chapter 18

The ease with which an asset can be converted into a medium of exchange is known as a. volatility. b. liquidity. c. speculative exchange. d. currency.

b. liquidity

M1 money includes all but which of the following? a. Checkable deposits b. Savings accounts c. Paper money d. Coins

b. savings accounts

Comparing how many dollars it takes to attend college each year to annual earnings on a job represents the use of money as a a. store of coincidence. b. unit of account. c. store of value. d. medium of exchange.

b. unit of account

Which of the following is not part of the Federal Reserve System? a. Council of Economic Advisors b. 12 Federal Reserve District Banks c. Federal Open Market Committee d. Board of Governors

A. council of economic advisors

Which of the following is not one of the functions of the Fed? a. Controlling government spending and taxes b. Maintaining and circulating currency c. Maintaining federal government checking accounts and gold d. Controlling the money supply e. Supervising and regulating banks

a. controlling government spending and taxes

The Monetary Control Act of 1980 extended the Fed's authority to a. impose required reserve ratios on all depository institutions. b. control the discount rate. c. control the federal funds rate. d. All of the answers are correct.

a. impose required reserve ratios on all depository institutions

Buying a cup of coffee with a dollar bill represents the use of money as a a. medium of exchange. b. unit of account. c. store of value. d. All of the answers are correct.

a. medium of exchange

The Monetary Control Act of 1980 a. allowed fewer institutions to offer checking account services. b. did none of these choices. c. created less competition among various financial institutions. d. restricted savings and loan associations to long-term loans.

b. did none of these choices

The Federal Reserve System was founded in a. 1935. b. 1913. c. 1933. d. 1929.

b. 1913

The difference between M1 and M2 is given by which of the following? a. M1 includes currency, coins, gold, and silver, whereas M2 does not contain gold and silver. b. M1 is made up of currency and checkable deposits, whereas M2 contains M1 plus savings deposits and small time deposits. c. M1 is limited to checkable deposits, whereas M2 contains currency. d. M1 includes only currency, whereas M2 contains M1 plus checkable deposits.

b. M1 is made up of currency and checkable deposits, whereas M2 contains M1 plus savings deposit and small time deposits

Which of the following items does not provide a store of value? a. Currency b. Checkable deposits c. Credit cards d. All of the answers are correct.

c. credit cards

The major protection against a sudden mass attempt to withdraw cash from banks is the a. Federal Reserve. b. Consumer Protection Act. c. deposit insurance provided by the FDIC. d. gold and silver backing the dollar.

c. deposit insurance provided by the FDIC

Which of the following is a desirable property of money? a. Scarcity b. Portability c. Divisibility d. All of the answers are correct.

d. all answers are correct

Which of the following items is included when computing M1? a. Coins in circulation b. Currency in circulation c. Checking accounting entries d. All of the answers are correct.

d. all of the above answers are correct

Which of the following statements is true? a. Money must be relatively "scarce" if it is to have value. b. Money must be divisible and portable. c. M1 is the narrowest definition of money. d. All of the answers are correct.

d. all of the above answers are correct

Which of the following is counted as part of M2? a. Currency b. Checkable deposits at commercial banks c. Money market funds d. All of the answers are correct.

d. all of the answers are correct

Anything can be money if it acts as a. a unit of account. b. a store of value. c. a medium of exchange. d. all three of the answers above.

d. all three of the answers above

Which of the following is a store of value? a. Federal reserve notes b. Debit card c. Passbook savings deposit d. Each of the above answers is a store of value.

d. each of the above answers is a store of value

The Fed's principal decision-making body, which directs buying and selling U.S. government securities, is known as the a. Federal Deposit Insurance Corporation. b. District Board of Governors. c. Reserve Requirement Regulation Conference. d. Federal Open Market Committee

d. federal open market committee

Which definition of the money supply includes credit cards? a. M1 b. M2 c. Both answers include credit card balances. d. Neither definition of money includes credit card balances.

d. neither definition of money includes credit card balances

With respect to controlling the money supply, the law requires the Fed to take orders from a. the Secretary of the Treasury. b. the president. c. the Speaker of the House. d. no one—the Fed is an independent agency.

d. no one