Unit 5 Review- Money, Banking & the Fed

Question 1

Deposit: $10,000 . RR=15% . How much are legal reserves?

Accepted Answer

$1,500

Question 2

The Federal Reserve is affiliated with the Democratic party

Accepted Answer

False

Question 3

A security where BIG money is loaned for a set period of time for a set amount of interest

Accepted Answer

Bonds

Question 4

The Fed acts as the federal government's bank

Accepted Answer

True

Question 5

This tool to alter money supply involves the Fed purchasing government securities

Accepted Answer

Open Market Operations

Question 6

The following image describes

Accepted Answer

Easy Money

Question 7

Money is lightweight, convenient and easy to transfer

Accepted Answer

Portability

Question 8

This is a moneyless economy that relies on the "mutual coincidence of wants" to trade

Accepted Answer

Barter

Question 9

This group of 12 individuals is directly responsible for monetary policy decisions

Accepted Answer

Federal Open Markets Committee

Question 10

Deposit: $12,000 . RR= 8% . How much are excess reserves?

Accepted Answer

$11,040

Question 11

The amount or fee that is charged to a borrower of a loan

Accepted Answer

Interest Rate

Question 12

Banks make a majority of their profit from which of the following?

Accepted Answer

Loans

Question 13

Our basic unit of currency is

Accepted Answer

Federal Reserve Note

Question 14

Metallic coins are produced by which of the following

Accepted Answer

US Mint

Question 15

The nearest Federal Reserve District Bank is located in

Accepted Answer

Dallas

Question 16

Currency does not include

Accepted Answer

Coins

Question 17

The Fed is owned by

Accepted Answer

Member Banks

Question 18

When measuring the money supply, the Fed considers

Accepted Answer

All of the Above

Question 19

The ability of money to withstand constant exchange without becoming mutilated and worn

Accepted Answer

Durability

Question 20

Coins count toward M1

Accepted Answer

False

Question 21

The following image describes

Accepted Answer

Tight Money

Question 22

Every time a bank lends money to a customer, the money supply gets larger

Accepted Answer

True

Question 23

Gunpowder, corn, and musket balls are examples of this kind of money

Accepted Answer

Commodity Money

Question 24

Banks pay customers interest on this kind of account

Accepted Answer

All of the Above

Question 25

This tool to alter Monetary policy changes the percent of deposits that banks must keep

Accepted Answer

Reserve Requirements

Question 26

When the Fed buys government securities, it decreases the circulation of bonds

Accepted Answer

True

Question 27

What does the fractional reserve system mean?

Accepted Answer

Banks keep a small portion of deposits & loan the rest

Question 28

Raising the discount rate causes more banks to want to borrow money, and spurs the economy

Accepted Answer

False

Question 29

What is the purpose of the FDIC?

Accepted Answer

Ensure customers don't lose money if a bank fails

Question 30

Money created by a government decree that has no alternative value or use as a commodity

Accepted Answer

Fiat Money

Question 31

The Fed was created in

Accepted Answer

1913

Question 32

A policy where the Fed decreases the money supply, interest rates go up & discouraging loans

Accepted Answer

Tight Money

Question 33

If you deposit funds into a savings account, money is functioning as a

Accepted Answer

Store of Value

Question 34

Money is in limited supply

Accepted Answer

Scarcity

Question 35

DDA is another name for

Accepted Answer

Checking Account

Question 36

The amount of new money the banking system generates with each dollar of deposits

Accepted Answer

Money Multipliers

Question 37

Destroying old bills/coins and circulating new bills/coins is which responsibility?

Accepted Answer

Maintaining Currency

Question 38

The amount of a deposit to be set aside in legal reserves is determined by

Accepted Answer

Reserve Requirement

Question 39

The lowest interest rate a bank will charge its best customers (with good credit scores)

Accepted Answer

Prime Rate

Question 40

Who is responsible for Monetary Policy?

Accepted Answer

The Federal Reserve

Question 41

When comparing prices of an item across different stores, you are using money to evaluate

Accepted Answer

Measure of Value

Question 42

The interest rate that the Fed charges on loans to its member banks

Accepted Answer

Discount Rate

Question 43

The amount of a deposit that the bank retains and puts into their vault

Accepted Answer

Legal Reserve

Question 44

M2 includes

Accepted Answer

All of the Above

Question 45

This tool is used most often by the Fed to alter the money supply

Accepted Answer

Open Market Operations

Question 46

When banks lend out money, the economy's money supply shrinks

Accepted Answer

False

Question 47

A Demand Deposit Account describes

Accepted Answer

A Checking Account

Question 48

Electronic transfer of funds, online banking and processing checks are which responsibility?

Accepted Answer

Maintaining Payment System

Question 49

Which is NOT liquid money?

Accepted Answer

Small-time Deposits

Question 50

If the RR is 12%, what is the money multiplier?

Accepted Answer

8.33

Question 51

Monetary Policy can be described as

Accepted Answer

changes to the money supply

Question 52

The ability to break a currency down into smaller portions

Accepted Answer

Divisibility

Question 53

This group of 7 individuals oversee the Fed

Accepted Answer

Board of Governors, Federal Open Markets Committee

Question 54

A policy where the Fed expands the money supply, interest rates fall & spurs the economy

Accepted Answer

Easy Money

Question 55

Deposit: $720 . RR=24% . What is the excess reserve?

Accepted Answer

$547.2

Question 56

The Fed rarely uses this tool to alter money supply

Accepted Answer

Reserve Requirement

Question 57

Banks are this kind of business entity

Accepted Answer

Corporation

Question 58

Which is NOT a component of money?

Accepted Answer

Credit Cards

Question 59

The ability of money to be accessed quickly and efficiently whenever the depositor desires

Accepted Answer

Liquid

Question 60

1/RR

Accepted Answer

Money Multiplier

Question 61

When the Fed buys bonds, it increases the money supply

Accepted Answer

True

Question 62

The ability of money to be accepted by all parties in a transaction

Accepted Answer

Medium of Exchange

Question 63

The amount of a deposit that a bank loans out to other customers

Accepted Answer

Excess Reserve

Question 64

This tool to alter the money supply involves the Fed changing interest rates on loans to banks

Accepted Answer

Discount Rate

Unit 5 Review- Money, Banking & the Fed

Questions 65

Unit 5 Review- Money, Banking & the Fed

Questions 65