Question 1

The Fed:

Accepted Answer

A)  has little control over the money supply. 
B)  serves as the central bank for the United States. 
C)  often uses a mix of lower taxes in its fiscal policy. 
D)  ensures commercial bank profitability. 
A)  has little control over the money supply. 
B)  serves as the central bank for the United States. 
C)  often uses a mix of lower taxes in its fiscal policy. 
D)  ensures commercial bank profitability.

Question 2

Which of the following is not a component of the M1 money supply?

Accepted Answer

A)  Checkable deposits. 
B)  Large-denomination (more than $100) bills. 
C)  Interest-earning checking deposits. 
D)  Outstanding balances on credit cards. 
A)  Checkable deposits. 
B)  Large-denomination (more than $100) bills. 
C)  Interest-earning checking deposits. 
D)  Outstanding balances on credit cards.

Question 3

Which of the following is in charge of the buying and selling of government securities by the Fed?

Accepted Answer

A)  The president. 
B)  The Federal Open Market Committee. 
C)  The Congress. 
D)  None of the above. 
A)  The president. 
B)  The Federal Open Market Committee. 
C)  The Congress. 
D)  None of the above.

Question 4

Although it has considerable political independence,the Fed is legally a branch of the U.S.Treasury Department.

Accepted Answer

A) True 
 B)False

Question 5

The seven members of the Board of Governors serve 14-year terms to:

Accepted Answer

A)  reduce political influence. 
B)  provide steady employment. 
C)  inhibit independent decisions. 
D)  prevent illegal appointments. 
A)  reduce political influence. 
B)  provide steady employment. 
C)  inhibit independent decisions. 
D)  prevent illegal appointments.

Question 6

The major protection against sudden mass attempt to withdraw cash from banks is the:

Accepted Answer

A)  Federal Reserve. 
B)  Consumer Protection Act. 
C)  deposit insurance provided by the FDIC. 
D)  gold and silver backing the dollar. 
A)  Federal Reserve. 
B)  Consumer Protection Act. 
C)  deposit insurance provided by the FDIC. 
D)  gold and silver backing the dollar.

Question 7

In the United States,the money supply (M1)consists of:

Accepted Answer

A)  paper currency and coins. 
B)  coins, paper currency and checkable deposits. 
C)  paper currency, coins, checkable deposits, and savings deposits. 
D)  government bonds, currency, and checkable deposits. 
A)  paper currency and coins. 
B)  coins, paper currency and checkable deposits. 
C)  paper currency, coins, checkable deposits, and savings deposits. 
D)  government bonds, currency, and checkable deposits.

Question 8

The M1 definition of the money supply includes:

Accepted Answer

A)  currency in circulation and checkable deposits. 
B)  Federal Reserve Notes, gold certificates, and checkable deposits. 
C)  Federal Reserve Notes and bank loans. 
D)  None of the above. 
A)  currency in circulation and checkable deposits. 
B)  Federal Reserve Notes, gold certificates, and checkable deposits. 
C)  Federal Reserve Notes and bank loans. 
D)  None of the above.

Question 9

In its function of controlling the money supply,the Fed does which one of the following?

Accepted Answer

A)  Controls the money supply. 
B)  Clears checks. 
C)  Regulates banks. 
D)  Holds gold belonging to foreign governments. 
E)  All of the above are true. 
A)  Controls the money supply. 
B)  Clears checks. 
C)  Regulates banks. 
D)  Holds gold belonging to foreign governments. 
E)  All of the above are true.

Question 10

Which of the following is not one of the functions of the Federal Reserve?

Accepted Answer

A)  Clearing checks. 
B)  Printing currency. 
C)  Supervising and regulating banks. 
D)  Controlling the money supply. 
A)  Clearing checks. 
B)  Printing currency. 
C)  Supervising and regulating banks. 
D)  Controlling the money supply.

Question 11

M1 includes savings accounts.

Accepted Answer

A) True 
 B)False

Question 12

Members of the Federal Reserve Board of Governors serve one nonrenewable term of:

Accepted Answer

A)  4 years. 
B)  7 years. 
C)  14 years. 
D)  life. 
A)  4 years. 
B)  7 years. 
C)  14 years. 
D)  life.

Question 13

The Federal Funds Committee executes the purchases and sales of government securities decisions of the Federal Reserve.

Accepted Answer

A) True 
 B)False

Question 14

Comparing how many dollars it takes you to run your car each year to annual earnings on a job instead of keeping track of costs in terms of gallons of gasoline and quarts of oil represents the use of money as a:

Accepted Answer

A)  means of payment. 
B)  unit of account. 
C)  store of purchasing power. 
D)  form of plastic money. 
A)  means of payment. 
B)  unit of account. 
C)  store of purchasing power. 
D)  form of plastic money.

Exam 18: Money and the Federal Reserve System

The Fed:

Which of the following is not a component of the M1 money supply?

Which of the following is in charge of the buying and selling of government securities by the Fed?

Although it has considerable political independence,the Fed is legally a branch of the U.S.Treasury Department.

The seven members of the Board of Governors serve 14-year terms to:

The major protection against sudden mass attempt to withdraw cash from banks is the:

In the United States,the money supply (M1)consists of:

The M1 definition of the money supply includes:

In its function of controlling the money supply,the Fed does which one of the following?

Which of the following is not one of the functions of the Federal Reserve?

M1 includes savings accounts.

Members of the Federal Reserve Board of Governors serve one nonrenewable term of:

The Federal Funds Committee executes the purchases and sales of government securities decisions of the Federal Reserve.

Comparing how many dollars it takes you to run your car each year to annual earnings on a job instead of keeping track of costs in terms of gallons of gasoline and quarts of oil represents the use of money as a:

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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