Question 1

New York Life, Prudential, and Hartford are all primarily

Accepted Answer

A)  commercial banks.
B)  mutual fund companies.
C)  insurance companies.
D)  securities firms.

Question 2

Debit card balances are part of money supply M1, but credit card balances are not.

Accepted Answer

A) True 
 B)False

Question 3

Purchasing groceries using a debit card best exemplifies money serving as a

Accepted Answer

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

Question 4

Which of the following statements best describes the 12 Federal Reserve Banks?

Accepted Answer

A)  They are privately owned and privately controlled central banks whose basic goal is to provide an ample and orderly market for U.S.Treasury securities.
B)  They are privately owned and publicly controlled central banks whose basic function is to minimize the risks in commercial banking in order to make it a reasonably profitable industry.
C)  They are privately owned and publicly controlled central banks whose basic goal is to control the money supply and interest rates in promoting the general economic welfare.
D)  They are privately owned and publicly controlled central banks whose basic goal is to earn profits for their owners.

Question 5

Checkable deposits are money because they are

Accepted Answer

A)  legal tender.
B)  fiat money.
C)  acceptable as payment.
D)  token money.

Question 6

Stock market price quotations best exemplify money serving as a

Accepted Answer

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

Question 7

To keep high inflation from eroding the value of money, monetary authorities in the United States

Accepted Answer

A)  create token money that is less than its intrinsic value.
B)  make paper money legal tender for the payment of debt.
C)  establish insurance on checkable deposit accounts.
D)  control the supply of money in the economy.

Question 8

During a financial crisis, the Fed and other central banks always adopt a strict policy of lending only to financial firms that are solvent but illiquid.

Accepted Answer

A) True 
 B)False

Question 9

Currency (paper money plus coins)  constitutes about

Accepted Answer

A)  25 percent of the U.S.M1 money supply.
B)  43 percent of the U.S.M1 money supply.
C)  57 percent of the U.S.M1 money supply.
D)  66 percent of the U.S.M1 money supply.

Question 10

To say money is socially defined means that

Accepted Answer

A)  money has been defined in a Constitutional amendment.
B)  whatever performs the functions of money extremely well is considered to be money.
C)  the money supply includes all public and private securities purchased by society.
D)  society, acting through Congress, specifies what shall be included in the money supply.

Question 11

In 2009, approximately how much of the money on deposit was held by the three largest U.S.banks?

Accepted Answer

A)  30 percent
B)  50 percent
C)  70 percent
D)  90 percent

Question 12

Charter One, Pentagon Federal Credit Union, and Boeing Employees Credit Union are all primarily

Accepted Answer

A)  commercial banks.
B)  thrifts.
C)  insurance companies.
D)  pension funds.

Question 13

When a banker records how many dollars each of his borrowers owes the bank, money is serving as

Accepted Answer

A)  a store of value.
B)  a unit of account.
C)  a medium of exchange.
D)  legal tender.

Question 14

As of March 2009, the federal government and the Federal Reserve had spent $170 billion to keep AIG financially afloat.

Accepted Answer

A) True 
 B)False

Question 15

The value of money in the United States is based on the stock of gold and silver held by the United States government.

Accepted Answer

A) True 
 B)False

Question 16

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 ones.

Question 17

Subprime mortgage loans are so named because the rates charged are below the prime interest rate.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following functions of money enables society to gain the benefits of geographic and labor specialization?

Accepted Answer

A)  unit of account
B)  store of value
C)  medium of exchange
D)  medium of deferred payment

Question 19

United States currency has value primarily because it

Accepted Answer

A)  is legal tender, is generally acceptable in exchange for goods or services, and is backed by the gold and silver of the Federal government.
B)  is generally acceptable in exchange for goods or services, is backed by the gold and silver of the Federal government, and facilitates trade.
C)  is relatively scarce, is legal tender, and is generally acceptable in exchange for goods and services.
D)  facilitates trade, is legal tender, and permits the use of credit cards and near monies.

Question 20

TARP, created in 2008, stands for

Accepted Answer

A)  Toxic Asset Relief Program.
B)  Troubled Asset Recovery Plan.
C)  Toxic Asset Reinvestment Policy.
D)  Troubled Asset Relief Program.

Exam 34: Money, Banking, and Financial Institutions

To keep high inflation from eroding the value of money, monetary authorities in the United States

Correct AnswerverifiedShow Answer

Checkable deposits are money because they are

Correct AnswerverifiedShow Answer

Subprime mortgage loans are so named because the rates charged are below the prime interest rate.

Correct AnswerverifiedShow Answer

When a banker records how many dollars each of his borrowers owes the bank, money is serving as

Correct AnswerverifiedShow Answer

As of March 2009, the federal government and the Federal Reserve had spent $170 billion to keep AIG financially afloat.

Correct AnswerverifiedShow Answer

Which of the following statements best describes the 12 Federal Reserve Banks?

Correct AnswerverifiedShow Answer

To say money is socially defined means that

Correct AnswerverifiedShow Answer

The value of money in the United States is based on the stock of gold and silver held by the United States government.

Correct AnswerverifiedShow Answer

Currency (paper money plus coins) constitutes about

Correct AnswerverifiedShow Answer

Which of the following functions of money enables society to gain the benefits of geographic and labor specialization?

Correct AnswerverifiedShow Answer

Debit card balances are part of money supply M1, but credit card balances are not.

Correct AnswerverifiedShow Answer

United States currency has value primarily because it

Correct AnswerverifiedShow Answer

TARP, created in 2008, stands for

Correct AnswerverifiedShow Answer

During a financial crisis, the Fed and other central banks always adopt a strict policy of lending only to financial firms that are solvent but illiquid.

Correct AnswerverifiedShow Answer

Stock market price quotations best exemplify money serving as a

Correct AnswerverifiedShow Answer

Purchasing groceries using a debit card best exemplifies money serving as a

Correct AnswerverifiedShow Answer

New York Life, Prudential, and Hartford are all primarily

Correct AnswerverifiedShow Answer

The major wave of defaults on home mortgages in 2007 destabilized

Correct AnswerverifiedShow Answer

Charter One, Pentagon Federal Credit Union, and Boeing Employees Credit Union are all primarily

Correct AnswerverifiedShow Answer

In 2009, approximately how much of the money on deposit was held by the three largest U.S.banks?

Correct AnswerverifiedShow Answer

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