Financial institutions

help collect and transfer funds in checking accounts

a percentage of deposits banks must set aside

Which statement about financial institutions is not correct?

banks only hold deposits for safe keeping

What gives value to a $10 bill?

The $10 in goods and services for which it can be traded

A check is considered money because checks are

generally accepted as payment for goods and services

studbud

Economics Chapter 13

28 termsStudBud Administration119 plays

The function of money, Fed, and Cost-push inflation and demand pull inflation

Flashcards28 cardsFPractice quizPHost liveL

Questions 28

Answers

1
Its supply automatically expands and contracts with business activity
elastic currency
currency
components of the money supply
legal tender
2
Exchange a good or service for another
purchasing power
money
barter
legal tender
3
A deposit of $1000 with a reserve requirement of 20%, what is the max money that can be created
$5000
$2000
$800
$200
4
Financial institutions
accept and hold deposits only for business firms
consider interest earned on loans a minor source of income
help collect and transfer funds in checking accounts
accept and hold deposits only in the form of savings account
5
Government-issued paper money and coins
money
coins
legal tender
currency
6
In a money economy, money serves as a
medium of exchange
measure of value
all of these
store of value
7
A period of rising prices
inflation
currency
legal tender
barter
8
Bank reserves are
the sum total of customers' deposits
funds set aside for future investment
funds banks lend to other banks
a percentage of deposits banks must set aside
9
What services does the Federal Reserve system provide banks throughout the nation?
holds reserves
processes checks
all the above
supplies currency and coins
10
A bowling ball would not be useful as money because it lacks which of the following qualities
recognizability
stability
portability
durability
11
Law requires that it be accepted in payment of debt
money
barter
legal tender
purchasing power
12
Why is The Fed or a similar regulatory agency necessary to oversee the banking system
A sound banking system is necessary in a modern economy
They set the rules and standards for financial institutions
Regulatory body protect consumers & ensures the system works
all of these
13
Anything generally accepted in payment for goods and services
Barter
legal tender
currency
money
14
What are banking services the Federal Reserve provides the federal government?
Issues and redeems government bonds
both of these
Maintains the Treasury Depart. bank account
neither of these
15
The value of money
increases with the passage of time
can increase or decrease
remains the same at all times
rises when prices rise
16
The maximum amount of money commercial banks can create depends on the demand for loans and
the amount of its reserves
the amount of Federal Reserve notes issued
the amount of cash on hand
the amount of gold and silver in its vault
17
Which statement about financial institutions is not correct?
banks only hold deposits for safe keeping
A central function of all banks is to make loans to borrower
Banks loans become additions to the money supply
Financial institutions provide services to make a profit
18
Which of the following groups will benefit most from rising prices
lenders
bondholders
borrowers
people on fixed incomes
19
What gives value to a $10 bill?
The cost of the paper it is printed on
the gold used to back it up
the cost of the labor to print it
The $10 in goods and services for which it can be traded
20
Of the following which is the largest component of the money in circulation
coins
paper money
savings account
checking amounts
21
The value of money
purchasing power
barter
elastic currency
inflation
22
Money in a checking account
Corporate income tax
purchasing power
components of the money supply
elastic currency
23
M1 and M2
elastic currency
components of the money supply
currency
corporate income
24
Tourist frequently carry these instead of money
Demand Deposits
CD
Traveler's checks
money
25
Which of the following groups will be hurt most by rising prices or inflation?
bondholders
borrowers
people on fixed incomes
lenders
26
when demand increases faster than industry's ability to satisfy that demand
all of the above
price increases
cost-push inflation exists
there is an over-supply of goods and services
27
The buying power of money
increases during periods of inflation
decreases during inflation
decreases during deflation
is unaffected by inflation or deflation
28
A check is considered money because checks are
easier to carry than metal coins
generally accepted as payment for goods and services
similar in appearance to paper currency
easy to obtain from the bank

Economics Chapter 13 Flashcards | StudBud