OU Federal Reserve System & Economic Issues in USA Multiple Choice Questions

QUESTION 1

1. The Federal Reserve System was founded in:a.1929.b.1935.c.1933.d.1913.

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QUESTION 2

1. The Monetary Control Act of 1980:a.allowed savings and loan associations to offer checking accounts.b.allowed more institutions to offer checking account services.c.created greater competition among various financial institutions.d.all of the above.e.none of the above.

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QUESTION 3

1. Which of the following items is included when computing M1?a.Coins in circulation.b.Currency in circulation.c.Checking accounting entries.d.All of the above.e.None of the above

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QUESTION 4

1. The members of the Federal Reserve Board of Governors serve:a.4-year terms.b.2-year terms.c.10-year terms.d.6-year terms.e.14-year terms.

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QUESTION 5

1. The money supply known as M2:a.excludes interest-earning checking accounts in savings and loans.b.includes large denomination repurchase agreements.c.includes savings accounts and small denomination time deposits.d.includes large denomination time deposits.e.does not include money market mutual accounts.

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QUESTION 6

1. The Federal Reserve System is owned by:a.people who have deposits in member banks.b.federal government agencies such as the Treasury.c.anyone who buys stock over the counter.d.the banks that are members of the Federal Reserve System.e.the Congress of the United States.

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QUESTION 7

1. Fiat money is money:a.that is not included as part of the M1 money supply.b.accepted by law regardless of its intrinsic value.c.that is backed by gold or silver held on reserve by the government.d.such as coins that are made from metal.

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QUESTION 8

1. Which of the following is not part of M1?a.Paper currency.b.Checking accounts.c.Credit cards.d.Coins.

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QUESTION 9

1. In the United States, the money supply (M1) consists of:a.paper currency, coins, checkable deposits, and savings deposits.b.paper currency and coins.c.government bonds, currency, and checkable deposits.d.coins, paper currency and checkable deposits.

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QUESTION 10

1. Are outstanding credit card balances counted as part of the money supply?a.No; money is an asset, while the credit card balances are a liability. Thus, they are not included in the money supply figures.b.Yes; they are used to purchase things, and therefore, they are included in the money supply figures.c.Partly; credit card balances of $100 or less are included in the M1 money supply, but the money supply figures do not include balances in excess of $100.d.Partly; credit card balances are included in the M1 money supply, but not the M2 money supply.

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QUESTION 11

1. The term “near monies” refers to which of the following? a. Counterfeit money that closely approximates the appearance of real money.b.Mexican pesos and Canadian dollars – the money used by our nearest neighbors.c. Savings and small time deposits, which (unlike currency and checkable deposits) are not immediately available as money in a transaction.d.None of the answers above are correct.

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QUESTION 12

1. Which of the following is a desirable property of money?a.Scarcity.b.Portability.c.Divisibility.d.All of the above.

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QUESTION 13

1. The President and the Congress jointly determine the nation’s monetary policies, and the Fed is required by law to implement those policies. True False

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QUESTION 14

1. In its function of controlling the money supply, the Fed does which one of the following?a.Controls the money supply.b.Clears checks.c.Regulates banks.d.Holds gold belonging to foreign governments.e.All of the above are true.

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QUESTION 15

1. The Federal Reserve Board of Governors has:a.seven members who serve 14-year terms.b.seven members who serve 4-year terms.c.12 members who serve 4-year terms.d.12 members who serve 14-year terms.e.seven members who serve 6-year terms.

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QUESTION 16

1. If every person is willing to accept money in payment, rather than goods and services, money serves as a:a.unit of account.b.coincident exchange.c.medium of exchange.d.store of value.

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QUESTION 17

1. Which of the following is not a component of the M1 money supply?a.Large-denomination (more than $100) bills.b.Interest-earning checking deposits.c.Outstanding balances on credit cards.d.Checkable deposits.

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QUESTION 18

1. M2 money includes all but which one of the following?a.Savings accounts.b.Checkable deposits.c.Money market deposit accounts.d.Money market mutual accounts.e.Large denomination time deposits.

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QUESTION 19

1. The Fed:a.has little control over the money supply.b.ensures commercial bank profitability.c.serves as the central bank for the United States.d.often uses a mix of lower taxes in its fiscal policy.

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QUESTION 20

1. For barter exchange to take place,a.there has to be a coincidence of wants.b.there has to be a single coincidence of wants.c.gold has to be one of the goods traded.d.money has to be used to put a value on the transaction.e.the products in question have to be divisible.

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QUESTION 21

1. Any item can successfully serve as money. True False

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QUESTION 22

1. Which of the following is the most important protection against fears of bank collapse?a.The gold and silver that backs Federal Reserve notes.b.The Federal Reserve Open Market Committee.c.The Federal Deposit Insurance Corporation.d.The Federal Reserve.

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QUESTION 23

1. Which of the following assets is most liquid?a.Funds in a checking account.b.A car.c.A home.d.A municipal bond.

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QUESTION 24

1. A barter economy is one in which:a.only precious metals are accepted as money.b.money serves as a medium of exchange.c.paper money is backed by gold.d.goods are traded directly for other goods.

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QUESTION 25

1. Buying a cup of coffee with a dollar bill represents the use of money as a:a.medium of exchange.b.unit of account.c.store of value.d.all of the above.

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QUESTION 26

1. M2 is actually a smaller amount than M1. True False

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QUESTION 27

1. Coins and dollar bills are money in the form of:a.investment.b.capital stock.c.currency.d.barter.

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QUESTION 28

1. Money is said to be liquid because it is immediately available to spend for goods. True False

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QUESTION 29

1. In order for barter to occur, traders must have a:a.unit of account.b.central banking facility.c.coincidence of wants.d.medium of exchange.

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QUESTION 30

1. Which of the following items does not provide a store of value?a.Currency.b.Checkable deposits.c.Credit cards.d.All of the above are correct.