4.03

Which of the following best describes a fractional reserve banking system?

Banks keep a portion of deposits on hand to satisfy their customer's demands for withdrawals.

Which most accurately explains why commodity money has value?

Commodity money is a good that can be used as a medium of exchange or for some other purpose.

Which government agency is responsible for managing the money supply in the United States?

Federal Reserve Bank

Which of the following best explains why Treasury bonds have an effect on the size of the money supply?

The Federal Reserve Bank can buy and sell these bonds to raise or lower bank deposits.

Which action is most likely to result in a decrease in the money supply?

The government sells a new batch of Treasury bonds.

Which involves the direct exchange of goods and services without the use of money as a medium of exchange?

barter system

Which pair is most similar to each other?

fiat money and digital money

Which of the following best describes the purpose of raising and lowering the required reserve ratio?

manage the economy by increasing or decreasing the amount of loans being made

Which of the following best describes the purpose of the Federal Reserve Bank?

manages the U.S. economy by controlling the money supply

Which is a balance sheet?

statement of financial position