Question 1

Currency consists of:

Accepted Answer

A)  coins and Eurodollars. 
B)  paper money and checks. 
C)  coins and paper money. 
D)  paper money and Eurodollars. 
E)  coins and checks. 
A)  coins and Eurodollars. 
B)  paper money and checks. 
C)  coins and paper money. 
D)  paper money and Eurodollars. 
E)  coins and checks.

Question 2

Which of the following institutions is responsible for supervising the banking system of the United States?

Accepted Answer

A)  The Federal Reserve System. 
B)  The Open Market Committee. 
C)  The U.S. Treasury. 
D)  The Federal Deposit Insurance Corporation. 
A)  The Federal Reserve System. 
B)  The Open Market Committee. 
C)  The U.S. Treasury. 
D)  The Federal Deposit Insurance Corporation.

Question 3

Which of the following items is included when computing M1?

Accepted Answer

A)  Checking accounting entries. 
B)  Currency in circulation. 
C)  All of the above. 
D)  None of the above. 
A)  Checking accounting entries. 
B)  Currency in circulation. 
C)  All of the above. 
D)  None of the above.

Question 4

The currency of the United States is:

Accepted Answer

A)  backed dollar for dollar by gold. 
B)  backed by a gold cover of 50 percent. 
C)  not backed by any precious metal. 
D)  backed by the government's silver reserves. 
E)  back by the government's gold and silver reserves. 
A)  backed dollar for dollar by gold. 
B)  backed by a gold cover of 50 percent. 
C)  not backed by any precious metal. 
D)  backed by the government's silver reserves. 
E)  back by the government's gold and silver reserves.

Question 5

The government agency that provides insurance for all checkable deposits up to $250,000 in banks choosing its protection is the:

Accepted Answer

A)  Federal Deposit Insurance Corporation. 
B)  Federal Reserve. 
C)  Office of Management and Budget. 
D)  Treasury. 
E)  Securities and Exchange Commission. 
A)  Federal Deposit Insurance Corporation. 
B)  Federal Reserve. 
C)  Office of Management and Budget. 
D)  Treasury. 
E)  Securities and Exchange Commission.

Question 6

Though many assets can be used as a store of value,money is a particularly attractive method to store value because:

Accepted Answer

A)  it increases in value as prices rise. 
B)  its purchasing power does not decline when prices rise. 
C)  it is the most liquid of all assets. 
D)  it is backed by gold. 
A)  it increases in value as prices rise. 
B)  its purchasing power does not decline when prices rise. 
C)  it is the most liquid of all assets. 
D)  it is backed by gold.

Question 7

Compared to a barter economy,using money increases efficiency by reducing:

Accepted Answer

A)  transaction costs. 
B)  the need to exchange goods. 
C)  the need to specialize. 
D)  inflation. 
A)  transaction costs. 
B)  the need to exchange goods. 
C)  the need to specialize. 
D)  inflation.

Question 8

Buying a cup of coffee with a dollar bill represents the use of money as a:

Accepted Answer

A)  medium of exchange. 
B)  unit of account. 
C)  store of value. 
D)  all of the above. 
A)  medium of exchange. 
B)  unit of account. 
C)  store of value. 
D)  all of the above.

Question 9

The Federal Reserve System is divided into:

Accepted Answer

A)  2 districts. 
B)  12 districts. 
C)  26 districts. 
D)  50 districts. 
E)  1 district. 
A)  2 districts. 
B)  12 districts. 
C)  26 districts. 
D)  50 districts. 
E)  1 district.

Question 10

Which of the following statements is true?

Accepted Answer

A)  Money must be relatively "scarce" if it is to have value. 
B)  Money must be divisible and portable. 
C)  M1 is the narrowest definition of money. 
D)  All of the above. 
A)  Money must be relatively "scarce" if it is to have value. 
B)  Money must be divisible and portable. 
C)  M1 is the narrowest definition of money. 
D)  All of the above.

Question 11

The Monetary Control Act of 1980:

Accepted Answer

A)  required banks to make home loans. 
B)  eliminated many forms of competition among financial institutions. 
C)  created sharper distinctions among various financial institutions. 
D)  none of the above. 
A)  required banks to make home loans. 
B)  eliminated many forms of competition among financial institutions. 
C)  created sharper distinctions among various financial institutions. 
D)  none of the above.

Question 12

M1 refers to:

Accepted Answer

A)  the most narrowly defined money supply definition. 
B)  currency held by the public plus checking account balances. 
C)  the smallest of the money-supply definitions. 
D)  all of the above. 
A)  the most narrowly defined money supply definition. 
B)  currency held by the public plus checking account balances. 
C)  the smallest of the money-supply definitions. 
D)  all of the above.

Question 13

The primary functions of money are:

Accepted Answer

A)  velocity, liquidity, and transactions. 
B)  speculative demand, measure of value, and precautionary demand. 
C)  a medium of exchange, a unit of account, and a store of value. 
D)  a store of value, heterogeneity, and a medium of exchange. 
E)  currency value, fiat value, and accepted value. 
A)  velocity, liquidity, and transactions. 
B)  speculative demand, measure of value, and precautionary demand. 
C)  a medium of exchange, a unit of account, and a store of value. 
D)  a store of value, heterogeneity, and a medium of exchange. 
E)  currency value, fiat value, and accepted value.

Question 14

The members of the Federal Reserve Board of Governors serve:

Accepted Answer

A)  6-year terms. 
B)  4-year terms. 
C)  10-year terms. 
D)  14-year terms. 
E)  2-year terms. 
A)  6-year terms. 
B)  4-year terms. 
C)  10-year terms. 
D)  14-year terms. 
E)  2-year terms.

Question 15

The statement that Computech's profits totaled $500 million last year represents the use of money as a:

Accepted Answer

A)  medium of exchange. 
B)  store of value. 
C)  unit of account. 
D)  means of coincidence. 
A)  medium of exchange. 
B)  store of value. 
C)  unit of account. 
D)  means of coincidence.

Question 16

What is the length of the term of the members of the Board of Governors of the Federal Reserve System?

Accepted Answer

A)  Four years. 
B)  Six years. 
C)  Fourteen years. 
D)  Life or until the member resigns. 
A)  Four years. 
B)  Six years. 
C)  Fourteen years. 
D)  Life or until the member resigns.

Question 17

In the United States,currency in circulation is the largest component of the M1 money supply.

Accepted Answer

A) True 
 B)False

Question 18

A majority of the commercial banks in the United States are not members of the Fed.

Accepted Answer

A) True 
 B)False

Question 19

The Federal Reserve's primary function is to control the money supply.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following items is included when computing M1?

Accepted Answer

A)  Coins in circulation. 
B)  Currency in circulation. 
C)  Checking accounting entries. 
D)  All of the above. 
E)  None of the above 
A)  Coins in circulation. 
B)  Currency in circulation. 
C)  Checking accounting entries. 
D)  All of the above. 
E)  None of the above

Exam 18: Money and the Federal Reserve System

Currency consists of:

Which of the following institutions is responsible for supervising the banking system of the United States?

Which of the following items is included when computing M1?

The currency of the United States is:

The government agency that provides insurance for all checkable deposits up to $250,000 in banks choosing its protection is the:

Though many assets can be used as a store of value,money is a particularly attractive method to store value because:

Compared to a barter economy,using money increases efficiency by reducing:

Buying a cup of coffee with a dollar bill represents the use of money as a:

The Federal Reserve System is divided into:

Which of the following statements is true?

The Monetary Control Act of 1980:

M1 refers to:

The primary functions of money are:

The members of the Federal Reserve Board of Governors serve:

The statement that Computech's profits totaled $500 million last year represents the use of money as a:

What is the length of the term of the members of the Board of Governors of the Federal Reserve System?

In the United States,currency in circulation is the largest component of the M1 money supply.

A majority of the commercial banks in the United States are not members of the Fed.

The Federal Reserve's primary function is to control the money supply.

Which of the following items is included when computing M1?

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 1: Market Demand and Supply

Part 2: Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money Creation

Monetary Policy

A: Appendix: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

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