4.03 Money in the Bank

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

Federal Reserve Bank

Which most accurately explains why fiat money has value?

Fiat money has value because the government declares that it has value.

Which best explains how a barter system works?

Goods and services are exchanged without the use of money.

Which action is most likely to result in an increase in the money supply?

The Fed buys millions of dollars in Treasury bonds.

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 is a form of fiat money that is commonly used today?

digital money

Which is an asset?

jewelry someone owns

Which of the following explains why the government sets a required reserve ratio for private banks?

make sure banks don't run out of money when customers make withdrawals

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