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135 Cards in this Set

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Barter is the:
a. direct exchange of goods and services.
b. exchange of goods, but not services.
c. system that does not depend on a coincidence of wants.
d. system used in advanced economies.
Barter is the:
a. direct exchange of goods and services.
A direct exchange of fish for corn is an example of:
a. storing value.
b. a modern exchange method.
c. barter.
d. a non-coincidence of wants
A direct exchange of fish for corn is an example of:
c. barter.
The exchange of one good for another, without the use of money, is known as:
a. acquisitive exchange.
b. liquidity.
c. volatility.
d. barter.
e. currency.
The exchange of one good for another, without the use of money, is known as:

d. barter.
Barter requires:
a. that the exchanged goods be portable.
b. that the exchanged goods be durable.
c. a coincidence of wants.
d. that the exchange medium be divisible.
e. an effective middleman.
Barter requires:

c. a coincidence of wants.
In order for barter to occur, traders must have a:
a. unit of account.
b. coincidence of wants.
c. medium of exchange.
d. central banking facility.
In order for barter to occur, traders must have a:

b. coincidence of wants.
For barter exchange to take place,
a. there has to be a coincidence of wants.
b. the products in question have to be divisible.
c. money has to be used to put a value on the transaction.
d. there has to be a single coincidence of wants.
e. gold has to be one of the goods traded.
For barter exchange to take place,
a. there has to be a coincidence of wants.
Buying a cup of coffee with a dollar bill represents the use of money as a:
a. medium of exchange.
b. unit of account.
c. store of value.
d. all of the above.
Buying a cup of coffee with a dollar bill represents the use of money as a:
a. medium of exchange.
The use of a dollar bill to buy a concert ticket represents the function of money as a:
a. medium of exchange.
b. unit of account.
c. store of value.
d. all of the above.
The use of a dollar bill to buy a concert ticket represents the function of money as a:
a. medium of exchange.
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. means of payment.
b. unit of account.
c. store of purchasing power.
d. form of plastic money.
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:

b. unit of account.
Comparing how many dollars it takes to attend college each year to annual earnings on a job represents the use of money as a:
a. medium of exchange.
b. unit of account.
c. store of value.
d. store of coincidence.
Comparing how many dollars it takes to attend college each year to annual earnings on a job represents the use of money as a:

b. unit of account.
The statement that Computech's profits totaled $500 million last year represents the use of money as a:
a. medium of exchange.
b. store of value.
c. unit of account.
d. means of coincidence.
The statement that Computech's profits totaled $500 million last year represents the use of money as a:

c. unit of account.
One hundred dollars on deposit in a checking account represents the use of money as a:
a. medium of exchange.
b. store of value.
c. unit of account.
d. coincident exchange.
One hundred dollars on deposit in a checking account represents the use of money as a:

b. store of value.
Which of the following is not a store of value?
a. Dollar bills.
b. Credit card.
c. Coins.
d. Gold.
Which of the following is not a store of value?

b. Credit card.
Which of the following is the most liquid store of purchasing power?
a. A dollar bill.
b. Common stock.
c. Gold.
d. Real estate.
Which of the following is the most liquid store of purchasing power?
a. A dollar bill.
If every person is willing to accept money in payment, rather than goods and services, money serves as is a:
a. medium of exchange.
b. unit of account.
c. store of value.
d. coincident exchange.
If every person is willing to accept money in payment, rather than goods and services, money serves as is a:
a. medium of exchange.
Which of the following items does not provide a store of value?
a. Currency.
b. Checkable deposits.
c. Credit cards.
d. All of the above are correct.
Which of the following items does not provide a store of value?

c. Credit cards.
Which of the following is not a store of value?
a. Federal Reserve notes.
b. Credit card.
c. Debit card.
d. Passbook savings deposit.
Which of the following is not a store of value?

b. Credit card.
Which of the following is not an example of money used as a unit of account?
a. A British pound is worth $3.00.
b. Auto repairs were $3,000 last year.
c. Business travel totaled 12,000 miles.
d. Gasoline sells for $1.20 per gallon and oil is $5.00 per quart.
Which of the following is not an example of money used as a unit of account?

d. Gasoline sells for $1.20 per gallon and oil is $5.00 per quart.
Anything can be money if it acts as a:
a. unit of account.
b. store of value.
c. medium of exchange.
d. All of the above must be correct.
Anything can be money if it acts as a:

d. All of the above must be correct.
The primary functions of money are:
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.
The primary functions of money are:

c. a medium of exchange, a unit of account, and a store of value.
Coins and dollar bills are money in the form of:
a. barter.
b. currency.
c. capital stock.
d. investment.
Coins and dollar bills are money in the form of:

b. currency.
If something is a medium of exchange, then it:
a. serves as a yardstick for measuring the value of other goods.
b. is a means of holding wealth for the future.
c. has an absolute value in gold.
d. is widely accepted as payment for purchases.
If something is a medium of exchange, then it:

d. is widely accepted as payment for purchases.
If something is a unit of account, then it:
a. serves as a yardstick for measuring the relative value of other goods
b. is a means of holding wealth for the future
c. is fairly stable
d. is durable and portable
e. is accepted as payment for any purchase
If something is a unit of account, then it:
a. serves as a yardstick for measuring the relative value of other goods
Credit cards are:
a. M1 money.
b. M2 and M3 money.
c. M3 money.
d. near money.
e. not money.
Credit cards are:

e. not money.
Currency consists of:
a. coins and Eurodollars.
b. paper money and checks.
c. coins and paper money.
d. paper money and Eurodollars.
e. coins and checks.
Currency consists of:

c. coins and paper money.
Which of the following assets is the most liquid?
a. Money market mutual fund shares.
b. Certificates of deposit.
c. Dollars.
d. Passbook savings deposits.
Which of the following assets is the most liquid?

c. Dollars.
Which of the following forms of money is the least liquid?
a. Dollars.
b. Checking account deposits.
c. Passbook savings.
d. Certificates of deposit.
Which of the following forms of money is the least liquid?

d. Certificates of deposit.
Which of the following assets is the most liquid?
a. Money.
b. Gold.
c. Land.
d. Stocks.
Which of the following assets is the most liquid?
a. Money.
The ease with which an asset can be converted into a medium of exchange is known as:
a. volatility.
b. liquidity.
c. currency.
d. Gresham’s Law.
e. speculative exchange.
The ease with which an asset can be converted into a medium of exchange is known as:

b. liquidity.
Which one of the following items would be the most liquid?
a. Pizza.
b. Ticket to next week’s basketball game.
c. Stereo.
d. Dollar bill.
e. U.S. savings bond.
Which one of the following items would be the most liquid?

d. Dollar bill.
The ease with which an asset can be converted into a medium of exchange is:
a. currency convertibility.
b. asset convertibility.
c. convertibility.
d. money convertibility.
e. liquidity.
The ease with which an asset can be converted into a medium of exchange is:

e. liquidity.
The characteristics that money should have include:
a. portability, durability, and flexibility.
b. durability, flexibility and stability.
c. durability, portability, and non-homogeneity.
d. scarcity, portability, and divisibility.
e. portability, homogeneity, and flexibility.
The characteristics that money should have include:

d. scarcity, portability, and divisibility.
Gold is a perfect medium of exchange and measure of value because of its:
a. divisibility, portability, and homogeneity.
b. divisibility and durability.
c. durability and relative scarcity.
d. durability and homogeneity.
e. divisibility, durability, and relative scarcity.
Gold is a perfect medium of exchange and measure of value because of its:
a. divisibility, portability, and homogeneity.
The currency of the United States is:
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
The currency of the United States is:

c. not backed by any precious metal.
Which of the following is a desirable property of money?
a. Scarcity.
b. Portability.
c. Divisibility.
d. All of the above.
Which of the following is a desirable property of money?

d. All of the above.
Which of the following statements is false?
a. Round stones with holes in the center can serve as money.
b. Money eases the process of exchanging goods and services in a modern economy.
c. Money serves as a measure of value only when it is backed by gold or silver.
d. Money is used as a measure of the relative value of goods and services in an economy.
Which of the following statements is false?

c. Money serves as a measure of value only when it is backed by gold or silver.
Which one of the following is part of the official money supply in the United States?
a. Federal Reserve Notes.
b. Gold bars.
c. Common stock.
d. Silver coins.
Which one of the following is part of the official money supply in the United States?
a. Federal Reserve Notes.
Which of the following is not counted as part of M1?
a. Coins.
b. Federal Reserve notes or " paper money."
c. Passbook savings deposits.
d. Checkable deposits.
e. travelers’ checks.
Which of the following is not counted as part of M1?

c. Passbook savings deposits.
M1 refers to:
a. Federal Reserve Notes and gold certificates.
b. Currency held by the public plus checking account balances.
c. The largest of the money-supply definitions.
d. None of the above.
M1 refers to:

b. Currency held by the public plus checking account balances.
The M1 definition of the money supply includes:
a. currency in circulation, checkable deposits, and traveler’s checks.
b. Federal Reserve Notes, gold certificates, and checkable deposits.
c. Federal Reserve Notes and bank loans.
d. None of the above.
The M1 definition of the money supply includes:
a. currency in circulation, checkable deposits, and traveler’s checks.
M1 refers to:
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.
M1 refers to:

d. all of the above.
Which of the following items is included when computing M1?
a. Coins in circulation.
b. Currency in circulation.
c. Checking accounting entries.
d. All of the above.
e. None of the above
Which of the following items is included when computing M1?

d. All of the above.
Which of the following items is included when computing M1?
a. Checking accounting entries.
b. Currency in circulation.
c. Traveler's checks.
d. All of the above.
Which of the following items is included when computing M1?

d. All of the above.
The M1 money supply is defined to be the sum of currency, traveler's checks, and:
a. checkable deposits.
b. Treasury bonds.
c. savings accounts.
d. large time deposits.
The M1 money supply is defined to be the sum of currency, traveler's checks, and:
a. checkable deposits.
Which of the following statements is true?
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.
Which of the following statements is true?

d. All of the above.
Which of the following is not part of M1?
a. Checking accounts.
b. Coins.
c. Credit cards.
d. Traveler's checks.
e. Paper currency.
Which of the following is not part of M1?

c. Credit cards.
By definition, M1 includes:
a. savings accounts.
b. money market mutual accounts.
c. small denomination time deposits.
d. travelers’ checks.
By definition, M1 includes:

d. travelers’ checks.
M1 money includes all but which one of the following?
a. Traveler’s checks.
b. Checkable deposits.
c. Savings accounts.
d. Paper money.
e. Coins.
M1 money includes all but which one of the following?

c. Savings accounts.
The M1 definition of the money supply includes currency,
a. checkable deposits, and savings accounts.
b. checkable deposits, and credit cards.
c. checkable deposits, and debit cards.
d. checkable deposits, and travelers’ checks.
e. traveler’s checks, and credit cards.
The M1 definition of the money supply includes currency,

d. checkable deposits, and travelers’ checks.
The largest component of the M1 definition of the money supply is:
a. traveler’s checks.
b. savings accounts.
c. money market accounts.
d. checkable deposits
The largest component of the M1 definition of the money supply is:

d. checkable deposits
The smallest component of the M1 money supply is:
a. demand and other checkable deposits.
b. currency.
c. traveler’s checks.
d. money market accounts.
e. savings accounts.
The smallest component of the M1 money supply is:

c. traveler’s checks.
The M1 definition of the money supply includes:
a. coins and currency in circulation.
b. coins and currency in circulation, checkable deposits, and traveler’s checks.
c. Federal Reserve notes, gold certificates, and checkable deposits.
d. Federal Reserve notes and bank loans.
The M1 definition of the money supply includes:

b. coins and currency in circulation, checkable deposits, and traveler’s checks.
Which one of the following is part of the M2 definition of the money supply, but not part of M1?
a. Traveler's checks.
b. Currency held in banks.
c. Currency in circulation.
d. Small time deposits of less than $100,000.
Which one of the following is part of the M2 definition of the money supply, but not part of M1?

d. Small time deposits of less than $100,000.
Which definition of the money supply includes credit cards?
a. M1.
b. M2.
c. M3.
d. None of the above include credit cards balances
Which definition of the money supply includes credit cards?

d. None of the above include credit cards balances
Which of the following is counted as part of M2?
a. Currency.
b. Checkable deposits.
c. Money market mutual funds.
d. All of the above.
Which of the following is counted as part of M2?

d. All of the above.
Which of the following is not considered part of M2?
a. Small time deposits of less than $100,000.
b. Money market mutual fund shares.
c. Savings deposits.
d. Large time deposits of more than $100,000.
Which of the following is not considered part of M2?

d. Large time deposits of more than $100,000.
Which of the following is considered part of M2?
a. Savings deposits.
b. Money market mutual fund shares.
c. Small time deposits of less than $100,000.
d. All of the above.
Which of the following is considered part of M2?

d. All of the above.
The money supply known as M2:
a. includes large denomination time deposits.
b. excludes interest-earning checking accounts in savings and loans.
c. does not include money market mutual accounts.
d. includes savings accounts and small denomination time deposits.
e. includes large denomination repurchase agreements.
The money supply known as M2:

d. includes savings accounts and small denomination time deposits.
M2 money includes all but which one of the following?
a. Traveler’s checks.
b. Savings accounts.
c. Large denomination time deposits.
d. Money market deposit accounts.
e. Money market mutual accounts.
M2 money includes all but which one of the following?
.
c. Large denomination time deposits.
M2 money includes all but which one of the following?
a. Checkable deposits.
b. Savings accounts.
c. Large repurchase agreements.
d. Money market mutual accounts.
e. Small time deposits.
M2 money includes all but which one of the following?

c. Large repurchase agreements.
M2 is equal to M1 plus:
a. savings deposits, money market deposit accounts, small time deposits, and eurodollars.
b. savings deposits, money market deposit accounts, money market mutual funds,
and eurodollars.
c. small time deposits, money market deposit accounts, money market mutual funds,
and eurodollars.
d. savings deposits and small time deposits of less than $100,000.
e. money market mutual funds, money market deposit accounts, savings deposits, large
time deposits, and repurchase agreements.
M2 is equal to M1 plus:

d. savings deposits and small time deposits of less than $100,000.
When M1 is expanded to M2, the money supply:
a. almost doubles.
b. more than triples.
c. goes up tenfold in size.
d. changes very little.
e. goes up by 50 percent.
When M1 is expanded to M2, the money supply:

b. more than triples.
Suppose you transfer $1,000 from your checking account to your savings account. How does this action affect the M1 and M2 money supplies?
a. M1 and M2 are both unchanged.
b. M1 falls by $1,000, and M2 rises by $1,000.
c. M1 is unchanged, and M2 rises by $1,000.
d. M1 falls by $1,000, and M2 is unchanged.
Suppose you transfer $1,000 from your checking account to your savings account. How does this action affect the M1 and M2 money supplies?

d. M1 falls by $1,000, and M2 is unchanged.
The money supply known as M3:
a. does not include credit union accounts.
b. excludes certificates of deposit.
c. includes M2 + large denomination time deposits of $100,000 or more.
d. excludes travelers’ checks.
The money supply known as M3:

c. includes M2 + large denomination time deposits of $100,000 or more.
A progression of the money supplies from most liquid to least liquid would look like:
a. M1, M2, M3.
b. M2, M3, M1.
c. M3, M2, M1.
d. M3, M1, M2.
e. M1, M3, M2.
A progression of the money supplies from most liquid to least liquid would look like:
a. M1, M2, M3.
Credit cards are:
a. M1 money.
b. M2 and M3 money.
c. M3 money.
d. not money.
Credit cards are:

d. not money.
The Federal Reserve System was founded in:
a. 1913.
b. 1929.
c. 1933.
d. 1935.
The Federal Reserve System was founded in:
a. 1913.
Members of the Federal Reserve Board of Governors serve one nonrenewable term of:
a. 4 years.
b. 7 years.
c. 14 years.
d. life.
Members of the Federal Reserve Board of Governors serve one nonrenewable term of:

c. 14 years.
The number of presidentially appointed members who sit on the Federal Reserve Board of Governors is:
a. none.
b. seven.
c. nine.
d. twelve.
The number of presidentially appointed members who sit on the Federal Reserve Board of Governors is:

b. seven.
Decisions regarding purchases and sales of government securities by the Fed are made by the:
a. Federal Funds Committee.
b. Discount Committee.
c. Federal Open Market Committee.
d. FDIC.
Decisions regarding purchases and sales of government securities by the Fed are made by the:

c. Federal Open Market Committee.
Which of the following types of financial institutions is required to belong to the Federal Reserve System?
a. National banks.
b. State-chartered banks.
c. Savings and loan institutions.
d. Credit unions.
Which of the following types of financial institutions is required to belong to the Federal Reserve System?
a. National banks.
With respect to controlling the money supply, the law requires the Fed to take orders from:
a. the President.
b. the Speaker of the House.
c. the Secretary of the Treasury.
d. no one-the Fed is an independent agency
With respect to controlling the money supply, the law requires the Fed to take orders from:

d. no one-the Fed is an independent agency
The seven members of the Board of Governors serve 14-year terms to:
a. reduce political influence.
b. provide steady employment.
c. inhibit independent decisions.
d. prevent illegal appointments.
The seven members of the Board of Governors serve 14-year terms to:
a. reduce political influence.
Which of the following groups oversees and administers the Federal Reserve System?
a. The House of Representatives.
b. The President's Council of Economic Advisors.
c. The U.S. Treasury Department.
d. None of the above, the Fed is an independent agency
Which of the following groups oversees and administers the Federal Reserve System?

d. None of the above, the Fed is an independent agency
Which of the following is not part of the Federal Reserve System?
a. Council of Economic Advisors.
b. Board of Governors.
c. Federal Open Market Committee.
d. 12 Federal Reserve District Banks.
e. Federal Advisory Council.
Which of the following is not part of the Federal Reserve System?
a. Council of Economic Advisors.
The Fed:
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.
The Fed:

b. serves as the central bank for the United States.
The Federal Reserve System:
a. was created by and is owned by the government.
b. pursues independent fiscal policy at the behest of Congress.
c. never acts to control inflation.
d. pursues an independent monetary policy which can conflict with the government’s economic policy.
e. only acts to lower taxes and increase spending when there are recessionary tendencies
in the economy.
The Federal Reserve System:

d. pursues an independent monetary policy which can conflict with the government’s economic policy.
The Fed’s principal decision-making body, which directs buying and selling U. S. government securities, is known as the:
a. Federal Deposit Insurance Corporation.
b. District Board of Governors.
c. Federal Open Market Committee.
d. Reserve Requirement Regulation Conference
The Fed’s principal decision-making body, which directs buying and selling U. S. government securities, is known as the:

c. Federal Open Market Committee.
The Fed is often considered the bankers’ bank because it:
a. demands much more currency than it has available.
b. no longer has a monopoly on printing paper currency.
c. lowers the discount rate in order to restrict the money supply.
d. holds bankers reserves, provides banks with currency and loans, and clears their checks.
e. refuses to uses its power of open market operations when a quorum of state-chartered bankers petitions it.
The Fed is often considered the bankers’ bank because it:

d. holds bankers reserves, provides banks with currency and loans, and clears their checks.
Who owns the Fed?
a. The federal government.
b. The states.
c. The District Federal Reserve Banks.
d. All banks.
e. Member banks.
Who owns the Fed?

e. Member banks.
The main purpose of the Fed is to:
a. serve as the bankers’ bank for member banks.
b. regulate interest rates.
c. print Federal Reserve Notes.
d. regulate financial institutions.
e. maintain the proper functioning of our money system.
The main purpose of the Fed is to:

e. maintain the proper functioning of our money system.
In its function of controlling the money supply, the Fed does which one of
the following?
a. Controls the money supply.
b. Clears checks.
c. Regulates banks.
d. Holds gold belonging to foreign governments.
e. All of the about are true.
In its function of controlling the money supply, the Fed does which one of
the following?

e. All of the about are true.
The central bank of the United States is the:
a. Federal Reserve Banking System.
b. First National Bank.
c. Comptroller’s Bank.
d. United States National Bank.
e. U.S. Treasury Bank.
The central bank of the United States is the:
a. Federal Reserve Banking System.
The Federal Reserve System is divided into:
a. 2 districts.
b. 12 districts.
c. 26 districts.
d. 50 districts.
e. 1 district.
The Federal Reserve System is divided into:

b. 12 districts.
The Federal Reserve System is owned by:
a. federal government agencies such as the Treasury.
b. the Congress of the United States.
c. the banks that are members of the Federal Reserve System.
d. anyone who buys stock over the counter.
e. people who have deposits in member banks.
The Federal Reserve System is owned by:

c. the banks that are members of the Federal Reserve System.
The members of the Federal Reserve Board of Governors serve:
a. 6-year terms.
b. 4-year terms.
c. 10-year terms.
d. 14-year terms.
e. 2-year terms.
The members of the Federal Reserve Board of Governors serve:

d. 14-year terms.
The Federal Reserve Board of Governors consists of:
a. 50 members selected by state legislatures.
b. 12 members, one from each Federal Reserve District.
c. 12 members nominated by the President and confirmed by the Senate.
d. seven members elected by Congress.
e. seven members nominated by the President and confirmed by the Senate.
The Federal Reserve Board of Governors consists of:

e. seven members nominated by the President and confirmed by the Senate.
The Federal Reserve Board of Governors has:
a. seven members who serve 6-year terms.
b. 12 members who serve 14-year terms.
c. seven members who serve 4-year terms.
d. 12 members who serve 4-year terms.
e. seven members who serve 14-year terms.
The Federal Reserve Board of Governors has:

e. seven members who serve 14-year terms.
Which of the following is in charge of the buying and selling of government securities by the Fed?
a. The president.
b. The Federal Open Market Committee.
c. The Congress.
d. None of the above.
Which of the following is in charge of the buying and selling of government securities by the Fed?

b. The Federal Open Market Committee.
Which of the following institutions is responsible for supervising the banking system of the United States?
a. The Federal Reserve System.
b. The Open Market Committee.
c. The U.S. Treasury.
d. The Federal Deposit Insurance Corporation.
Which of the following institutions is responsible for supervising the banking system of the United States?
a. The Federal Reserve System.
Which of the following is not one of the functions of the Federal Reserve?
a. Clearing checks.
b. Printing currency.
c. Supervising and regulating banks.
d. Controlling the money supply.
Which of the following is not one of the functions of the Federal Reserve?

b. Printing currency.
Which of the following is not a function of the Federal Reserve System?
a. To control the money supply.
b. To print new money.
c. To supervise and regulate banks.
d. To aid in the check clearing process.
e. Maintaining and circulating currency.
Which of the following is not a function of the Federal Reserve System?

b. To print new money.
The major protection against sudden mass attempt to withdraw cash from banks is the:
a. Federal Reserve.
b. Consumer Protection Act.
c. deposit insurance provided by the FDIC.
d. gold and silver backing the dollar.
The major protection against sudden mass attempt to withdraw cash from banks is the:

c. deposit insurance provided by the FDIC.
Which of the following is the most important protection against fears of bank collapse?
a. The Federal Reserve.
b. The Federal Reserve Open Market Committee.
c. The Federal Deposit Insurance Corporation.
d. The gold and silver that backs Federal Reserve notes.
Which of the following is the most important protection against fears of bank collapse?

c. The Federal Deposit Insurance Corporation.
The Federal Deposit Insurance Corporation:
a. has eliminated bank failures.
b. insures all demand deposits without limit.
c. insures all demand deposits up to $100,000.
d. insures all demand deposits up to $10,000.
e. insures all savings and loan deposits up to $100,000.
The Federal Deposit Insurance Corporation:

c. insures all demand deposits up to $100,000.
The government agency that provides insurance for all checkable deposits up to $100,000 in banks choosing its protection is the:
a. Federal Deposit Insurance Corporation.
b. Federal Reserve.
c. Office of Management and Budget.
d. Treasury.
e. Securities and Exchange Commission.
The government agency that provides insurance for all checkable deposits up to $100,000 in banks choosing its protection is the:
a. Federal Deposit Insurance Corporation.
The Federal Deposit Insurance Corporation (FDIC):
a. insures all demand deposit accounts up to $10 million in banks choosing FDIC
protection.
b. was created as a government-owned corporation following the creation of the World Bank and the International Monetary Fund after World War II.
c. rarely evaluates bank performance to detect weaknesses in operation.
d. creates monetary policy in conjunction with the Federal Reserve Board.
e. was created to reduce the risk of banking by compensating depositors and keeping bank failures from spreading.
The Federal Deposit Insurance Corporation (FDIC):

e. was created to reduce the risk of banking by compensating depositors and keeping bank failures from spreading.
The Monetary Control Act of 1980:
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.
The Monetary Control Act of 1980:

d. none of the above.
The Monetary Control Act of 1980 extended the Fed’s authority to:
a. impose required-reserve ratios on all depository institutions.
b. control the discount rate.
c. control the federal funds rate.
d. all of the above.
The Monetary Control Act of 1980 extended the Fed’s authority to:
a. impose required-reserve ratios on all depository institutions.
The Monetary Control Act of 1980:
a. allowed savings and loan associations to offer checking accounts.
b. allowed more institutions to offer checking account services.
c. created greater competition among various financial institutions.
d. all of the above.
e. none of the above.
The Monetary Control Act of 1980:

d. all of the above.
The Monetary Control Act of 1980:
a. extended the Fed's authority to impose required-reserve ratios on all depository institutions.
b. excluded the required-reserve ratios as an instrument of short-term policy.
c. provided the Fed with the authority to use open market operations.
d. all of the above.
d. none of the above.
The Monetary Control Act of 1980:
a. extended the Fed's authority to impose required-reserve ratios on all depository institutions.
Which of the following laws increased competition among financial institutions and gave the Fed greater control over nonmember banks?
a. The Federal Reserve Act.
b. The Equal Credit Opportunity Act.
c. The Monetary Control Act.
d. The Thrift Bailout Bill.
Which of the following laws increased competition among financial institutions and gave the Fed greater control over nonmember banks?

c. The Monetary Control Act.
The Monetary Control Act of 1980:
a. created less competition among various financial institutions.
b. allowed fewer institutions to offer checking account services.
c. restricted savings and loan associations to long-term loans.
d. all of the above.
e. none of the above.
The Monetary Control Act of 1980:

e. none of the above.
An economy using money is more efficient that a barter economy because the use of money reduces the time spend searching for trading partners with a coincidence of wants and therefore more time can be spend producing goods and services.
true
Barter is a system of exchange that does not depend on a coincidence of wants
false
Money eliminates the need to barter.
true
Credit cards are money because they serve the three functions of money.
false
Checkable deposits are not classified as money because they fail to provide a store of value
false
By functioning as a unit of account, money provides a common measurement of the relative value of goods and services.
true
Any item can successfully serve as money.
false
Money is said to be liquid because it is immediately available to spend for goods.
true
M1 includes savings accounts.
false
M1 is actually a smaller amount than M2.
true
In the United States, currency in circulation is the largest component of the M1 money supply.
false
Unused lines of credit on credit cards are part of M2.
false
M2 is actually a smaller amount than M1.
false
The Federal Reserve's primary function is to control the money supply.
true
The Federal Reserve System is a branch of the Treasury Department.
false
The Federal Reserve System was created by act of Congress in 1931 in an effort to end a wave of bank failures brought on by the Great Depression.
false
The Federal Reserve System was created by an act of Congress in 1933 in an effort to end a wave of bank failures brought on the Great Depression.
false
A majority of the commercial banks in the United States are not members of the Fed.
true
Although the chairman of its Board of Governors is appointed by the Treasury Department, the Fed operates with considerable independence from the executive branch of the government.
false
Most commercial banks belong to the Federal Reserve System
false
The Federal Funds Committee executes the purchases and sales of government securities decisions of the Federal Reserve.
false
Although it has considerable political independence, the Fed is legally a branch of the
U.S. Treasury Department.
false
The Federal Reserve's most important function is to change the money supply in order to smooth out the business cycle.
true
The Federal Reserve System is run by the President of the United States.
false
The President and the Congress jointly determine the nation's monetary policies, and the Fed is required by law to implement those policies.
false
A majority of the commercial banks in the United States are members of the Fed.
false
The chairman of its Board of Governors is appointed by the president; the Fed operates without independence from the executive branch of the government.
false
All banks are required to join the Fed.
false
The Fed's responsibilities include controlling the money supply, clearing checks, and supervising and regulating banks.
true
What is money? What are the three definitions of money in the United States?
Money is anything that serves as a medium of exchange, store of value and unit of account. The three definitions of the money supply n the United States are M1, M2 and M3.
Who runs the Federal Reserve System? Describe the organizational structure of the Fed.
The Fed is run by the Board of Governors. There are 7 members of the Board of Governors, each appointed by the President of the United States with the confirmation of the U.S. Senate for 14 year terms. The Board of Governors are aided in their policy making by the Federal Advisory Council which consists of 12 prominent bankers, each appointed by the Presidents of the 12 Federal Reserve Banks located around the country. The Fed’s chief policy-making body is the Open Market Committee which consists of the 7 Board of Governors plus 5 Federal Reserve District bank presidents.
Describe the functions of the Federal Reserve System.
The Fed’s functions include (1) controlling the money supply, (2) clearing checks, (3) supervising and regulating banks, (4) maintaining and circulating currency, (5) protecting consumers, and (6) maintaining federal government checking accounts and gold reserves.