Question 1

Charter One,Pentagon Federal Credit Union,and Boeing Employees Credit Union are all primarily:

Accepted Answer

A)   commercial banks.
B)   thrifts.
C)   insurance companies.
D)   pension funds.E) B) and C)
F) A) and D)

Question 2

The Board of Governors of the Federal Reserve has ____ members.

Accepted Answer

A)   5
B)   7
C)   9
D)   14E) A) and B)
F) A) and C)

Question 3

Answer the question on the basis of the following table:   Year ‾ Price Level‾ Value of Dollar ‾11.00$1.0021.2530.8040.50\begin{array}{ccc}\underline{	ext { Year }} &\underline{ 	ext { Price Level} } &\underline{ 	ext { Value of Dollar }} \1& 1.00 & \$ 1.00 \2 & 1.25 & \3 & 0.80 & \4& 0.50 &\end{array} Year ​1234​ Price Level​1.001.250.800.50​ Value of Dollar ​$1.00​ 
 Refer to the table.The value of the dollar in year 4 is:

Accepted Answer

A)   $1.50.
B)   $0.33.
C)   $0.50.
D)   $2.00. E) All of the above
F) C) and D)

Question 4

The members of the Federal Reserve Board:

Accepted Answer

A)   serve seven-year terms.
B)   are appointed by the American Economic Association.
C)   are elected by votes of the 12 presidents of the Federal Reserve Banks.
D)   are appointed for 14-year terms.E) B) and C)
F) A) and B)

Question 5

Money market deposit accounts are included in:

Accepted Answer

A)   M1 only.
B)   M2 only.
C)   neither M1 nor M2.
D)   both M1 and M2.E) C) and D)
F) B) and D)

Question 6

Assuming no other changes,if balances in money market deposit accounts increase by $50 billion and small-denominated time deposits decrease by $50 billion,the:

Accepted Answer

A)   M1 and M2 money supplies will not change.
B)   M2 money supply will increase.
C)   M1 money supply will decline.
D)   M2 money supply will increase and the M1 money supply will decrease.E) B) and C)
F) B) and D)

Question 7

To say money is socially defined means that:

Accepted Answer

A)   money has been defined in a Constitutional amendment.
B)   whatever performs the functions of money extremely well is considered to be money.
C)   the money supply includes all public and private securities purchased by society.
D)   society,acting through Congress,specifies what shall be included in the money supply.E) None of the above
F) B) and C)

Question 8

Small-denominated time deposits,by definition:

Accepted Answer

A)   mature in one month or less.
B)   mature in one year or less.
C)   are less than $100,000.
D)   are held by state and local banks only.E) A) and B)
F) None of the above

Question 9

A checking account entry is money because it:

Accepted Answer

A)   is ensured by the Federal Deposit Insurance Corporation.
B)   has been declared as such by the federal government.
C)   performs the functions of money.
D)   can be sold for currency.E) A) and D)
F) A) and C)

Question 10

Banks lost money during the mortgage default crisis because:

Accepted Answer

A)   of defaulted loans to investors in mortgage-backed securities.
B)   they held mortgage-backed securities they had purchased from investment firms.
C)   homebuyers defaulted on mortgages held by the banks.
D)   of all of these reasons.E) B) and C)
F) All of the above

Question 11

Research involving industrially advanced countries suggests that:

Accepted Answer

A)   the more independent the central bank,the lower the average annual growth of real GDP.
B)   the more independent the central bank,the higher the average annual growth of real GDP.
C)   there is no relationship between the degree of independence of a country's central bank and the growth rate of its real GDP.
D)   the less independent the central bank,the higher the average annual rate of inflation.E) A) and B)
F) C) and D)

Question 12

The group that sets the Federal Reserve System's policy on buying and selling government securities (bills,notes,and bonds) is the:

Accepted Answer

A)   Federal Deposit Insurance Corporation (FDI
C)  .
B)   Federal Bond Sale Authority.
C)   Council of Economic Advisers.
D)   Federal Open Market Committee (FOM
C)  .E) None of the above
F) A) and B)

Question 13

(Consider This) Credits cards are:

Accepted Answer

A)   the fastest growing component of the M1 money supply.
B)   near-monies that are part of the M2 money supply but not the M1 money supply.
C)   not money,as officially defined.
D)   also known as time deposits.E) All of the above
F) A) and D)

Question 14

Which of the following does not explain what backs the money supply in the United States?

Accepted Answer

A)   It is backed by gold.
B)   It is widely accepted in transactions.
C)   It is designated "legal tender" by the federal government.
D)   It is relatively scarce.E) B) and C)
F) A) and B)

Question 15

The various lender-of-last-resort programs implemented by the Fed in response to the financial crisis of 2007 and 2008:

Accepted Answer

A)   severely depleted the assets of the Federal Reserve.
B)   have been little used,and therefore are ineffective.
C)   increased the moral hazard problem by limiting losses from bad financial decisions.
D)   were designed to offset the moral hazard created by the TARP and other bailout programs.E) B) and C)
F) C) and D)

Question 16

During periods of rapid inflation,money may cease to work as a medium of exchange:

Accepted Answer

A)   unless it has been designated legal tender.
B)   unless it is backed by gold.
C)   because it is too scarce for everyone to have enough for transactions.
D)   because people and businesses will not want to accept it in transactions.E) None of the above
F) B) and D)

Question 17

An important routine function of the Federal Reserve Bank is to:

Accepted Answer

A)   supervise the liquidation of the assets of bankrupt state banks.
B)   help large commercial banks develop correspondent relationships with smaller commercial banks.
C)   advise commercial banks as to the most profitable ways of reinvesting profits.
D)   provide facilities by which commercial banks and thrift institutions may collect checks.E) A) and B)
F) A) and C)

Question 18

The purchasing power of money and the price level vary:

Accepted Answer

A)   inversely.
B)   directly during recessions but inversely during inflations.
C)   directly but not proportionately.
D)   directly and proportionately.E) B) and D)
F) B) and C)

Question 19

The U.S.Treasury is the only agency authorized to put money into circulation in the U.S.economy.

Accepted Answer

A) True 
 B)False

Question 20

Paper money (currency) in the United States is issued by the:

Accepted Answer

A)   U.S.Mint.
B)   Federal Reserve Banks.
C)   U.S.Treasury.
D)   national banks.E) C) and D)
F) B) and C)

Exam 33: Money, Banking, and Financial Institutions

The various lender-of-last-resort programs implemented by the Fed in response to the financial crisis of 2007 and 2008:

Correct Answer
verified

The members of the Federal Reserve Board:

Correct Answer
verified

A checking account entry is money because it:

Correct Answer
verified

The U.S.Treasury is the only agency authorized to put money into circulation in the U.S.economy.

Correct Answer
verified

(Consider This) Credits cards are:

Correct Answer
verified

Paper money (currency) in the United States is issued by the:

Correct Answer
verified

Money market deposit accounts are included in:

Correct Answer
verified

The Board of Governors of the Federal Reserve has ____ members.

Correct Answer
verified

To say money is socially defined means that:

Correct Answer
verified

Banks lost money during the mortgage default crisis because:

Correct Answer
verified

Small-denominated time deposits,by definition:

Correct Answer
verified

The purchasing power of money and the price level vary:

Correct Answer
verified

The group that sets the Federal Reserve System's policy on buying and selling government securities (bills,notes,and bonds) is the:

Correct Answer
verified

Charter One,Pentagon Federal Credit Union,and Boeing Employees Credit Union are all primarily:

Correct Answer
verified

Assuming no other changes,if balances in money market deposit accounts increase by $50 billion and small-denominated time deposits decrease by $50 billion,the:

Correct Answer
verified

During periods of rapid inflation,money may cease to work as a medium of exchange:

Correct Answer
verified

Which of the following does not explain what backs the money supply in the United States?

Correct Answer
verified

Correct Answer
verified

Research involving industrially advanced countries suggests that:

Correct Answer
verified

An important routine function of the Federal Reserve Bank is to:

Correct Answer
verified

Exam 33: Money, Banking, and Financial Institutions

The various lender-of-last-resort programs implemented by the Fed in response to the financial crisis of 2007 and 2008:

Correct AnswerverifiedShow Answer

The members of the Federal Reserve Board:

Correct AnswerverifiedShow Answer

A checking account entry is money because it:

Correct AnswerverifiedShow Answer

The U.S.Treasury is the only agency authorized to put money into circulation in the U.S.economy.

Correct AnswerverifiedShow Answer

(Consider This) Credits cards are:

Correct AnswerverifiedShow Answer

Paper money (currency) in the United States is issued by the:

Correct AnswerverifiedShow Answer

Money market deposit accounts are included in:

Correct AnswerverifiedShow Answer

The Board of Governors of the Federal Reserve has ____ members.

Correct AnswerverifiedShow Answer

To say money is socially defined means that:

Correct AnswerverifiedShow Answer

Banks lost money during the mortgage default crisis because:

Correct AnswerverifiedShow Answer

Small-denominated time deposits,by definition:

Correct AnswerverifiedShow Answer

The purchasing power of money and the price level vary:

Correct AnswerverifiedShow Answer

The group that sets the Federal Reserve System's policy on buying and selling government securities (bills,notes,and bonds) is the:

Correct AnswerverifiedShow Answer

Charter One,Pentagon Federal Credit Union,and Boeing Employees Credit Union are all primarily:

Correct AnswerverifiedShow Answer

Assuming no other changes,if balances in money market deposit accounts increase by $50 billion and small-denominated time deposits decrease by $50 billion,the:

Correct AnswerverifiedShow Answer

During periods of rapid inflation,money may cease to work as a medium of exchange:

Correct AnswerverifiedShow Answer

Which of the following does not explain what backs the money supply in the United States?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Research involving industrially advanced countries suggests that:

Correct AnswerverifiedShow Answer

An important routine function of the Federal Reserve Bank is to:

Correct AnswerverifiedShow Answer

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