Exam 14: Money and the Banking System

Money is anything that

By law, all banks are required to hold a certain percentage of their checking deposits on reserve either in the form of vault cash or deposits at the Federal Reserve.

During periods of deflation, the store-of-value function of money is eroded.

Which agency of the Federal government insures deposits up to $100,000 in virtually all U.S. banks?

Gold and silver were removed from the U.S. monetary system decades ago and therefore no longer provide "backing" for the dollar.

Vault cash, mortgage loans, and checking deposits are assets of a bank.

All U.S. coins bear the words

Credit cards are actually loans, so they are not part of the M₁ money supply.

The largest denomination Federal Reserve note is the $100 bill.

In our economy, stores of value for households include all of the following except

The largest source of the M₁ money supply is the

A money market deposit account pays a higher interest rate than a demand deposit account.

Concerning a bank, its required reserves equal its excess reserves minus its actual reserves.

Federal Reserve notes constitute the largest component of the M₁ money supply.

Certified checks, cashier's checks, money orders, and traveler's checks tend to ensure a higher probability of payment than demand deposits.

A bank's actual reserves are the sum of its required reserves and its

The money multiplier equals 1 + required reserve ratio.

All of the following are components of the M₁ money supply except

By law, all banks are required to hold a certain percentage of their checking deposits on reserve in the form of

The process of earning interest on interest, as well as on the principal, is called