Macroeconomics: Money, Banking, and Financial Institutions

Checkable deposits are: considered to be near money included in M1 not included in either M1 or M2 also called time deposits

included in M1

If you place a part of your summer earning in a savings account, you are using money primarily as a: standard of value medium of exchange store of value unit of account

store of value

The Federal Reserve System was created in

1913

The Federal Reserve System was established by the Federal Reserve Act of: 1933 1945 1955 1913

1913

When you use money to purchase groceries, money is functioning as a store of value. (T/F)

False

Money performs its function as a store of value very well, because it protects one against the erosion of purchasing power from inflation. (T/F)

False

The M1 money supply is composed of currency, checkable deposits, and savings deposits. (T/F)

False

As it relates to Federal Reserve activities, the acronym FOMC describes the: Federal Organization for Monetary Control Federal Organization for Money Creation Federal Options Market Committee Federal Open Market Committee

Federal Open Market Committee

Checkable deposits are included in

NOT M1 but not in M2

Currency in circulation is part of

NOT M1 only

Coins in people's pockets and purses are: included in M2 but not in M1 excluded from M1 and M2 because people can exchange them for Federal Reserve notes included both in M1 and M2 included in M1 but not in M2

NOT included in M1 but not in M2

The M2 money supply is larger than the M1 money supply. (T/F)

True

Which of the following institutions does not provide checkable-deposit services to the general public? commercial banks savings and loan associations credit unions U.S. Treasury

U.S. Treasury

If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as: a unit of account a store of value a medium of exchange an economic investment

a medium of exchange

When economists say that money serves as a unit of account, they mean that it is: a monetary unit for measuring and comparing the relative values of goods a means of payment declared as legal tender by the government a way to keep wealth in a readily spendable form for future use

a monetary unit for measuring and comparing the relative values of goods

Money functions as: a medium of exchange a unit of account a store of value, a unit of account, and a medium of exchange a store of value

a store of value, a unit of account, and a medium of exchange

If you are estimating your total expenses for school next semester, you are using money primarily as: an economic investment a unit of account a medium of exchange a store of value

a unit of account

When economists say that money serves as a store of value, they mean that it is: a way to keep wealth in a readily spendable form for future use declared as legal tender by the government a means of payment a monetary unit for measuring and comparing the relative values of goods

a way to keep wealth in a readily spendable form for future use

The members of the Federal Reserve Board: serve seven-year terms are appointed by the American Economic Association are elected by votes of the 12 presidents of the Federal Reserve Banks are appointed for 14-year terms

are appointed for 14-year terms

The Federal Reserve System of the United States is the country's: comptroller or accountant deposit insurance provider central bank financial adviser

central bank

The M1 money supply is composed of: bank deposits of households and business firms bank deposits and mutual funds all coins and paper money held by the general public and the banks checkable deposits and currency in circulation

checkable deposits and currency in circulation

In the United States, the money supply (M1) includes: coins, paper currency, and checkable deposits coins, paper currency, checkable deposits, and credit balances with brokers paper currency, coins, gold certificates, and time deposits currency, checkable deposits, and Series E bonds

coins, paper currency, and checkable deposits

Money functions as a store of value if it allows you to: delay purchases until you want the goods make exchanges in a more efficient manner measure the value of goods in a reliable way increase your confidence in money

delay purchases until you want the goods

The amount of money reported as M2: is larger than the amount reported as M1 is smaller than the amount reported as M1 excludes coins and currency includes large ($100,000 or more) certificates of deposit

is larger than the amount reported as M1

Purchasing groceries using a debit card best exemplifies money serving as a: unit of account index of satisfaction medium of exchange store of value

medium of exchange

Currency held within banks is part of: the M2 definition of the money supply only neither the M1 nor the M2 definition of the money supply both the M1 and M2 definitions of the money supply the M1 definition of the money supply only

neither the M1 nor the M2 definition of the money supply

Currency held in the vault of the First National Bank is: counted as part of M2 but not M1 not counted as part of the money supply counted as part of M1 only counted as part of M1 if it was deposited into a checking account

not counted as part of the money supply

Currency held in the vault of the First National Bank is: not counted as part of the money supply only counted as part of M1 if it was deposited into a checking account counted as part of M2 but not M1 counted as part of M1

not counted as part of the money supply

What "backs" the money supply of the United States? the fact that currency is issued by the Federal Reserve System the amount of gold the U.S. government has on deposit at its banks the U.S. government's ability to keep the value of money relatively stable the fact that the intrinsic value of coins in circulation is greater than their face value

the U.S. government's ability to keep the value of money relatively stable

A $70 price tag on a sweater in a department store window is an example of money functioning as a: medium of exchange unit of account store of value standard of deferred payments

unit of account

When a consumer wants to compare the price of one product with another, money is primarily functioning as a: checkable deposit unit of account store of value medium of exchange

unit of account