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