econ chap 15

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To say money is socially defined means that:

whatever performs the functions of money extremely well is considered to be money.

If you place a part of your summer earnings in a savings account, you are using money primarily as a:

store of value.

In the United States, the money supply (M1) is comprised of

coins, paper currency, and checkable deposits.

The money supply is backed:

by the government’s ability to control the supply of money and therefore to keep its value relatively stable.

. In defining money as M1, economists exclude time deposits because:

they are not directly or immediately a medium of exchange.

Checkable deposits are:

included in M1

Checkable deposits are classified as money because:

they can be readily used in purchasing goods and paying debts.

Paper money (currency) in the United States is issued by the:

Federal Reserve Banks.

The largest component of the money supply (M1) is:

currency in circulation.

In January 2008, the supply of money (M1) in the United States was about:

$1365 billion.

If P equals the price level expressed as an index number and $V equals the value of the dollar, then:

$V = 1/P.

If the price index rises from 100 to 120, the purchasing power value of the dollar:

will fall by one-sixth.

The basic policy-making body in the U.S. banking system is the:

Board of Governors of the Federal Reserve.

The seven members of the Board of Governors of the Federal Reserve System are:

appointed by the President with the confirmation of the Senate.

The twelve Federal Reserve Banks:

hold the reserve deposits of commercial banks.

The Federal Reserve System is owned by:

National Banks

The group that sets the Federal Reserve Systems policy on buying and selling government securities (bills, notes, and bonds) is the:

Federal Open Market Committee (FOMC).

. An important routine function of the Federal Reserve Bank is to:

provide facilities by which commercial banks and thrift institutions may collect checks.

Which of the following is the basic economic policy function of the Federal Reserve Banks?

controlling the supply of money

The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 in:

commercial banks and thrifts.

The members of the Federal Reserve Board:

serve 14-year terms

To say that the Federal Reserve Banks are quasi-public banks means that:

they are privately owned, but managed in the public interest.

The Federal Reserve System:

is basically an independent agency.

Bank and thrift assets have declined significantly since 1980. They have responded to their relative declines by:

expanding their services and merging with one another.

The Financial Services Modernization Act of 1999

permitted banks, thrifts, pension companies, and securities firms to merge and to sell each other’s products.

Major countries in which citizens hold and use large quantities of U.S. dollars are

Russia, Argentina, and Turkey

The use of U.S. dollars in foreign countries:

helps foreign buyers and sellers overcome problems with their domestic currencies.

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