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Exam 14: Money, Banking, and Financial Institutions

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Question 81

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Define liquidity. Provide an example of a highly liquid and highly illiquid asset.

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Liquidity is the ease with which an asse...

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Question 82

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An important routine function of the Federal Reserve Bank is to

A) supervise the liquidation of the assets of bankrupt state banks.
B) help large commercial banks develop correspondent relationships with smaller commercial banks.
C) advise commercial banks as to the most profitable ways of reinvesting profits.
D) provide facilities by which commercial banks and thrift institutions may collect checks.

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Question 83

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If product prices were stated in terms of marbles, then marbles would be functioning primarily as

When the Fed acts as a "lender of last resort," as it did in the financial crisis of 2007-2008, it is performing its role of

(Consider This) Credit cards are

If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as

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 M1 definition of money includes item(s)

The members of the Federal Reserve Board

The TARP loans and the Fed's lender-of-last-resort actions that bailed out large, failing financial institutions helped reduce the moral-hazard problem in financial management.

The Federal Reserve System performs the following functions except

$\begin{array} { | l | c | } \hline \text { Money Market Mutual Fund Balances Held by Businesses } & \$ 100 \\\hline \text { Money Market Mutual Fund Balances Held by Individuals } & 230 \\\hline \text { Currency in Banks } & 10 \\\hline \text { Currency in Circulation } & 60 \\\hline \text { Savings Deposits, Including Money Market Deposit Accounts } & 60 \\\hline \text { Large-denominated (\$100,000 or more) Time Deposits } & 180 \\\hline \text { Small-denominated ( } \$ 100,000 \text { or less) Time Deposits } & 90 \\\hline \text { Checkable Deposits } & 70\\\hline\end{array}$ Refer to the table. The value of the near monies that are part of M2 is

Checkable deposits held in savings and loan institutions, mutual savings banks, and credit unions are part of the M1 definition of the money supply.

When economists say that money serves as a store of value, they mean that it is

Paper money (currency) in the United States is issued by the

How do long terms for appointments benefit the Federal Reserve's Board of Governors?

The Federal Reserve System of the United States is the country's

In defining money as M1, economists exclude time deposits because

What are the seven functions of the Federal Reserve System? Which one is most important?

The reason for the Fed being set up as an independent agency of government is to

One major advantage of money serving as a medium of exchange is that it allows society to