QUESTION Which type of bank account requires an even higher minimum balance than NOW accounts (such as $5,000 compared to $1,000)? A) standard checking account B) Super-NOW account C) savings account D) money market account E) certificate of deposit ANSWER Answer: B Explanation: B) An account requiring an even higher minimum balance than a […]
QUESTION Which of the following is NOT one of the policy tools through which the Fed controls the money supply? A) the reserve requirement B) open-market operations C) the discount rate D) the consumer price index E) the federal funds rate ANSWER Answer: D Explanation: D) The Fed controls the money supply through three […]
QUESTION Which of the following is NOT a common advantage of using money in an economic transaction? A) Money is often used as a form of collateral. B) Money is a store of wealth. C) Money is stable, in the sense that it has the same value to everyone. D) Money is not easily copied […]
QUESTION Which of the following is NOT true of the U.S. money supply? A) The Federal Reserve System makes it available. B) Its most common measurement is referred to as M2. C) It includes currency, traveler’s checks, and various bank checking account balances. D) Cash or currency makes up roughly 80 percent of it. E) […]
QUESTION What does it mean to say that all commercial banks are chartered? A) They are not Fed members. B) All of their accounts are considered within the money supply by M1’s definition. C) They have received government permission to operate. D) They belong to a group of other local banks that pool funds. E) […]
QUESTION What differentiates M1 from M2? A) M1 is a much broader definition of the money supply than M2. B) M2 includes only currency in its definition of the money supply. C) M1 is the much more commonly used measure of the money supply. D) M1 includes assets such as mutual funds and money market […]
QUESTION Which of the following is TRUE of time deposits? A) They are bank funds that cannot be withdrawn without notice. B) They are only included in M1’s definition of the money supply. C) They are limited to $100,000 per depositor per bank. D) They can only be held in federal banks. E) They are […]
QUESTION What percentage of a bank’s transaction account funds does the reserve requirement say must be kept as vault cash or in a Federal Reserve bank account? A) between 1% and 4% B) between 3% and 10% C) between 8% and 15% D) between 10% and 20% E) between 18% and 33% ANSWER Answer: […]
QUESTION What happens when the Fed sells more bonds to the public? A) The money it takes in payment is withdrawn from circulation. B) The money supply increases. C) Government spending increases. D) The discount rate adjusts. E) Banks must put more of their money into the Fed. ANSWER Answer: A Explanation: A) When […]
QUESTION The Federal Reserve is considering requiring banks to put a higher percentage of their money into the Fed. What’s the likely outcome? A) It reduces the money supply. B) Banks have more to lend to their customers. C) The Fed is able to spend more on government programs. D) Banks are allowed to reduce […]
