Question 1

What is the Wall Street Reform and Consumer Protection Act?

Accepted Answer

Passed after the ﬁnancial crisis of 2007...

Question 2

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.E) B) and D)
F) All of the above

Question 3

Refer to the given list of assets. 1. Large-denominated ($100,000 and over)  time deposits
2)  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
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 10 items listed .E) B) and C)
F) B) and D)

Question 4

The Federal Reserve System is divided into

Accepted Answer

A)   5 districts.
B)   7 districts.
C)   12 districts.
D)   15 districts.E) A) and C)
F) A) and B)

Question 5

To say that coins are "token money" means that

Accepted Answer

A)   their face value is less than their intrinsic value.
B)   their face value is greater than their intrinsic value.
C)   their face value is equal to their intrinsic value.
D)   they are not legal tender.E) None of the above
F) B) and D)

Question 6

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.E) A) and B)
F) None of the above

Question 7

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

Accepted Answer

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

Question 8

During a ﬁnancial crisis, the Fed and other central banks often adopt an "extend and pretend" policy in their emergency lending activities. Which of the following is not a consequence of this policy?

Accepted Answer

A)   It limits the potential for insolvent banks to drag down the solvent ones as well.
B)   It enhances the moral-hazard problem going forward; banks will be more likely to engage in risky behavior.
C)   It allows many poorly managed ﬁrms that have become insolvent due to making bad investments to avoid well-deserved bankruptcies.
D)   It increases the chances of the Fed itself (or another central bank)  being dragged into its own bankruptcy crisis.E) None of the above
F) B) and D)

Question 9

The use of a debit card is most similar to

Accepted Answer

A)   paying with a check.
B)   using a stored-value card.
C)   using currency.
D)   obtaining a short-term loan.E) B) and C)
F) All of the above

Question 10

An inﬂation rate of 6 percent would erode the purchasing power of the dollar by

Accepted Answer

A)   5.7.
B)   3.3.
C)   6.
D)   16.7.E) A) and B)
F) B) and C)

Question 11

What is a key advantage of money over other ﬁnancial assets such as stocks, bonds, precious metals, or real estate?

Accepted Answer

A key advantage of money, especially in ...

Question 12

If the purchasing power of the dollar is falling, then it follows that

Accepted Answer

A)   the price index is falling.
B)   the price index is rising.
C)   nominal incomes are falling.
D)   interest rates are rising.E) A) and B)
F) B) and C)

Question 13

Which of the following is not part of the M2 money supply?

Accepted Answer

A)   money market mutual fund balances
B)   money market deposit accounts
C)   currency
D)   large-denominated time depositsE) All of the above
F) C) and D)

Question 14

The Federal Open Market Committee (FOMC)  is made up of

Accepted Answer

A)   the chair of the Board of Governors along with the 12 presidents of the Federal Reserve Banks.
B)   the seven members of the Board of Governors along with the president of the New York Federal Reserve Bank.
C)   the seven members of the Board of Governors of the Federal Reserve System along with the three members of the Council of Economic Advisers.
D)   the seven members of the Board of Governors of the Federal Reserve System along with the president of the New York Federal Reserve Bank and four other Federal Reserve Bank presidents on a rotating basis.E) A) and C)
F) B) and C)

Question 15

Item  Billions of Dollars  Checkable Deposits $2,000 Small Time Deposits 350 Currency Held by the Public 80 Savings Deposits, Including Money-Market Deposit Accounts 1,300 Money-Market Mutual Funds Held by Individuals 600 Money-Market Mutual Funds Held by Businesses 700\begin{array} { | l | r | } \hline { 	ext { Item } } & 	ext { Billions of Dollars } \\hline 	ext { Checkable Deposits } & \$ 2,000 \\hline 	ext { Small Time Deposits } & 350 \\hline 	ext { Currency Held by the Public } & 80 \\hline 	ext { Savings Deposits, Including Money-Market Deposit Accounts } & 1,300 \\hline 	ext { Money-Market Mutual Funds Held by Individuals } & 600 \\hline 	ext { Money-Market Mutual Funds Held by Businesses } & 700 \\hline\end{array} Item  Checkable Deposits  Small Time Deposits  Currency Held by the Public  Savings Deposits, Including Money-Market Deposit Accounts  Money-Market Mutual Funds Held by Individuals  Money-Market Mutual Funds Held by Businesses ​ Billions of Dollars $2,000350801,300600700​​  The accompanying table contains hypothetical data for an economy. The size of the M1 money supply is

Accepted Answer

A)   $1,940 billion.
B)   $2,080 billion.
C)   $2,220 billion.
D)   $2,730 billion. E) B) and D)
F) C) and D)

Question 16

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.E) None of the above
F) A) and C)

Question 17

A few years prior to the Financial Crisis of 2007-2008, many people were getting approved for mortgage loans even
without proper documentation or credit checks.

Accepted Answer

A) True 
 B)False

Question 18

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 19

The 12 Federal Reserve Banks are governmentally owned but privately controlled.

Accepted Answer

A) True 
 B)False

Question 20

(Consider This)  One major advantage of credit cards used for transactions is that they

Accepted Answer

A)   offer discounts on most transactions.
B)   charge a lower interest rate than other means of payment.
C)   give consumers the lowest prices on products purchased.
D)   allow consumers to coordinate timing and payment for purchases.E) C) and D)
F) B) and D)

Exam 14: Money, Banking, and Financial Institutions

Correct Answer
verified

If the purchasing power of the dollar is falling, then it follows that

Correct Answer
verified

An inﬂation rate of 6 percent would erode the purchasing power of the dollar by

Correct Answer
verified

(Consider This) One major advantage of credit cards used for transactions is that they

Correct Answer
verified

The Federal Reserve System is divided into

Correct Answer
verified

The use of a debit card is most similar to

Correct Answer
verified

A few years prior to the Financial Crisis of 2007-2008, many people were getting approved for mortgage loans even without proper documentation or credit checks.

Correct Answer
verified

The Federal Open Market Committee (FOMC) is made up of

Correct Answer
verified

Correct Answer
verified

During a ﬁnancial crisis, the Fed and other central banks often adopt an "extend and pretend" policy in their emergency lending activities. Which of the following is not a consequence of this policy?

Correct Answer
verified

What is a key advantage of money over other ﬁnancial assets such as stocks, bonds, precious metals, or real estate?

Correct Answer
verified
A key advantage of money, especially in ...
View Answer

The 12 Federal Reserve Banks are governmentally owned but privately controlled.

Correct Answer
verified

What is the Wall Street Reform and Consumer Protection Act?

Correct Answer
verified
Passed after the ﬁnancial crisis of 2007...
View Answer

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.

Correct Answer
verified

Which of the following is not part of the M2 money supply?

Correct Answer
verified

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

Correct Answer
verified

The M2 money supply includes

Correct Answer
verified

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

Correct Answer
verified

The largest component of the money supply (M1) is

Correct Answer
verified

To say that coins are "token money" means that

Correct Answer
verified

Exam 14: Money, Banking, and Financial Institutions

Correct AnswerverifiedShow Answer

If the purchasing power of the dollar is falling, then it follows that

Correct AnswerverifiedShow Answer

An inﬂation rate of 6 percent would erode the purchasing power of the dollar by

Correct AnswerverifiedShow Answer

(Consider This) One major advantage of credit cards used for transactions is that they

Correct AnswerverifiedShow Answer

The Federal Reserve System is divided into

Correct AnswerverifiedShow Answer

The use of a debit card is most similar to

Correct AnswerverifiedShow Answer

A few years prior to the Financial Crisis of 2007-2008, many people were getting approved for mortgage loans even without proper documentation or credit checks.

Correct AnswerverifiedShow Answer

The Federal Open Market Committee (FOMC) is made up of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

During a ﬁnancial crisis, the Fed and other central banks often adopt an "extend and pretend" policy in their emergency lending activities. Which of the following is not a consequence of this policy?

Correct AnswerverifiedShow Answer

What is a key advantage of money over other ﬁnancial assets such as stocks, bonds, precious metals, or real estate?

Correct AnswerverifiedA key advantage of money, especially in ...View AnswerShow Answer

The 12 Federal Reserve Banks are governmentally owned but privately controlled.

Correct AnswerverifiedShow Answer

What is the Wall Street Reform and Consumer Protection Act?

Correct AnswerverifiedPassed after the ﬁnancial crisis of 2007...View AnswerShow Answer

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.

Correct AnswerverifiedShow Answer

Which of the following is not part of the M2 money supply?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The M2 money supply includes

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The largest component of the money supply (M1) is

Correct AnswerverifiedShow Answer

To say that coins are "token money" means that

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
A key advantage of money, especially in ...
View Answer

Correct Answer
verified

Correct Answer
verified
Passed after the ﬁnancial crisis of 2007...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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