Chapter 10 Boyd Test

The money in checking accounts is referred to as A: a demand deposit. B: a money supply. C: fractional reserve banking. D: interest.

A: a demand deposit.

Money that has value because the government has ordered that it is an acceptable means to pay debts is referred to as A: fiat money. B: commodity money. C: representative money. D: uniformity

A: fiat money.

A banker exchanges bank notes for silver and gold money then leaves town and disappears. This is a A: fraud. B: wildcat. C: bank run. D: greenback.

A: fraud.

"Specie" is a term used as early as the 1600s for A: gold and silver coins. B: paper currency. C: goldsmiths' receipts. D: tobacco.

A: gold and silver coins.

What is an example of commodity money? A: precious stones B: currency C: coins D: a tractor

A: precious stones

What is the simple interest of a loan for $1,000 with 5% interest after 3 years? A: $50 B: $150 C: $1,050 D: $1,150

B: $150

A dollar bill typically lasts A: 6 months in circulation. B: 1 year in circulation. C: 2 years in circulation. D: 3 years in circulation.

B: 1 year in circulation.

Which Act abolished the independence of the savings and loan industry and transferred insurance responsibilities to the Federal Deposit Insurance Corporation (FDIC)? A: Federal Reserve Act B: Financial Institutions Reform, Recovery, and Enforcement Act C: National Banking Act of 1863 D: National Banking Act of 1864

B: Financial Institutions Reform, Recovery, and Enforcement Act

The Antifederalist movement, which supported a decentralized banking system, was led by A: Alexander Hamilton. B: Thomas Jefferson. C: Aaron Burr. D: Andrew Jackson.

B: Thomas Jefferson

"Principal" is the A: ability to be used as, or directly converted to, cash. B: amount of money borrowed. C: failure to pay back a loan. D: price paid for the use of borrowed money.

B: amount of money borrowed.

"Objects that have value because the holder can exchange them for something else of value" defines A: fiat money. B: commodity money. C: representative money. D: portability.

B: commodity money.

The fractional banking system A: only works if there are a limited number of banks. B: ensures growth in the economy. C: makes banking more secure. D: prevents excessive defaults.

B: ensures growth in the economy.

Barter is A: a means for comparing the values of goods and services. B: the direct exchange of one set of goods or services for another. C: anything that serves as a medium of exchange, a unit of account, and a store of value. D: something that keeps its value if it is stored rather than used.

B: the direct exchange of one set of goods or services for another.

Which of the following is an example of an informal bank? A: A bank that is not incorporated. B: A bank that is not a member of a central bank. C: A merchant who stores money for customers. D: An individual who loans money to friends.

C: A merchant who stores money for customers.

Which of these currencies became worthless by the end of the Civil War? A: greebacks B: demand notes C: Confederate currency D: Union currency

C: Confederate currency

A bank chartered, or licensed, by the national government is called A: the central bank. B: a member bank. C: a national bank. D: the Federal Reserve.

C: a national bank.

Which of the following does NOT belong in the M2 category? A: money market mutual funds B: near money C: currency held in bank vaults D: deposits in savings

C: currency held in bank vaults

"Default" refers to the A: ability to be used as, or directly converted to, cash. B: amount of money borrowed. C: failure to pay back a loan. D: price paid for the use of borrowed money.

C: failure to pay back a loan.

The ability to be used as, or directly converted to, cash is A: default. B: the money supply. C: liquidity. D: interest.

C: liquidity

Which of the following is an example of money as a store of value? A: comparing the costs of two vacations B: appraising a wedding ring C: making money at a garage sale and saving it D: researching car prices online

C: making money at a garage sale and saving it

A bank that belongs to the Federal Reserve System is called a A: central bank. B: member bank. C: national bank. D: local bank.

C: national bank.

"Objects that have value in themselves and that are also used as money" is the definition for A: fiat money. B: commodity money. C: representative money. D: money.

C: representative money.

The government agency that covers customer deposits if a bank fails is the A: Federal Reserve System. B: central bank. C: member bank. D: Federal Deposit Insurance Corporation (FDIC).

D: Federal Deposit Insurance Corporation (FDIC).

The central banking system for the United States that was set up in 1913 is known as the A: central bank system. B: member bank system. C: national bank system. D: Federal Reserve System.

D: Federal Reserve System.

A NOW account is a type of A: savings account that works similarly to money market accounts. B: checking account offered by credit unions only in the Northeast. C: savings account that yields higher interest. D: checking account that pays interest.

D: checking account that pays interest.

Which one of the following is NOT one of the four most common ways people can save money in banks? A: checking accounts B: money market accounts C: certificates of deposit D: fractional reserves

D: fractional reserves

What is the name for a monetary system in which paper money and coins are equal to the value of a certain amount of gold? A: Federal Reserve note B: Federal Reserve System C: greenback D: gold standard

D: gold standard

The price paid for the use of borrowed money is referred to as the A: liquidity. B: default. C: principal. D: interest.

D: interest.

Anything that is used to determine value during the exchange of goods and services is a A: unit of account. B: barter. C: store of value. D: medium of exchange.

D: medium of exchange.

For a traveler, paper currency would be preferable to coins because of A: limited supply. B: acceptability. C: uniformity. D: portability.

D: portability.