Question 1

If every person is willing to accept money in payment, rather than goods and services, money serves as a:

Accepted Answer

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

Question 2

Describe the functions of the Federal Reserve System.

Accepted Answer

The Fed's functions include
(1) control...

Question 3

The characteristics that money should have include:

Accepted Answer

A)   portability, durability, and flexibility.
B)   durability, flexibility and stability.
C)   durability, portability, and non-homogeneity.
D)   scarcity, portability, and divisibility.

Question 4

Which of the following is not counted as part of M1?

Accepted Answer

A)   coins
B)   Federal Reserve notes or " paper money"
C)   passbook savings deposits
D)   checkable deposits

Question 5

Which definition of the money supply includes credit cards?

Accepted Answer

A)   M1.
B)   M2.
C)   M3.
D)   Credit card balances are not included in money supply. D

Question 6

Fiat money is money:

Accepted Answer

A)   accepted by law regardless of its intrinsic value.
B)   that is not included as part of the M1 money supply.
C)   that is backed by gold or silver held on reserve by the government.
D)   such as coins that are made from metal.

Question 7

The number of presidentially appointed members who sit on the Federal Reserve Board of Governors is:

Accepted Answer

A)   none.
B)   seven.
C)   nine.
D)   twelve.

Question 8

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

Accepted Answer

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

Question 9

Comparing how many dollars it takes to attend college each year to annual earnings on a job represents the use of money as a:

Accepted Answer

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

Question 10

Which of the following is not a component of the M1 money supply?

Accepted Answer

A)   demand deposits
B)   large-denomination (more than $100)  bills
C)   interest-earning checking deposits
D)   outstanding balances on credit cards

Question 11

The Federal Reserve System is owned by:

Accepted Answer

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.

Question 12

The seven members of the Board of Governors serve 14-year terms to:

Accepted Answer

A)   reduce political influence.
B)   provide steady employment.
C)   inhibit independent decisions.
D)   prevent illegal appointments.

Question 13

The primary functions of money are:

Accepted Answer

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.

Question 14

In the United States, the purchasing power of money is determined by:

Accepted Answer

A)   the underlying precious metals that back each unit of currency.
B)   the value of U.S. treasury bonds that back each unit of currency.
C)   its acceptability.
D)   Congress, which controls the money supply. C

Question 15

The main purpose of the Fed is to:

Accepted Answer

A)   maintain the proper functioning of our money system.
B)   regulate interest rates.
C)   print Federal Reserve Notes.
D)   regulate financial institutions.

Question 16

What is the "unit of account" function of money?

Accepted Answer

A)   a common measurement of the relative value of different goods and services
B)   the ability of money to hold value over time
C)   the quality of money not to be hoarded because of its commodity value
D)   the function of money to be widely accepted I exchange for goods and services

Question 17

The statement that ABC Co.'s profits totaled $500 million last year represents the use of money as a:

Accepted Answer

A)   medium of exchange.
B)   store of value.
C)   unit of account.
D)   means of coincidence. C

Question 18

M1 money includes all but which one of the following?

Accepted Answer

A)   checkable deposits
B)   savings accounts
C)   paper money
D)   coins

Question 19

The Federal Deposit Insurance Corporation:

Accepted Answer

A)   has eliminated bank failures.
B)   insures all demand deposits without limit.
C)   insures all demand deposits up to $100,000.
D)   includes commercial banks and state-chartered banks as its members.

Question 20

The difference between M1 and M2 is given by which of the following?

Accepted Answer

A)   M1 includes currency, coins, gold and silver, whereas M2 does not contain gold and silver.
B)   M1 is made up of currency, traveler's checks, and money in checkable accounts, whereas M2 contains M1 plus savings deposits and time deposits.
C)   M1 is limited to currency, whereas M2 contains M1 plus traveler's checks and money in checkable accounts.
D)   M1 includes currency and traveler's checks, whereas M2 contains M1 plus money in checking accounts.

Exam 24: Money and the Federal Reserve System

If every person is willing to accept money in payment, rather than goods and services, money serves as a:

Correct AnswerverifiedShow Answer

Describe the functions of the Federal Reserve System.

Correct AnswerverifiedThe Fed's functions include (1) control...View AnswerShow Answer

The characteristics that money should have include:

Correct AnswerverifiedShow Answer

Which of the following is not counted as part of M1?

Correct AnswerverifiedShow Answer

Which definition of the money supply includes credit cards?

Correct AnswerverifiedD

Fiat money is money:

Correct AnswerverifiedShow Answer

The number of presidentially appointed members who sit on the Federal Reserve Board of Governors is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Comparing how many dollars it takes to attend college each year to annual earnings on a job represents the use of money as a:

Correct AnswerverifiedShow Answer

Which of the following is not a component of the M1 money supply?

Correct AnswerverifiedShow Answer

The Federal Reserve System is owned by:

Correct AnswerverifiedShow Answer

The seven members of the Board of Governors serve 14-year terms to:

Correct AnswerverifiedShow Answer

The primary functions of money are:

Correct AnswerverifiedShow Answer

In the United States, the purchasing power of money is determined by:

Correct AnswerverifiedC

The main purpose of the Fed is to:

Correct AnswerverifiedShow Answer

What is the "unit of account" function of money?

Correct AnswerverifiedShow Answer

The statement that ABC Co.'s profits totaled $500 million last year represents the use of money as a:

Correct AnswerverifiedC

M1 money includes all but which one of the following?

Correct AnswerverifiedShow Answer

The Federal Deposit Insurance Corporation:

Correct AnswerverifiedShow Answer

The difference between M1 and M2 is given by which of the following?

Correct AnswerverifiedShow Answer

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D

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C

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