Exam 12: Money,Banking and the Financial System: Old Problems With New Twists

Large corporations enter the secondary financial market to provide themselves adequate liquidity to conduct their day to day operations.

The most important function of money is as a medium of exchangE.

The main purpose of the Fed is to control the rate of interest.

Investment banks

Prior to the enactment of the Monetary Control Act of 1980,state-chartered banks had the option of whether or not they wanted to be a member of the Federal Reserve System.

The equation of exchange is

In late 2008,the US Treasury Department began

Residential real estate is generally considered to be more liquid than a savings account.

A mortgage backed security is

During inflationary periods,the Federal Reserve should lower the discount rate so that member banks may more easily obtain needed reserves to enable them to increase their loans.

Because of recent changes in the regulatory system,commercial banks are able to offer a smaller variety of financial products and services than in the past.

The money supply consists primarily of gold,silver,and other metals held by the government.

If the reserve ratio is 10% and a new demand deposit of $5,000 is made,what is the maximum deposit creation possible?

When the Fed wishes to increase the money supply,it can do so by

A stock is

The distinctions between commercial banks and other financial institutions has blurred in recent years.

Monetary policyrefers to control of the money supply by the Federal Reserve authorities.

If the Required Reserve Ratio is increased by the Fed,one could assume that the Fed is attempting to control inflation.

The quantity theory of money states that increases in the money supply cause increases in both the price level and output.

When you compare a dollar's worth of apples to a dollar's worth of oranges,money is serving which function?