federal Reserve is the nation's second largest check clearinghouse.

When shopping for a credit card, one should be concerned about the annual percentage rate, grace period, over-limit fee, and late payment fee.

All U.S. coins and paper money are designated as

The FDIC does all of the following except

Money has all of the following functions except that it

Why does U.S. currency have serial numbers?

A ______ is a checking account that does not pay interest.

The liabilities of a bank include all of the following except

If Debra finds $100 on the street and then deposits it into her bank checking account, the immediate effect on the money supply is

The U.S. money supply consists of gold and silver bullion, checking account deposits, coins, and Federal Reserve notes.

Suppose that Wisconsin National Bank has actual reserves of $100,000, checking account deposits of $300,000 and the required reserve ratio is 20 percent. The bank is allowed to increase its loans by

For people who do not maintain a checking account and who prefer not to make payments with cash, a ______ serves the same function as a personal check.

The purpose of the legal tender pledge, which applies to paper money and coins, is to

A commercial bank is a

Assume that the required reserve ratio is 20 percent and the commercial banking system initially has no excess reserves. Additional deposits of $40 million into checking accounts will permit the banking system to create a maximum of other new deposits equal to

Checking accounts that are issued by credit unions are called NOW accounts.

The largest denomination of paper curency issued in the U.S. today is the ______ bill.

If you use your ______ to make a purchase, you are obtaining a short-term loan from your financial institution.

Which type of money carries the official motto of the United States, In God We Trust?

When the U.S. government designates coins and paper money as legal tender, it mandates their acceptance in transactions and requires that they be used in payment of taxes.

Scarcity and Choice

Market Transactions: Demand and Supply Analysis

Demand and Supply Applications

Production and the Costs of Production

Competition and Monopoly: Virtues and Vices

Imperfect Competition

Labor Markets

Government and Markets

The Mixed Economy of the United States

Gross Domestic Product and Economic Growth

The Business Cycle, Unemployment, and Inflation

Macroeconomic Instability: Aggregate Demand and Aggregate Supply

Fiscal Policy and the Federal Budget

The Federal Reserve and Monetary Policy

The United States and the Global Economy

International Finance

Economic Systems and Developing Countries

Filters