econ chapter 32
Customer deposits at commercial banks are insured by the
Federal Deposit Insurance Corporation
The M1 money supply is controlled by I. the Federal Reserve System II. the World Bank III. commercial banks IV. thrift institutions V. the International Monetary Fund
I only
In addition to the components of M1, M2 consists of the following additional components I. non-checkable savings accounts II. money market deposit accounts III. small denominated time deposits IV. money market mutual funds
I, II, III, and IV
Which of the following is a function of money? I. A medium of exchange II. A store of value III. A unit of account
I, II, and III
The components of M1 consist of I. checkable deposits II. travelers' checks III. currency IV. government bonds V. non-checkable savings accounts
I, II, and III only
Stabilization of the money supply is important to an economy becaus I. too much money will increase the purchasing power of the dollar II. too little money will hurt economic growth III. too much money will cause rapid inflation
II and III only
Each of the following statements about the Federal Reserve System is correct EXCEPT
The President has power to remove Governors who fail to carry out the President's policy objectives.
The components of the M1 money supply are distinguished from the additional components of the M2 money supply because M1 money is
perfectly liquid
Open market operations consist of
the central bank buying and selling government bonds on the open market
The Fed's functions include all of the following EXCEPT
accepting deposits of individual businesses and corporations
The stable value of money depends on all of the following EXCEPT the
commitment of the government to issue all of the money citizens want to purchase goods and services
The primary role of the Federal Reserve is to
control the money supply
During a period of inflation, the purchasing power of money
decreases
The kind of currency used in the United States today can be best described as
fiat money
The value of fiat money as a medium of exchange is backed by
its purchasing power
