Unit 8 Econ 151
Which of the following is not a thrift institution?
A commercial bank
Which of the following is not a depository institution?
A pension fund
Which type of money has the lowest opportunity cost?
Fiat money
Which of the following is not performed by the Fed?
Holding deposits of households and firms
Which of the following statements is true of a barter system?
In a barter system, an individual offers one good or service to get another good or service.
Which of the following statements is true of open-market operations?
Open-market operations involve the Fed's purchase and sale of government securities.
Which of the following is associated with the problem of hyperinflation?
People look for alternatives to using money.
Which of the following statements is true?
The Federal Reserve System was established in 1913
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 statements is correct regarding the Fed?
Under the Federal Reserve System, there are 12 Federal Reserve banks, one in each of the 12 Federal Reserve districts
Which of the following is true of a price level increase in an economy?
When the price level increases, the purchasing power of money decreases.
The reserve ratio is the ratio of:
a bank's reserves to its total deposits.
A bank holding company is:
a corporation that owns one or more banks.
The members of the Board of Governors of the Fed are:
appointed by the president with the approval of the Senate
Fiat money:
has value because people accept it.
Money that is acceptable because the government requires that it be accepted in payment of debt is _____.
legal tender
Between 1930 and 1933, many banks in the U.S. failed because:
people lost confidence in them
The Board of Governors of the Fed consists of:
seven members appointed by the president.
Barter was more feasible in primitive societies than in modern societies because:
specialization was limited and thus there were few goods available for trade in primitive societies.
The reserve requirement refers to:
the fraction of deposits that banks are required by the Fed to hold as reserves
Which of the following was the earliest type of money?
Commodity money
A subprime mortgage is:
a mortgage in which the borrower has a poor credit rating
The most effective mechanism for reducing runs on banks is _____.
deposit insurance
The wide acceptance of fiat money is determined by:
people's belief that it is worth something.
Commodity money is something:
that has an intrinsic value
