Econ Chapter 14

The Glass-Steagall Act of 1933 required

A separation of commercial banking from the trading of stocks

The Federal Reserve System was established by the Federal Reserve Act of:

1913***

The Federal Reserve System is divided into:

12 districts***

How many members can serve on the Board of Governors of the Federal Reserve System?

7

One major advantage of credit cards used for transactions is that they:

Allow customers to coordinate timing and payment for purchases ?

Members of the Federal Reserve Board of Governors are:

Appointed by the President to staggered 14 year terms

The government bail-out of large institutions creates the problem of moral hazard, which means that these large firms will:

Be limited in terms of the securities and services that they get involved in

When the Fed acts as a "lender of last resort", like it did in the financial crisis of 2007-2008, it is performing its role of:

Being the bankers' bank***

The Federal Reserve System consists of which of the following?

Board of Governors and the 12 Federal Reserve Banks***

The Federal Reserve System of the U.S. is the country's:

Central Bank***

Thrifts" refer to the following institutions, except:

Commercial banks

Holding the money deposits of businesses and households and making loans to the public are the basic functions of:

Commercial banks and thrift institutions***

The main function of the Federal Reserve System is to:

Control the money supply***

The Bureau of Consumer Financial Protection was created in 2010 to become part of the:

Federal Reserve system

The paper currencies of the U.S. are also called

Federal reserve notes***

The basic requirement for an item to function as money is that it be:

Generally accepted as a medium of exchange

During the Financial Crisis of 2007-2008, Goldman Sachs, Morgan Stanley, and other financial firms with heavy exposure to the mortgage-related problems rushed to become bank holding companies in order to:

Get massive loans from the fed

The so-called too-big-to-fail policy has two conflicting sides: on one hand there's the moral hazard problem that it creates, but in the other hand the Fed must:

Have an incentive to make highly risky investments

The causes of the skyrocketing mortgage default rates that triggered the financial crisis in 2007-2008 include the following, except:

Housing prices increased drastically***

United States currency has value primarily because it:

Is relatively scarce, is legal tender, and is generally acceptable in exchange for goods and services

Which definition(s) of the money supply include(s) only items which are directly and immediately usable as a medium of exchange

M1

Checkable deposits are included in:

M1 and M2

The Federal Reserve Banks are owned by the

Member banks***

The consolidation in the financial industry into fewer and larger firms:

Progressed further in the Financial Crisis of 2007-2008

The reason for the Fed being set up as an independent agency of government is to:

Protect it from political pressure***

The Federal Reserve System performs the following functions, except:

Providing banking services to the general public***

The Federal Open Market Committee (FOMC) of the Federal Reserve System is primarily for:

Setting the Fed's monetary policy and directing the purchase and sale of government securities

What "backs" the money supply of the U.S.?

The U.S. gov'ts ability to keep the value of money relatively stable

Which of the following is not true about the Federal Reserve banks

They compete with commercial banks in their basic functions ?

The "bail-out" money that went to giant financial institutions like Citibank and Goldman Sachs, along with General Motors and Chrysler during the Financial Crisis and the Great Recession, came from the:

Troubled Assets Relief Program

Which of the following institutions does not provide checkable-deposit services to the general public?

U.S. Treasury

The functions of money are to serve as a:

Unit of Account, store of value, and medium of exchange***

When a consumer wants to compare the price of one product with another, money is primarily functioning as a:

Unit of account***

An asset's liquidity refers to its ability to be:

a means of payment

What function is money serving when you use it when you go shopping?

a medium of exchange

What function is money serving when you deposit money in a savings account?

a store of value

Which of the following would be considered to be the most liquid?

checkable deposits

The M1 money supply is composed of

checkable deposits and currency***

To keep high inflation from eroding the value of money, monetary authorities in the United States

control the supply of money in the economy***

Money functions as a store of value if it allows you to:

delay purchases until you want goods

One major advantage of money serving as a medium of exchange is that it allows society to:

escape the complications of barter***

Checkable deposits are money because they are:

flat money***

Which of the following is not true about the use of a credit card?

it allows people to economize the use of money ?

.Currency and checkable deposits are

major components of the M1 money supply***

Money eliminates the need for a coincidence of wants in trading primarily through its role as a:

medium of exchange

People can generally get the following items at their commercial banks, except:

money market mutual funds***

Which of the following financial institutions pool deposits of customers and use the money to buy a portfolio of stocks or bonds or both?

mutual funds

The use of a credit card is most similar to:

obtaining a short term loan***

The so-called near-monies have the following characteristics, except

part of money supply M1

The use of a debit card is most similar to:

paying with a check

When there is inflation in the economy, it implies that the:

price index is rising and the purchasing power of money is falling***

Which of the following items are included in money supply M2 but not M1?

savings deposits ?

Which of the following "backs" the value of money in the United States?

the acceptability of it as a medium of exchange

When a banker records how many dollars each of his borrowers owes the bank, money is serving as a:

unit of account