Question 1

In the U.S.economy,the money supply is controlled by the:

Accepted Answer

A)  U.S.Treasury. 
B)  Federal Reserve System. 
C)  Senate Committee on Banking and Finance. 
D)  Congress.

Question 2

(Consider This)Credit cards are defined as money because they facilitate transactions.

Accepted Answer

A) True 
 B)False

Question 3

Answer the question on the basis of the following table: $\begin{array}{ccc}
\underline{\text { Year }} &\underline{ \text { Price Level} } &\underline{ \text { Value of Dollar }} \
1& 1.00 & \$ 1.00 \
2 & 1.25 & \
3 & 0.80 & \
4& 0.50 &
\end{array}$ Refer to the table.The value of the dollar in year 2 is:

Accepted Answer

A)  $1.25. 
B)  $1.33. 
C)  $0.80. 
D)  $0.75.

Question 4

Answer the question on the basis of the following list of assets: 1.Large-denominated ($100,000 and over)time deposits
2)Noncheckable savings deposits
3)Currency (coins and paper money)in circulation
4)Small-denominated (under $100,000)time deposits
5)Stock certificates
6)Checkable deposits
7)Money market deposit accounts
8)Money market mutual fund balances held by individuals
9)Money market mutual fund balances held by businesses
10)Currency held in bank vaults
Refer to the given list.The assets that are not included in either M1 or M2 are:

Accepted Answer

A)  Items 1,5,9,and 10. 
B)  Items 2,5,8,and 9. 
C)  Items 1,3,5,7,and 9. 
D)  All of the ten items listed.

Question 5

The M2 money supply may be larger or smaller than the M1 money supply depending on the size of small-denominated time deposit balances and money market mutual fund balances held by individuals.

Accepted Answer

A) True 
 B)False

Question 6

The near-money components of M2 are:

Accepted Answer

A)  equally liquid as the M1 components of M2. 
B)  more liquid than the M1 components of M2. 
C)  less liquid than the M1 components of M2. 
D)  highly illiquid.

Question 7

Purchasing common stock by writing a check best exemplifies money serving as a:

Accepted Answer

A)  store of value. 
B)  unit of account. 
C)  medium of exchange. 
D)  index of satisfaction.

Question 8

Gold backs the U.S.money supply.

Accepted Answer

A) True 
 B)False

Question 9

Wells Fargo,J.P.Morgan Chase,and Citibank are all primarily:

Accepted Answer

A)  commercial banks. 
B)  mutual fund companies. 
C)  insurance companies. 
D)  securities firms.

Question 10

The largest component of the money supply (M1)is:

Accepted Answer

A)  currency in bank vaults. 
B)  currency in circulation. 
C)  checkable deposits. 
D)  stock certificates.

Question 11

In 2009,approximately how much of the money on deposit was held by the three largest U.S.banks?

Accepted Answer

A)  30 percent. 
B)  50 percent. 
C)  70 percent. 
D)  90 percent.

Question 12

When economists say that money serves as a medium of exchange,they mean that it is:

Accepted Answer

A)  a way to keep wealth in a readily spendable form for future use. 
B)  a means of payment. 
C)  a monetary unit for measuring and comparing the relative values of goods. 
D)  declared as legal tender by the government.

Question 13

If the price index rises from 200 to 250,the purchasing power value of the dollar:

Accepted Answer

A)  may either rise or fall. 
B)  will rise by 25 percent. 
C)  will fall by 25 percent. 
D)  will fall by 20 percent.

Question 14

The seven members of the Board of Governors of the Federal Reserve System are:

Accepted Answer

A)  appointed by the president with the confirmation of the Senate. 
B)  elected by Congress from a slate of nominees provided by the president. 
C)  appointed by the Senate Finance Committee. 
D)  appointed by the presidents of the 12 Federal Reserve Banks.

Question 15

The Assistant U.S.Attorney General in charge of prosecuting financial crimes did which of the following in response to HSBC bank's years of money laundering and helping firms and individuals cheat on their taxes?

Accepted Answer

A)  Imposed fines on HSBC and prosecuted key executives so as to diminish moral hazard in the financial services industry. 
B)  Filed an antitrust lawsuit so as to break up HSBC without disrupting the financial system. 
C)  Imposed only modest fines on HSBC so as not to destabilize the bank and the financial system. 
D)  Imposed sanctions based on the provisions of the 2010 Wall Street Reform and Consumer Protection Act.

Question 16

The paper money used in the United States is:

Accepted Answer

A)  National Bank Notes. 
B)  Treasury Notes. 
C)  United States Notes. 
D)  Federal Reserve Notes.

Question 17

As it relates to Federal Reserve activities,the acronym FOMC describes the:

Accepted Answer

A)  Federal Open Market Committee. 
B)  Federal Options Market Committee. 
C)  Federal Organization for Monetary Control. 
D)  Federal Organization for Money Creation.

Question 18

The M2 money supply includes:

Accepted Answer

A)  stock certificates. 
B)  currency in bank vaults. 
C)  the cash value of life insurance policies. 
D)  individual shares in money market mutual funds.

Question 19

The M2 money supply is about ________ times larger than the M1 money supply.

Accepted Answer

A)  1.5 
B)  4 
C)  8 
D)  13

Question 20

Checkable deposits include:

Accepted Answer

A)  both large and small-denominated time deposits. 
B)  the deposits of banks and thrifts on which checks can be written. 
C)  only the checkable deposits of commercial banks. 
D)  only the checkable deposits of thrift institutions.

Exam 33: Money, Banking, and Financial Institutions

In the U.S.economy,the money supply is controlled by the:

(Consider This)Credit cards are defined as money because they facilitate transactions.

The M2 money supply may be larger or smaller than the M1 money supply depending on the size of small-denominated time deposit balances and money market mutual fund balances held by individuals.

The near-money components of M2 are:

Purchasing common stock by writing a check best exemplifies money serving as a:

Gold backs the U.S.money supply.

Wells Fargo,J.P.Morgan Chase,and Citibank are all primarily:

The largest component of the money supply (M1) is:

In 2009,approximately how much of the money on deposit was held by the three largest U.S.banks?

When economists say that money serves as a medium of exchange,they mean that it is:

If the price index rises from 200 to 250,the purchasing power value of the dollar:

The seven members of the Board of Governors of the Federal Reserve System are:

The Assistant U.S.Attorney General in charge of prosecuting financial crimes did which of the following in response to HSBC bank's years of money laundering and helping firms and individuals cheat on their taxes?

The paper money used in the United States is:

As it relates to Federal Reserve activities,the acronym FOMC describes the:

The M2 money supply includes:

The M2 money supply is about ________ times larger than the M1 money supply.

Checkable deposits include: