Chapter 14 - Section I 1. Money functions as all of the following EXCEPT a. a store of value. c. a medium of exchange. b. a monetary standard. d. a measure of value. 2. A mutual coincidence of wants is a. difficult to achieve in a barter economy. b. easy to achieve in a barter economy. c. impossible to achieve in a barter economy. d. difficult to achieve in a money economy. 3. Early colonists in Virginia used tobacco as a. specie. c. commodity money. b. fiat money. d. wampum. 4. What is the origin of the American dollar? a. the Austrian taler and wampum c. wampum and shillings b. the Spanish peso and shillings d. the Spanish peso and Austrian taler 5. To be a successful medium of exchange, money must be all of the following EXCEPT a. easily available. c. durable. b. portable. d. easily divisible. a. something accepted by all parties as payment for goods and services b. made from silver or gold c. a common denominator that can be used to express worth in terms that most individuals understand d. money by government decree e. any substance that serves as a medium of exchange, a measure of value, and a store of value 6. money 7. medium of exchange 8. measure of value 9. fiat money 10. specie 1. B 2. A 3. C 4. B 5. A 6. E 8. C 9. D 10. B
Chapter 14 - Section II 1. Under what monetary standard does the United States currently operate? a. the gold standard c. the silver standard b. the inconvertible fiat money standard d. the greenback standard 2. All of the following were problems with banking before the Civil War EXCEPT a. state banks issued their own currencies. b. wildcat banks printed large amounts of currency. c. many banks issued more currency than they could back. d. the economy grew faster than the gold stock. 3. Which of the following statements about a gold standard is FALSE? a. The government cannot print too much paper currency. b. People feel more secure about their money. c. It is easier to expand the money supply. d. The government risks draining its gold reserves. 4. Greenbacks and United States notes were issued to a. raise money to finance the Civil War. c. change the monetary standard. b. stabilize the monetary supply. d. pay interest on the federal debt. 5. Created during the Civil War, the National Banking System a. was made up of banks chartered by the federal government. b. resulted in shifting the paper money supply from being entirely privately-issued to being entirely publicly-issued. c. eventually replaced state-chartered banks. d. all of the above a. paper currency issued by the Treasury that was redeemable in both gold and silver b. mechanism designed to keep the money supply portable, durable, divisible, and limited in supply c. monetary standard under which the basic currency unit is equivalent to, and can be exchanged for, a specific amount of gold d. fiat currency that must be accepted in payment for debts e. a monetary standard under which the fiat money supply cannot be converted into gold or silver by its citizens 6. monetary standard 7. legal tender 8. Treasury coin notes 9. gold standard 10. inconvertible fiat money standard 1. B 2. C 3. A 5. A 6. B 7. D 8. A 9. C 10. E
Chapter 14 - Section III 1. The Federal Reserve System is a. owned by the government. c. publicly controlled. b. unable to lend money to other banks. d. under the authority of Congress. 2. Which of the following statements about the Great Depression is FALSE? a. Thousands of banks failed. b. Banking reforms followed the Great Depression. c. Runs on banks were common. d. A new banking system was created. 3. The federal agency that insures bank deposits in the event of a bank failure is the a. DDA. c. FSLIC. b. FDIC. d. Fed. 4. One of the oldest thrift institutions in the United States is the a. mutual savings bank. c. credit union. b. savings and loan association. d. savings bank. 5. Which of the following institutions experienced serious crisis and reform during the 1980s? a. mutual savings banks c. savings and loan associations b. commercial banks d. credit unions a. depository institution that invests the majority of its funds in home mortgages b. depositor-owned financial organization operated only for the benefit of its depositors c. system that functions as the central bank of the United States d. financial institutions that accepted the deposits of small investors e. nonprofit service cooperative that is owned by, and operated for, the benefit of its members 6. Federal Reserve System 7. thrift institution 8. mutual savings bank 9. credit union 10. savings and loan association 1. C 2. B 3. B 5. C 6. C 7. D 8. B 9. E 10. A
Chapter 14 - Section IV 1. The Fed is owned by a. member banks. c. all banks. b. the federal government. d. the people of the United States. 2. Which banks are members of the Fed? a. all state banks b. some state banks and some national banks c. some state banks and all national banks d. all state banks and all national banks 3. Which one of the following is NOT part of the Federal Reserve System? a. the Board of Governors c. the Federal Advisory Council b. the Federal Open Market Committee d. the Comptroller of the Currency 4. The Fed is responsible for all of the following EXCEPT a. regulating holding companies. b. supervising foreign banks in the United States. c. approving bank mergers. d. regulating credit unions. 5. The Fed provides all of the following services EXCEPT a. overseeing the activities of the Treasury Department. b. check clearing. c. enforcing consumer legislation. d. maintaining currency and coins. a. makes decisions about the growth of the money supply and the level of interest rates b. commercial banks that are members of, and hold stock in, the Fed c. metallic forms of money d. paper component of the money supply e. corporation that owns one or more banks 6. member bank 7. Federal Open Market Committee 8. bank holding company 9. currency 10. coins 1. A 2. D 3. D 5. D 6. B 8. D 9. E 10. C
Chapter 14 - Section V 1. When a bank keeps $12 from a $100 deposit as legal reserves, it is using a. the Federal Reserve System. c. a legal reserve system. b. a fractional reserve system. d. a fractional deposit system. 2. What does a bank use to make loans? a. excess reserves c. legal reserves b. reserve requirements d. member bank reserves 3. All of the following actions by the Fed would promote an easy money policy EXCEPT a. increasing the reserve requirement. b. buying government securities. c. lowering the discount rate. d. announcing that it anticipates adopting an easy money policy. ll of the following actions by the Fed would promote a tight money policy EXCEPT a. increasing the reserve requirement. b. selling government securities. c. having an official testify to Congress that a tight money policy is likely. d. lowering the discount rate. 5. All of the following are tools of monetary policy EXCEPT a. selective credit controls. c. tight money controls. b. moral suasion. d. open market operations. a. rule stating that a percentage of every deposit be set aside as legal reserves b. the interest the Fed charges on loans to financial institutions c. legal reserves in excess of the reserve requirement d. minimum deposits left with a stockbroker to be used as down payments to buy other securities e. the expansion and/or contraction of the money supply in order to influence the cost and the availability of credit 6. monetary policy 7. reserve requirement 8. excess reserves 9. discount rate 10. margin requirements 1. C 2. A 3. A 4. B 5. D 6. E 8. C 9. B 10. D