A Quiz On Ch 13 Money And Banking

25 Questions | By Ecofanics | Updated: Mar 22, 2022 | Attempts: 1669

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A Quiz On Ch 13 Money And Banking - Quiz

The world today is becoming a cashless economy and everyone is embracing the use of banks to keep our money and using debit and credit notes. Have you read chapter 13 of McConnell and Brue on money and banking? Take the review test below and refresh your memory on the topic.

Questions and Answers

1.

When the price of a product is stated in terms of dollars and cents, then money is functioning as a unit of account.
- A.
  
  True
- B.
  
  False
2.

The money supply designated M1 is the sum of currency and noncheckable deposits.
- A.
  
  True
- B.
  
  False
3.

The currency component of M1 includes both coins and paper money.
- A.
  
  True
- B.
  
  False
4.

If a coin is token money, its face value is less than its intrinsic value.
- A.
  
  True
- B.
  
  False
5.

Both commercial banks and thrift institutions accept checkable deposits.
- A.
  
  True
- B.
  
  False
6.

The checkable deposit of the Federal government at the Federal Reserve Banks are a component of M1.
- A.
  
  True
- B.
  
  False
7.

M2 exceeds M1 by the amount of noncheckable savings, small time deposits, and money market deposit accounts and money market mutual funds.
- A.
  
  True
- B.
  
  False
8.

A small time deposit is one that is less than $100,000.
- A.
  
  True
- B.
  
  False
9.

M2 is less than M3 by the amount of small time deposits in depository institutions.
- A.
  
  True
- B.
  
  False
10.

Economists and public officials are in general agreement on how to define the money supply in the U.S.
- A.
  
  True
- B.
  
  False
11.

A near money is a medium of exchange.
- A.
  
  True
- B.
  
  False
12.

Currency and checkable deposits are money because they are acceptable to sellers in exchange for goods and services.
- A.
  
  True
- B.
  
  False
13.

If money is to have a fairly stable value, its supply must be limited relative to the demand for it.
- A.
  
  True
- B.
  
  False
14.

There is a transactions demand for money because households and business firms use money as a store of value.
- A.
  
  True
- B.
  
  False
15.

An increase in the price level would, ceteris paribus, increase the transactions demand for money.
- A.
  
  True
- B.
  
  False
16.

An increase in the nominal GDP, ceteris paribus, will increase both the total demand for money and the equilibrium rate of interest in the economy.
- A.
  
  True
- B.
  
  False
17.

Bond prices and interest rates are inversely related.
- A.
  
  True
- B.
  
  False
18.

Members of the Board of Governors of the Federal Reserve System are appointed by the president and confirmed by the senate.
- A.
  
  True
- B.
  
  False
19.

The Federal Open Market Committee is responsible for keeping the stock market open and regulated.
- A.
  
  True
- B.
  
  False
20.

The Federal Reserve Banks are the bankers' banks because they make loans to and accept deposits from depository institutions.
- A.
  
  True
- B.
  
  False
21.

Federal Reserve Banks are owned and operated by the U.S. government.
- A.
  
  True
- B.
  
  False
22.

At times, the Fed lends money to banks and thrifts, charging them an interest rate called the bank and thrift rate.
- A.
  
  True
- B.
  
  False
23.

Congress established the Fed as an independent agency to protect it from political pressure so that it can effectively control the money supply and maintain price stability.
- A.
  
  True
- B.
  
  False
24.

In recent years, banks and thrifts have increased their share of the financial services indurty and control of financial assets.
- A.
  
  True
- B.
  
  False
25.

It is expected that electronic money will reduce the problems for the Fed in controlling the money supply.
- A.
  
  True
- B.
  
  False