Question 1

Credit cards are money because they serve the three functions of money.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following defines the "unit of account" function of money?

Accepted Answer

A)   A common measurement of the relative value of different goods and services.
B)   The ability of money to hold value over time.
C)   The materials used to manufacture money are of medium grade or quality, so that people will not hoard money for its commodity value.
D)   Money is widely accepted in exchange for goods and services.E) B) and D)
F) B) and C)

Question 3

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

Accepted Answer

A) True 
 B)False  True

Question 4

The M1 definition of the money supply includes currency,

Accepted Answer

A)   checkable deposits, and savings accounts.
B)   checkable deposits, and credit cards.
C)   checkable deposits, and debit cards.
D)   and checkable deposits.E) None of the above
F) A) and B)

Question 5

Which of the following is responsible for controlling the money supply in the United States?

Accepted Answer

A)   The U.S. Congress.
B)   The Board of Governors of the Federal Reserve System.
C)   The U.S. Treasury.
D)   The Council of Economic Advisors.E) C) and D)
F) B) and C)

Question 6

A barter economy is one in which:

Accepted Answer

A)   money serves as a medium of exchange.
B)   only precious metals are accepted as money.
C)   goods are traded directly for other goods.
D)   paper money is backed by gold.E) A) and B)
F) None of the above

Question 7

If something is a medium of exchange,then it:

Accepted Answer

A)   serves as a yardstick for measuring the value of other goods.
B)   is a means of holding wealth for the future.
C)   has an absolute value in gold.
D)   is widely accepted as payment for purchases.E) All of the above
F) None of the above

Question 8

The Fed's responsibilities include controlling the money supply,clearing checks,and supervising and regulating banks.

Accepted Answer

A) True 
 B)False

Question 9

M1 money includes all but which one of the following?

Accepted Answer

A)   Checkable deposits.
B)   Savings accounts.
C)   Paper money.
D)   Coins.E) None of the above
F) C) and D)

Question 10

Most commercial banks belong to the Federal Reserve System.

Accepted Answer

A) True 
 B)False

Question 11

Who owns the Fed?

Accepted Answer

A)   The federal government.
B)   The states.
C)   The District Federal Reserve Banks.
D)   All banks.
E)   Member banks.F) A) and E)
G) C) and E)

Question 12

Which definition of the money supply includes credit cards?

Accepted Answer

A)   M1.
B)   M2.
C)   M3.
D)   None of the above includes credit card balances.E) A) and D)
F) B) and C)

Question 13

The Federal Reserve System was founded in:

Accepted Answer

A)   1913.
B)   1929.
C)   1933.
D)   1935.E) A) and C)
F) C) and D)

Question 14

When M1 is expanded to M2,the money supply:

Accepted Answer

A)   almost doubles.
B)   more than triples.
C)   goes up tenfold in size.
D)   changes very little.
E)   goes up by 50 percent.F) A) and B)
G) A) and C)

Question 15

What establishes the value of fiat money?

Accepted Answer

A)   Our collective trust and confidence that the central government, which decrees that money cannot be refused as payment for debt.
B)   Gold and silver owned by the large commercial banks.
C)   The central government authority's promise to redeem fiat money for gold or silver upon demand.
D)   None of the above.E) A) and C)
F) A) and B)

Question 16

Describe the functions of the Federal Reserve System.

Accepted Answer

The Fed's functions include (1)controlli...

Question 17

The use of a dollar bill to buy a concert ticket represents the function of money as a:

Accepted Answer

A)   medium of exchange.
B)   unit of account.
C)   store of value.
D)   all of the above.E) A) and B)
F) A) and C)

Question 18

Which of the following is not part of M1?

Accepted Answer

A)   Checking accounts.
B)   Coins.
C)   Credit cards.
D)   Paper currency.E) A) and C)
F) B) and D)

Question 19

If every person is willing to accept money in payment,rather than goods and services,money serves as a:

Accepted Answer

A)   medium of exchange.
B)   unit of account.
C)   store of value.
D)   coincident exchange.E) A) and D)
F) A) and C)

Question 20

Money is:

Accepted Answer

A)   valuable because it is backed by gold.
B)   any items used in barter.
C)   an illiquid asset.
D)   none of the above.E) B) and C)
F) B) and D) D

Exam 18: Money and the Federal Reserve System

Credit cards are money because they serve the three functions of money.

Correct AnswerverifiedFalse

Which of the following defines the "unit of account" function of money?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedTrue

The M1 definition of the money supply includes currency,

Correct AnswerverifiedShow Answer

Which of the following is responsible for controlling the money supply in the United States?

Correct AnswerverifiedShow Answer

A barter economy is one in which:

Correct AnswerverifiedShow Answer

If something is a medium of exchange,then it:

Correct AnswerverifiedShow Answer

The Fed's responsibilities include controlling the money supply,clearing checks,and supervising and regulating banks.

Correct AnswerverifiedShow Answer

M1 money includes all but which one of the following?

Correct AnswerverifiedShow Answer

Most commercial banks belong to the Federal Reserve System.

Correct AnswerverifiedShow Answer

Who owns the Fed?

Correct AnswerverifiedShow Answer

Which definition of the money supply includes credit cards?

Correct AnswerverifiedShow Answer

The Federal Reserve System was founded in:

Correct AnswerverifiedShow Answer

When M1 is expanded to M2,the money supply:

Correct AnswerverifiedShow Answer

What establishes the value of fiat money?

Correct AnswerverifiedShow Answer

Describe the functions of the Federal Reserve System.

Correct AnswerverifiedThe Fed's functions include (1)controlli...View AnswerShow Answer

The use of a dollar bill to buy a concert ticket represents the function of money as a:

Correct AnswerverifiedShow Answer

Which of the following is not part of M1?

Correct AnswerverifiedShow Answer

If every person is willing to accept money in payment,rather than goods and services,money serves as a:

Correct AnswerverifiedShow Answer

Money is:

Correct AnswerverifiedD

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False

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True

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The Fed's functions include (1)controlli...
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D