Econ Final 14

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The functions of money are to serve as a:

Unit of account, store of value, and medium of exchange

When a consumer wants to compare the price of one product with another, money is primarily functioning as a:

Unit of account

When a banker records how many dollars each of his borrowers owes the bank, money is serving as a:

Unit of account

What function is money serving when you deposit money in a savings account?

A store of value

What function is money serving when you use it when you go shopping?

A medium of exchange

If product prices were stated in terms of tobacco leaves, then tobacco leaves would be functioning primarily as:

A unit of account

One major advantage of money serving as a medium of exchange is that it allows society to:

Escape the complications of barter

Money eliminates the need for a coincidence of wants in trading primarily through its role as a:

Medium of exchange

An asset’s liquidity refers to its ability to be:

A means of payment

Currency and checkable deposits are:

The major components of money supply M1

The paper currencies of the U.S. are also called:

Federal Reserve notes

The M1 money supply is composed of:

Checkable deposits and currency in circulation

Which definition(s) of the money supply include(s) only items which are directly and immediately usable as a medium of exchange?


Checkable deposits are included in:

both M1 and M2

People can generally get the following items at their commercial banks, except:

Money market mutual funds

Which of the following "backs" the value of money in the United States?

The acceptability of it as a medium of exchange

United States currency has value primarily because it:

Is relatively scarce, is legal tender, and is generally acceptable in exchange for goods and services

The Federal backing for money in the United States comes from:

Controlling the money supply in order to keep the value of money relatively stable over time

What "backs" the money supply of the U.S.?

The U.S. government’s ability to keep the value of money relatively stable

When paper money is designated as legal tender, it means that:

It is a means of payment by law

When there is inflation in the economy, it implies that the:

Price index is rising and the purchasing power of money is falling

To keep high inflation from eroding the value of money, monetary authorities in the United States:

Control the supply of money in the economy

The Federal Reserve Banks are owned by the:

Member banks

The Federal Reserve System consists of which of the following?

Board of Governors and the 12 Federal Reserve Banks

How many members can serve on the Board of Governors of the Federal Reserve System?


How long is the term of office for members appointed to serve on the Board of Governors of the Federal Reserve System?

14 years

When was the Federal Reserve System established?


The Federal Reserve System of the U.S. is the country’s:

Central bank

Members of the Federal Reserve Board of Governors are:

Appointed by the President to staggered 14-year terms

Which group assists the Board of Governors of the Federal Reserve System in determining monetary policy?

Federal Open Market Committee

The Federal Open Market Committee (FOMC):

Sets policy on the sale and purchase of government bonds by the Fed

The Federal Open Market Committee (FOMC) of the Federal Reserve System is primarily for:

Setting the Fed’s monetary policy and directing the purchase and sale of government securities

The twelve Federal Reserve Banks can best be characterized as:

Central banks, banker’s banks, and quasi-public banks

The most important of the Federal Reserve district banks is the:

New York bank

How many Federal Reserve Banks are there?


The Federal Reserve System is divided into:

12 districts

Holding the money deposits of businesses and households and making loans to the public are the basic functions of:

Commercial banks and thrift institutions

Which of the following is the most important function of the Federal Reserve System?

Controlling the money supply

The Federal Reserve System is an:

Independent agency of government

The Financial Crisis of 2007-2008 started in which sector of the economy?

Real estate and housing sector

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