Question 1

All of the following are depository institutions except one.Which is the exception?

Accepted Answer

A) commercial banks 
B) savings and loan associations 
C) anminsurance company 
D) mutual savings banks 
E) credit unions 
A) commercial banks 
B) savings and loan associations 
C) anminsurance company 
D) mutual savings banks 
E) credit unions C

Question 2

The twelve district banks of the Federal Reserve System were created to decentralize power and respond to the public's fears of the monopoly power of a single central bank such as the Bank of England or the Bank of Japan.

Accepted Answer

A) True 
 B)False  True

Question 3

Suppose that corn is the unit of account in a certain economy.If a pair of tennis shoes exchanges for two bushels of corn and a pair of hiking boots exchanges for twelve bushels of corn,then

Accepted Answer

A) whether or not a double coincidence of wants exists,all trades have to be made using corn 
B) with one pair of tennis shoes,a person will be able to purchase twelve pairs of hiking boots 
C) with one pair of tennis shoes,a person will be able to purchase six pairs of hiking boots 
D) with twelve pairs of tennis shoes,a person will be able to purchase one pair of hiking boots 
E) with six pairs of tennis shoes,a person will be able to purchase one pair of hiking boots 
A) whether or not a double coincidence of wants exists,all trades have to be made using corn 
B) with one pair of tennis shoes,a person will be able to purchase twelve pairs of hiking boots 
C) with one pair of tennis shoes,a person will be able to purchase six pairs of hiking boots 
D) with twelve pairs of tennis shoes,a person will be able to purchase one pair of hiking boots 
E) with six pairs of tennis shoes,a person will be able to purchase one pair of hiking boots E

Question 4

Money market mutual funds

Accepted Answer

A) offer higher rates of interest than bank checking accounts but lack check writing privileges 
B) offer higher rates of interest than bank checking accounts and also offer check writing privileges 
C) usually pay lower rates of interest than bank checking accounts 
D) were originally developed and offered by banks to their customers 
E) usually do not offer any check writing privileges 
A) offer higher rates of interest than bank checking accounts but lack check writing privileges 
B) offer higher rates of interest than bank checking accounts and also offer check writing privileges 
C) usually pay lower rates of interest than bank checking accounts 
D) were originally developed and offered by banks to their customers 
E) usually do not offer any check writing privileges

Question 5

The FDIC insures deposits in

Accepted Answer

A) all banks 
B) Federal Reserve member banks only 
C) state banks only 
D) any banking institution that purchases FDIC insurance 
E) any bank approved by the Fed 
A) all banks 
B) Federal Reserve member banks only 
C) state banks only 
D) any banking institution that purchases FDIC insurance 
E) any bank approved by the Fed

Question 6

Which of the following is not a power of the Federal Reserve System?

Accepted Answer

A) setting the prime interest rate 
B) issuing Federal Reserve notes 
C) buying and selling U.S.government securities 
D) extending loans to member banks 
E) clearing checks 
A) setting the prime interest rate 
B) issuing Federal Reserve notes 
C) buying and selling U.S.government securities 
D) extending loans to member banks 
E) clearing checks

Question 7

A subprime mortgage is

Accepted Answer

A) a mortgage in which the borrower gets an interest rate below the prime rate 
B) a mortgage in which the interest rate is adjustable 
C) a mortgage for which the home is valued below its true market value 
D) a mortgage in which the borrower has a poor credit rating 
E) a mortgage for a home that was in foreclosure 
A) a mortgage in which the borrower gets an interest rate below the prime rate 
B) a mortgage in which the interest rate is adjustable 
C) a mortgage for which the home is valued below its true market value 
D) a mortgage in which the borrower has a poor credit rating 
E) a mortgage for a home that was in foreclosure

Question 8

The more specialized labor is,

Accepted Answer

A) the less likely it is that a double coincidence of wants will exist,and the less likely it is that monetary exchange will develop 
B) the less likely it is that a double coincidence of wants will exist,and the more likely it is that monetary exchange will develop 
C) the more likely it is that a double coincidence of wants will exist,and the less likely it is that monetary exchange will develop 
D) the more likely it is that a double coincidence of wants will exist,and the more likely it is that monetary exchange will develop 
E) the more likely it is that individuals are producing only what they want to consume 
A) the less likely it is that a double coincidence of wants will exist,and the less likely it is that monetary exchange will develop 
B) the less likely it is that a double coincidence of wants will exist,and the more likely it is that monetary exchange will develop 
C) the more likely it is that a double coincidence of wants will exist,and the less likely it is that monetary exchange will develop 
D) the more likely it is that a double coincidence of wants will exist,and the more likely it is that monetary exchange will develop 
E) the more likely it is that individuals are producing only what they want to consume

Question 9

Under a system of barter,

Accepted Answer

A) no rates of exchange are defined 
B) there are as many different rates of exchange as there are pairs of goods to trade 
C) rates of exchange are expressed in goods per dollar 
D) rates of exchange are expressed in dollars per good 
E) rates of exchange are denominated in gold or silver 
A) no rates of exchange are defined 
B) there are as many different rates of exchange as there are pairs of goods to trade 
C) rates of exchange are expressed in goods per dollar 
D) rates of exchange are expressed in dollars per good 
E) rates of exchange are denominated in gold or silver

Question 10

Seigniorage is

Accepted Answer

A) a retirement home for senior citizens 
B) revenue earned from coining money 
C) a fine paid by counterfeiters 
D) the profits made by illegally "clipping" or "shaving" bits of precious metal from coins 
E) the oldest known form of commodity money 
A) a retirement home for senior citizens 
B) revenue earned from coining money 
C) a fine paid by counterfeiters 
D) the profits made by illegally "clipping" or "shaving" bits of precious metal from coins 
E) the oldest known form of commodity money

Question 11

Under a fractional reserve banking system,

Accepted Answer

A) only a fraction of the banks in the system are allowed to create money 
B) only a fraction of the banks in the system have reserves 
C) the claims outstanding against the bank are only a fraction of the bank's total reserves 
D) each bank must deposit a fraction of its reserves with the Federal Reserve Bank 
E) bank reserves represent only a fraction of bank deposits 
A) only a fraction of the banks in the system are allowed to create money 
B) only a fraction of the banks in the system have reserves 
C) the claims outstanding against the bank are only a fraction of the bank's total reserves 
D) each bank must deposit a fraction of its reserves with the Federal Reserve Bank 
E) bank reserves represent only a fraction of bank deposits

Question 12

A lender of last resort is a financial institution that is willing and able to lend to

Accepted Answer

A) individuals who have other debts outstanding 
B) individuals who do not have a positive net worth 
C) banks that are not members of the Federal Reserve System 
D) fractional reserve system banks experiencing runs on their deposits 
E) Federal Reserve System member banks experiencing runs on their deposits 
A) individuals who have other debts outstanding 
B) individuals who do not have a positive net worth 
C) banks that are not members of the Federal Reserve System 
D) fractional reserve system banks experiencing runs on their deposits 
E) Federal Reserve System member banks experiencing runs on their deposits

Question 13

The value of money is determined by

Accepted Answer

A) people's belief that it is worth something 
B) the amount of precious metal that the government holds to back the money 
C) the money's market value as a commodity 
D) the rate of interest,which is the price paid to borrow money 
E) its ability to function as a unit of account 
A) people's belief that it is worth something 
B) the amount of precious metal that the government holds to back the money 
C) the money's market value as a commodity 
D) the rate of interest,which is the price paid to borrow money 
E) its ability to function as a unit of account

Question 14

Coins were minted with serrated edges

Accepted Answer

A) to make it obvious that they were made of cheap alloys 
B) so that cheaper metals did not have to be used 
C) to allow words to be printed on the border 
D) to prevent the coins from being clipped 
E) to make them jingle less when they rub together 
A) to make it obvious that they were made of cheap alloys 
B) so that cheaper metals did not have to be used 
C) to allow words to be printed on the border 
D) to prevent the coins from being clipped 
E) to make them jingle less when they rub together

Question 15

The earliest type of exchange involved

Accepted Answer

A) coins 
B) barter 
C) commodity money 
D) fiduciary money 
E) fiat money 
A) coins 
B) barter 
C) commodity money 
D) fiduciary money 
E) fiat money

Question 16

In the United States economy which one of the following is not money?

Accepted Answer

A) a Susan B.Anthony $1 coin 
B) a checking account at a bank 
C) a 25-cent piece (i.e.,a quarter) 
D) a $20 Federal Reserve note 
E) a $100 U.S.Government bond 
A) a Susan B.Anthony $1 coin 
B) a checking account at a bank 
C) a 25-cent piece (i.e.,a quarter) 
D) a $20 Federal Reserve note 
E) a $100 U.S.Government bond

Question 17

The United States has a dual banking system consisting of state banks and national banks.

Accepted Answer

A) True 
 B)False

Question 18

Suppose an ocean liner sinks and the passengers become stranded on a lush tropical island.Which of the following is most likely to be most useful as money in the economy that develops among the survivors?

Accepted Answer

A) the life jackets they put on when leaving the ship 
B) beads from the necklaces that were the party favors the night the ship sank 
C) the coconuts growing on the island 
D) the fish swimming around the island 
E) the sand on the island's beaches 
A) the life jackets they put on when leaving the ship 
B) beads from the necklaces that were the party favors the night the ship sank 
C) the coconuts growing on the island 
D) the fish swimming around the island 
E) the sand on the island's beaches

Question 19

In a barter system,

Accepted Answer

A) it is difficult to keep track of the relative values of goods and services 
B) an individual offers money to get a good or service 
C) an individual offers a good or service to get money 
D) different kinds of money are exchanged for each other 
E) individuals are self-sufficient 
A) it is difficult to keep track of the relative values of goods and services 
B) an individual offers money to get a good or service 
C) an individual offers a good or service to get money 
D) different kinds of money are exchanged for each other 
E) individuals are self-sufficient

Question 20

Which of the following is true of the discount rate?

Accepted Answer

A) It is the interest rate commercial banks charge their most creditworthy customers. 
B) It is the interest rate that thrift institutions charge for home mortgages. 
C) It is the interest rate at which depository institutions can borrow from the Federal Reserve. 
D) It is the interest rate set in the market for U.S.Treasury Bills. 
E) It is the prime interest rate. 
A) It is the interest rate commercial banks charge their most creditworthy customers. 
B) It is the interest rate that thrift institutions charge for home mortgages. 
C) It is the interest rate at which depository institutions can borrow from the Federal Reserve. 
D) It is the interest rate set in the market for U.S.Treasury Bills. 
E) It is the prime interest rate.

Exam 14: Money and the Financial System

All of the following are depository institutions except one.Which is the exception?

The twelve district banks of the Federal Reserve System were created to decentralize power and respond to the public's fears of the monopoly power of a single central bank such as the Bank of England or the Bank of Japan.

Suppose that corn is the unit of account in a certain economy.If a pair of tennis shoes exchanges for two bushels of corn and a pair of hiking boots exchanges for twelve bushels of corn,then

Money market mutual funds

The FDIC insures deposits in

Which of the following is not a power of the Federal Reserve System?

A subprime mortgage is

The more specialized labor is,

Under a system of barter,

Seigniorage is

Under a fractional reserve banking system,

A lender of last resort is a financial institution that is willing and able to lend to

The value of money is determined by

Coins were minted with serrated edges

The earliest type of exchange involved

In the United States economy which one of the following is not money?

The United States has a dual banking system consisting of state banks and national banks.

Suppose an ocean liner sinks and the passengers become stranded on a lush tropical island.Which of the following is most likely to be most useful as money in the economy that develops among the survivors?

In a barter system,

Which of the following is true of the discount rate?

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

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