Question 1

Money supply M1 does not include the currency held by:

Accepted Answer

A)   Households in their wallets or purses
B)   Business firms
C)   Commercial banks
D)   State and local governmentsE) C) and D)
F) None of the above

Question 2

The destabilizing effects of defaulting mortgages quickly spread throughout the financial system because those mortgages were involved in widespread:

Accepted Answer

A)   Diversification
B)   Securitization
C)   Multiplier effect
D)   Real-balance effectE) A) and B)
F) A) and C)

Question 3

In the United States, all money is essentially the debt of the Fed, commercial banks, and thrift institutions.

Accepted Answer

A) True 
 B)False

Question 4

Michelle transfers $4,000 from her savings account to her checking account. What effect is this change likely to have on M1 and M2?

Accepted Answer

A)   M1 decreases and M2 increases
B)   M1 increases and M2 decreases
C)   M1 increases and M2 stays the same
D)   M2 increases and M1 stays the sameE) B) and D)
F) A) and B)

Question 5

The Great Recession was the main cause of the Financial Crisis of 2007-2008.

Accepted Answer

A) True 
 B)False

Question 6

An asset's liquidity refers to its ability to be:

Accepted Answer

A)   Bought and stored
B)   Increasing in value over time
C)   Used and enjoyed
D)   A means of paymentE) B) and D)
F) All of the above

Question 7

The M1 money supply is composed of currency, checkable deposits, and savings deposits.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following institutions does not provide checkable-deposit services to the general public?

Accepted Answer

A)   Commercial banks
B)   Savings and loan associations
C)   U.S. Treasury
D)   Credit unionsE) A) and C)
F) A) and B)

Question 9

The most important among the Federal Reserve district banks in conducting monetary policy is the:

Accepted Answer

A)   Boston bank
B)   Chicago bank
C)   New York bank
D)   San Francisco bankE) B) and D)
F) A) and C)

Question 10

The major wave of defaults on home mortgages in 2007 destabilized:

Accepted Answer

A)   Only the banks that directly made the mortgage loans
B)   Only the mortgage brokers; not the commercial banks
C)   Many banks including those that made the loans indirectly
D)   Mostly large banks, but not too many small onesE) A) and B)
F) None of the above

Exam 14: Money, Banking, and Financial Institutions

Which of the following institutions does not provide checkable-deposit services to the general public?

Correct Answer
verified

The most important among the Federal Reserve district banks in conducting monetary policy is the:

Correct Answer
verified

An asset's liquidity refers to its ability to be:

Correct Answer
verified

The Great Recession was the main cause of the Financial Crisis of 2007-2008.

Correct Answer
verified

The major wave of defaults on home mortgages in 2007 destabilized:

Correct Answer
verified

The M1 money supply is composed of currency, checkable deposits, and savings deposits.

Correct Answer
verified

The destabilizing effects of defaulting mortgages quickly spread throughout the financial system because those mortgages were involved in widespread:

Correct Answer
verified

In the United States, all money is essentially the debt of the Fed, commercial banks, and thrift institutions.

Correct Answer
verified

Michelle transfers $4,000 from her savings account to her checking account. What effect is this change likely to have on M1 and M2?

Correct Answer
verified

Money supply M1 does not include the currency held by:

Correct Answer
verified

Exam 14: Money, Banking, and Financial Institutions

Which of the following institutions does not provide checkable-deposit services to the general public?

Correct AnswerverifiedShow Answer

The most important among the Federal Reserve district banks in conducting monetary policy is the:

Correct AnswerverifiedShow Answer

An asset's liquidity refers to its ability to be:

Correct AnswerverifiedShow Answer

The Great Recession was the main cause of the Financial Crisis of 2007-2008.

Correct AnswerverifiedShow Answer

The major wave of defaults on home mortgages in 2007 destabilized:

Correct AnswerverifiedShow Answer

The M1 money supply is composed of currency, checkable deposits, and savings deposits.

Correct AnswerverifiedShow Answer

The destabilizing effects of defaulting mortgages quickly spread throughout the financial system because those mortgages were involved in widespread:

Correct AnswerverifiedShow Answer

In the United States, all money is essentially the debt of the Fed, commercial banks, and thrift institutions.

Correct AnswerverifiedShow Answer

Michelle transfers $4,000 from her savings account to her checking account. What effect is this change likely to have on M1 and M2?

Correct AnswerverifiedShow Answer

Money supply M1 does not include the currency held by:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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