ECO CH13

Which of the following is not an important characteristic of money?

has commodity value

Fiat money

has value because people accept it

Federal Reserve banks do all of the following except one. Which is the exception?

hold deposits of households and firms

The Federal Reserve banks could probably have prevented many of the bank failures in the early 1930s by

lending money to the commercial banks

Open-market operations involve

the Fed's purchase and sale of government securities

Under the Federal Reserve System,

there are 12 Federal Reserve banks

How does money function as a unit of account?

The prices of all goods and services are measured in terms of money

Which of the following is true of the discount rate?

It is the interest rate at which depository institutions can borrow from the Federal Reserve

Many banks in the U.S. failed in the 1930s not because they were poorly managed but because they could not survive panicky withdrawals of funds by their depositors.

True

Fractional reserve banking occurs when

a bank has reserves that are less than its deposits

Mary Ellen deposits $100 into her savings account every month. Her daughter Carolyn keeps all her pennies in a piggy bank. These are examples of money funcitioning as

a store of value

The FDIC insures deposits in

any banking institution that purchases FDIC insurance

Under a fractional reserve banking system,

bank reserves represent only a fraction of its reserves with the Federal Reserve Bank

The Federal Reserve System has the power to

buy and sell federal government securities

Fiat money is backed by

nothing

Financial intermediaries do all of the following expect one. Which is the exception?

print money

The main sources of profit for financial institutions is

the difference between interest paid on deposits and interest received on loans

The discount rate it

the interest rate charged commercial banks for loans from a Federal Reserve bank

All of the following are powers of the Federal Reserve System except

the obligation to make loans to the general public

Which of the following is not a function of money?

to provide a double coincidence of wants